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Economics & Policy > Key Terms > Flashcards

Key Terms Flashcards

1
Q

With a growing global population and increasing economic production, the ________ reveals that overall emissions will increase unless the energy intensity and/or carbon intensity are reduced

A

Kaya identity

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2
Q

Four factors critical for economic growth are:

A

Natural resources
Human resources
Capital resources
Policy through Social values / Legal framework

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3
Q

A ______ is a good that can be provided to everybody (in a town or nation) at no more cost than the cost required to provide it to one person. It is non rival and non-excludable.

A

public good

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4
Q

Price, marginal revenue and marginal cost are equal for a firm in which market structure?

A

perfect competition

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5
Q

Types of goods in production are: (2)

A

capital goods
consumer goods

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6
Q

Types of goods for consumption are: (2)

A

normal goods
inferior goods

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7
Q

Types of goods considered together in a production possibility frontier are: (2)
These also affect the demand of a good or service

A

complements
substitutes

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8
Q

What is described by all the efficient and attainable combinations of the production of two (2) goods?

A

A production possibilities frontier

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9
Q

Many production possibilities curves/frontiers compare the production of _______ and ________ goods

A

Capital
Consumer

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10
Q

What are the four factors of production?

A

land
labor
capital
entrepreneurship

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11
Q

Which variable embodies some view about how future utility should be valued in terms of present utility?

A

Social discount utility rate = p

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12
Q

What is the value of consuming an additional unit of a good or service?

A

marginal utility

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13
Q

The downward slope of the demand curve is explained by ________

A

the law of decreasing marginal utility

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14
Q

The upward slope of the supply curve is explained by _______

A

The law of increasing marginal cost

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15
Q

What is the value of the next unit of production?

A

marginal cost

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16
Q

What are the two sectors and what flows between them in the circular flow of the economy?

A

Sectors: households, enterprises
Flows of income and consumption

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17
Q

What three things influence household demand after income?

A

Savings
Taxes
Imports

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18
Q

What three things influence enterprises after consumption?

A

Investment
Public expenditure
Exports

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19
Q

How does the economy interact with the environment? (4)

A

Natural resources (energy, materials)
Recycling (natural, industrial)
Waste (emissions, materials)
Ecosystem services (recreation, pollination)

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20
Q

Global population
Global GDP
Global material extraction plus Domestic extraction by region
Global trade in materials
Physical trade balance
Domestic material consumption
Global resource productivity
Can be described as _______

A

Worldwide drivers for natural resource use

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21
Q

What are the four main material categories of global material extraction?

A

Biomass
Fossil fuels
Metal ores
Non-metallic minerals

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22
Q

Describe the four changes in UNEP’s “towards sustainability” scenario

A

Resource efficiency
Climate mitigation and removal
Landscape and biodiversity protection
Healthy diets and reduced food waste

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23
Q

What are the benefits of natural capital? (3)

A

Life support systems
Sink services
Regulation services

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24
Q

How does economic activity cause environmental unsustainability?

A

Natural capital deterioration caused by economic activities

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25
Q

What are the three existing approaches to assess natural capital deterioration?

A

Ecosystem service modeling
Environmental assessment methods (footprints, LCA, MFA)
Economic modeling tools (equilibrium models, integrated assessment model)

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26
Q

How much land and water is required to support human activities is described by which environmental assessment methods? (2)

A

Ecological footprint
Resource nexus

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27
Q

Ecological footprint accounting tracks _____ for supply and _____ for demand of ecosystem services

A

Biocapacity (of ecosystem)
Ecological footprint (of production)

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28
Q

Total ecological footprint is the product of two factors:

A

human population
per capita consumption

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29
Q

An economy showing relative or absolute independence from environmental impacts is described as _____ from natural resources

A

decoupled

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30
Q

Economic “rent” refers to the price of a factor of production that is perfectly ____

A

inelastic

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31
Q

If demand for a good changes with price, then it is ______ with a value ____ than 1. The opposite is ______ and if it is equal to ___ it is _____.

A

elastic
greater
inelastic
1
unit elastic

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32
Q

The _________ describes the necessity of a good where low value means ____ and high means _____

It can also mean how much ____ can be substituted by capital

A

Constant elasticity of substitution
Crucial, would pay any price (inelastic)
Unnecessary (elastic)
labor

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33
Q

The value a person derives from a good or service is _____

A

utility

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34
Q

Increased consumption of the same good is not always positive. This exemplifies which law? What is the name of its graphed representation?

A

The law of diminishing/decreasing marginal utility
Indifference curve

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35
Q

______ is created by market inefficiency due to a lack of equilibrium and is measured by the difference in ___ and ___ of any given good or service including _____

A

Deadweight loss (DWL)
production/supply
consumption/demand
government tax, quotas (these can also cause DWL)

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36
Q

____ goods are usually provided by the government with _____ revenue

A

Public
Tax

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37
Q

_____ are used on imports to _____ domestic production

A

Tariffs
Protect

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38
Q

ASSUMPTION: Self-interest of individuals leads to _______ and _______

A

economic efficiency
welfare maximization

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39
Q

______ and _______ show the same amount of satisfaction / satisfactory options, graphed along a _____

A

Indifference
Utility
curve

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40
Q

To assess locality and context in policy, what assessment technique is needed?

A

Cost-benefit analysis

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41
Q

What factor distinguishes between public and private?

A

Exclusivity

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42
Q

What are the 3 efficiency conditions, assuming static allocation? What does #3 account for?

A
  1. Consumption
  2. Production
  3. Product mix efficiency; MRT = MRUS to show how slope of indifference curve and production possibility frontier are equal
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43
Q

What is welfare economics?

A

Economic well-being of individuals is at the center of individual welfare, whereas economic efficiency and general equilibrium are at the center of social welfare which is typically discussed at the level of economy. Theoretically grounded on microeconomics, welfare economics also has important implications for studying a wide variety of macroeconomic issues.

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44
Q

What did Pareto do?

A

Pareto used the concept of economic efficiency in studying income distribution involving the analysis of individual and social welfare.
He coined the term “welfare economics” in Manual of Political Economy and we derive “pareto improvements” and principles from him

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45
Q

What is required in a well-functioning economy?

A

the economy has a large number of buyers and sellers, homogeneous products or factors, perfect information, and no barriers to entry and exit to the market (some of these assumptions of don’t hold true for Adam Smith’s welfare economics concepts). Additional assumptions of all private goods, no externalities

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46
Q

What concept assumes allocation of resources to be efficient when the production possibilities from an allocation to various factors of production are in unity with the maximum possible utilities that can be derived from such allocation?

A

Pareto efficiency

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47
Q

__________ is a broad term typically used in microeconomics in order to denote the state of best possible operation of a product or service market. ________ assumes minimum cost for the production of a good or service, maximum output, and maximum surplus from the operation of the market.

A

Economic efficiency

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48
Q

Under the neoclassical economics tradition, economic ________ is the sum and outcome of _______ efficiency and ______ efficiency

A

efficiency
static
dynamic

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49
Q

Under static efficiency, what is it called when every resource is subject to optimal allocation, so every resource produces maximum output or else waste for the production of a given good or service is minimum? And also produces a mix of goods and services that aligns with consumer preferences and maximizes overall utility?

A

Allocative efficiency

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50
Q

What is the condition when the actual cost of production of a unit of good, that is, unit cost, is the lowest possible cost? It is the sum of _______ efficiency and _______ efficiency levels.

A

Productive efficiency
technical
scale

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51
Q

The __________ is responsible for allocating resources at their best use, _______ efficiency losses occur when it is above _______, that is, it exceeds consumers’ willingness to pay.

A

price mechanism
allocative
marginal cost

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52
Q

_______ shows all options for economy using all resources allocated on a graph which can _____ with greater efficiency, technology, capital, or resources

A

Production possibility frontier
increase

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53
Q

What are two properties of any point along the PPF?

A

efficient and attainable

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54
Q

Which points on the production possibilities frontier have the highest opportunity costs?

A

The endpoints, where all resources are used to produce only one good or the other

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55
Q

What law explains the shape of a typical production possibilities frontier?

A

the law of increasing opportunity costs

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56
Q

________ only happens along a higher welfare point, not higher efficiency point. While lines may intersect, it is not necessarily optimal

A

Pareto improvement

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57
Q

_________ define efficiency as making 1 person better off while not making anyone worse off

A

Pareto principles

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58
Q

The fact that “stuff happens” in conditions of _____ led to the concept of the safe minimum standard, known as ________

A

Uncertainty
Precautionary principle

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59
Q

______ is where a resource has zero demand
P (R = 0) = K and corresponds to SWF maximization if ________

A

Choke point
Optimized

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60
Q

Combinations of ______ can be assessed with ______ problems. As simple as what to eat, as complex as evolution

A

Factors
Multi-objective

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61
Q

A ______ solution is one in which no one objective function can be improved without a simultaneous detriment to another. This is considered the condition for _______

A

Non-dominated
Pareto optimality

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62
Q

What is it called when optimality conditions for supply and demand match socially optimal conditions?

A

Competitive equilibrium aka Walrasian equilibrium, does not hold up for externalities but this is part of the first theorem for welfare economics

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63
Q

Does the private market interest rate equal the social consumption discount rate in general equilibrium?

A

Yes

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64
Q

A _______ market has a lower price than with a _______ one, will _____ output and raise prices more _____

A

Monopolistic
Competitive
restrict
slowly

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65
Q

Showing consequences of what happens under variable changes (interest, more stock, taxes, demand, price of backstop technology, and resource extraction costs) is called _______

A

Comparative dynamic analysis

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66
Q

Resource _______ is different in competitive and monopolistic markets. Timing is _______ in monopolistic market, price _____ in early years and ______ in later years

A

Depletion
Longer
Higher
Lower

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67
Q

What is the justification for extraction of non-renewable resources?

A

Non-renewable resources considered to provide “something over and above the welfare possible from production in its absence” - creates additional possibilities for welfare (W)

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68
Q

In an idealized view, when stock goes to 0 what does it mean for demand and extraction?

A

Also go to 0

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69
Q

Resource demand function
Hotelling’s efficiency condition
Initial value for the resource stock
Final value for the resource stock

Are used to solve for ____ (2 / 5)

A

Resource net price / royalties (optimal, initial, interim, and final) as well as resource extraction rates

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70
Q

When interest rates ______, net price grows at market interest rate (i), which also raises growth rate of resource royalty Psubi, reaching a choke price (K) _____ in time

A

rise
earlier

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71
Q
  • Real marginal resource extraction cost
  • Marginal exploration and discovery costs
  • Real market price indicators and net price indicators

Are indicators of what condition for resources?

A

Scarcity

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72
Q

Scarcity tends to mean that a natural resource is _________

A

Becoming harder to obtain

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73
Q

What are the 3 types of EI resource stocks and what is the main difference between them?

A

Proven reserves
Probable reserves
Possible reserves

Price to extract known (proven) or unknown

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74
Q

When change in resource extraction occurs, cost _____ initially but then falls to “_______”, fall in extraction prices incurs the opposite

A

Rises
old gross price path

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75
Q

What are the characteristics of a monopolistic market? (6)

A

Not fixed price
Doesn’t allow for socially optimal allocation of profits
Profits maximized when marginal profit increases at the rate of interest
No substitute products
no one entering market
Price maker

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76
Q

What are the characteristics of a competitive market? (5)

A

In perfect conditions, market price is fixed so marginal revenue equals price
Shared information
Profits are zero
Lots of small firms providing the same service for the same price
Price taker

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77
Q

Efficiency is a necessary _____ condition that must be satisfied for an optimal extraction; states that an efficient extraction program requires the net price of the resource to grow at a proportionate rate of _____ over time

A

Hotelling rule
10%

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78
Q

Elasticity of natural resources is ____.
Other (replaceable) goods is ______.

A

low
high

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79
Q

What will cause a production possibility frontier to bow outward?

A

An increase in a factor of production

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80
Q

What does a non-renewable resource imply?

A

Fixed stocks

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81
Q

What characterizes a base resource (R)?

A

Available in Earth’s crust

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82
Q

There is resource ________ when it’s possible to get with technology

A

potential

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83
Q

How to describe the resources that are economically beneficial to extract now?
At a global level?

A

Reserves
World reserve base

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84
Q

What property shows how much to extract now vs. later?

A

Constant marginal costs of extraction

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85
Q

Gross social ______ (___) are derived from extraction and consumption of Rt

A

Benefits
B

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86
Q

The discount rate is a critical variable that influences the extraction of a resource in different ________

A

periods

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87
Q

At a discount rate of 0, future net benefits are ______ to current net benefits. The extraction is ______ between two periods.

A

exactly the same
divided evenly

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88
Q

At a discount rate above 0, ______ consumption is favored over ______ consumption. The higher the discount rate, _____ benefits are more highly weighted.

A

present
future
present

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89
Q

Net _____ is a function of quantity extracted R. This derives from the relationship of marginal ________ to the price and to the resources’ constant marginal _______

A

price
Social utility
Cost of extraction

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90
Q

An ______ extraction program requires the net price of the resource to grow ______ as the social utility discount rate

A

efficient
at the same rate

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91
Q

According to the Hotelling rule:
The owner’s profit per ton is ______ to the net price
The owner will _____ the net price available today against ______

A

equal
weigh
a possible higher future net price

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92
Q

Non-renewable resources are _____genous

A

Hetero-

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93
Q

ASSUMPTION
Non-renewable resources have _____ possibilities

A

substitution

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94
Q

ASSUMPTION
Utility comes directly from _______ resources

A

Consuming [the extracted]

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95
Q

ASSUMPTIONS
There are no ___, ____ or ____, or _____ to the extraction or consumption of non-renewable resources

A

externalities
taxation or subsidies
technological changes

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96
Q

A two-period model represents

A

A planning horizon of P0 and P1 for a non-renewable resource

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97
Q

The value of social welfare over an interval of time from period 0 to period T is a _____ model that can be calculated with an integral modeling _____________

A

multi-period
time to resource depletion / choke point

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98
Q

Optimality conditions for the multi-period model
Royalty, P =
Extraction R =
Depletion time =

A

K
0
sq. root of stock over discount rate

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99
Q

In the optimal resource depletion model, the net price rises at the _____, satisfying Hotelling’s rule

A

social utility discount rate

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100
Q

In the optimal resource depletion model, the ______ curve has a _____ where the demand for the resource is 0

A

resource demand
choke point (K)

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101
Q

The ____ path of the non-renewable resource is a linear declining function of time

A

extraction

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102
Q

Why does the optimal resource depletion model include a 45-degree line in the bottom-right quadrant?

A

To relate the net price to the optimal resource extraction

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103
Q

What are the four axes in the graphical representation of the optimal resource depletion model?

A

Net price + Y
Resource - X
Time + X - Y

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104
Q

_______ (and not the net price or royalty) should increase at the rate of _______ in order to maximize the discounted profits over time

A

marginal profit
interest

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105
Q

ASSUMPTION
For extraction of non-renewable resources ____(4)_____ are constant

A

Stock (size known)
Demand curve
Marginal extraction costs
Choke price (fixed)

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106
Q

An increase in the interest rate of a non-renewable resource results in an ____ of growth rate, meaning the graph gets _____ and time to exhaustion is _____

A

Increase
steeper
quicker

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107
Q

An increase in resource stock of a non-renewable resource causes the net price to ______ (initial royalty is _____) and when K is reached some portion of reserves _____. Therefore, time to exhaustion is ________ and curve becomes ______

A

decrease
lower
remain
extended
less steep

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108
Q

An increase in the resource stock for NRR will affect the net price path how?

A

look like a bunch of decreasing Ws in discrete steps along the curve

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109
Q

An increase in demand for a NRR will shift the curve _____, showing _____ extraction levels and initial ______. The resource will be _______ by the time it reaches K

A

Outwards
higher
net price
depleted

110
Q

If the demand for a NRR increases, will net price reach the choke price?

A

No

111
Q

Open-access with no private property rights is characterized by… (3)

A

Individualistic competition
Inability of owner to appropriate gains of their investment in stocks (eg fishery)
Exploitation likely, but not efficient or optimal

112
Q

To maximize, you can use a curve to take _____ where it is = 0

A

partial derivative

113
Q

A resource that has the capacity for _________ and growth is _______

A

reproduction
renewable

114
Q

A human-_____ time frame (___) is necessary for renewable theory

A

relevant
t

115
Q

____ is movement of stocks

A

flow

116
Q

The actual growth rate (___) is the rate of change over time, _____ at first but _____ at carrying capacity. The typical form is ______, derivative ______ G(S)

A

g
exponential
asymptotic
logistical
upside-down u

117
Q

The maximum stock size (____) supported by the environment is at the ____ of the parabola

A

Smax
top

118
Q

Maximum growth under certain conditions

A

Msy

119
Q

The logistic form of the biological growth function assumes a _____ stock/population threshold level Smin
If _____ = 0 then it is ______ growth

A

positive
Smin
simple

120
Q

What happens if stock/population goes below Smin?

A

It inevitably and permanently declines to 0

121
Q

The turning point S^D marks a change in stock growth from _______ to ______

A

despensation
compensation

122
Q

______ is the stock size at which the quantity of net natural growth is at a ______ and preferable for fishing or harvesting with ______

A

Maximum sustainable yield (MSY)
maximum
maximum replacement

123
Q

The simple logistic growth model is known as the ______ sub-model while net growth subject to harvest, effort, size of resource stock and catch coefficient is know as the ______ sub-model

A

biological
economic

124
Q

The economic sub-model for net growth depends on _____(4)_____

A

harvest, effort, size of resource stock and catch coefficient
H E S e

125
Q

Perfect competition and open-access model share which 2 characteristics?

A
  1. Large number of firms
  2. No barriers to enter or leave; implying: enter if profit per boat is positive, leave if negative
    (Drawback is no property rights)
126
Q

Costs of the renewable model are subject to _____ (c), ____ (E), and _____ (w)

A

Total cost
Effort
Cost per unit of harvesting effort

127
Q

Benefits of the renewable resource model are ______ (B), dependent on ____ (H) and _____ (P)

A

Gross Benefit
Harvest
Price

128
Q

What other variable can change the model assumption for theory of renewable resources?

A

Change in industry size to profitability, like elastic or marginal productivity
represented by a squiggly delta symbol

129
Q

In _____, net benefit (profits) = 0 and resource stock is _____ over time

A

equilibrium
constant

130
Q

Can go from harvest-stock to harvest-effort representation by finding the _____ harvest level for each _____ (E1 > E2 > E3)

A

steady-state
level of effort

131
Q

Another word for steady-state is _____

A

equilibrium

132
Q
  1. Usually unobservable but gross price is observable
  2. Varies over time unless steady-state
  3. Can be made equal to the difference between the market price and marginal cost of an incremental unit of harvested fish
    Are characteristics of what?
A

Net price

133
Q

_________ proposed as antidote to biological and economical over-fishing. Assumptions of price = marginal revenue, wanting to maximize wealth, and enforceable. Essentially, govern what is there to fish as if it were yours to fish resulting in profit-maximizing model

A

private property

134
Q

What framework is described by this?

A private-property fisher will look to maximize the discounted present value (PV) of the fishery and knowing the fundamental equation is implicit in this. What happens is fishery owners select a harvest rate for each period over the relevant time horizon to maximize the present value (or wealth) of the fishery, given an interest rate i

A

intertemporal optimization framework

135
Q

Commodity-driven deforestation (worst one), shifting agriculture, forestry (natural and plantation harvesting), wildfire, urbanization
Are what?

A

5 drivers of tree cover loss

136
Q

Main economic driver for ________ is cattle, then oil palm, soy, cocoa, rubber, coffee wood (fiber)

A

deforestation

137
Q

Rho as the discount rate is also known as? (3)

A

Time discounting
Euler’s number
Natural exponent function

138
Q

What are potential solutions to tree cover loss?

A

New regulations, new incentives, payment of environmental services

139
Q

Forest resources are what kind?

A

Natural and non-renewable OR semi-natural and hybrid if plantation forest

140
Q

_______ and fisheries can be modeled the same with which similar assumptions? (2)

A

Forests

Full cut only
Renewable resource

141
Q

Model showing optimal time for felling

A

Timber stand / single stand aka single-rotation model

142
Q

Maximum _____ at optimal time T

A

Present value

143
Q

The constants in the single rotation model describe what?

A

Maturity and growth

144
Q

Infinite rotation model definition and alternative name

A

= infinite geometric projection
Showing present value of profits for any rotation length T

145
Q

Timber reaches maturity after ___ years

A

135

146
Q

What conditions provide the optimum time to fell trees in the single rotation model? (2)

A

Maximize present value of profits
Rate of growth of the (undiscounted) net value of resource stock is equal to the private discount rate > i = p (ds / dt) / pSsubt

147
Q
  • Is return from the forest higher than the interest rate?
  • Beyond this point, expected rotation is less than interest rate
  • PV slope: where does it inflect? Reach 0? Decrease or increase?
A

Ways to assess the maximum (slope = 0) for forest resources

148
Q

Discount rates of ___ or higher result in negative present values at any rotation, at these rates commercial forestry not viable

A

6%

149
Q

Model to explain value of land as a capital asset is ____

A

land rent

150
Q

______ is payment for a factor of production with a fixed supply e.g. land

A

rent

151
Q

Assumptions for single stand / single rotation forest model

A

Biological growth fraction is quadratic
G(S) on y-axis and S on x-axis
- Not replanting forest
- All trees planted at same time so age and growth uniform
- Land has no alternative uses, opportunity cost is zero (not in calculation)
- Planting costs (k), marginal harvesting costs (c), and gross price of felled timber (P) are constant in real terms over time
- Forest generates value only through timber produced, no external effects

152
Q

Infinite model rotation assumptions

A

Considered more realistic
Decision to defer harvesting shows an additional cost over that of the previous model, happens to all subsequent planting cycles (delays)
Therefore, optimal calculation must equate benefits of harvest and plant deferred

153
Q

Present value means…

A

Economic value

154
Q

Land is what kind of asset, which can be measured with present value?

A

Capital

155
Q

Land (__) is an appreciating or depreciating asset. At ______, land rent is also equal to the revenue net of transportation cost minus labor cost and profits are ____

A

h
equilibrium
0

156
Q

Fertility of land dictates _____. Therefore, F > Fmin increases with ____ and psubz increases, F’min < Fmin shows new viable lowest amount

A

value

157
Q

Labor use of land is diminished with ______

A

distance

158
Q

Condition at Fmin means land earns _____ and any less, abandon because not economically feasible

A

No rent

159
Q

Therefore, F > Fmin increases with F
psubz increases, F’min < Fmin shows new viable lowest amount.
What approach is this?

A

Ricardian approach

160
Q

Factors of distance to a crucial location affects profits is the theory of what?

A

Land rent

161
Q

If product price from land increases, _____ > Dmax. Same if transportation costs ______

A

D’max
decrease

162
Q

A composite good (Z) can be modeled with which two functions in a “bundle” concept

A

Von Thunen model
Urban land rents

163
Q

4 types of water?

A

Green, blue, grey, black

164
Q

In addition to green and blue water -
______ : non-drinkable water that can be reused for irrigation, flushing toilets, and other purposes
______ : contains polluting chemical and biological constraints

A

Grey water
Black water

165
Q

Water use by humans (does/doesn’t) depend on the size of the local stock S(t)

A

Doesn’t

166
Q

What is needed at a minimum for allocating resources?

A

Allocation must follow basic need principle with minimum output to survive

167
Q

What are the two types of scarcity?

A

Physical and economic

168
Q

Ways to remunerate people in proportion to their effort (2)

A

Proportional shares based on what’s available
In proportion to production output

169
Q

Dividing remuneration by output solves both ____ efficiency and ____ output

A

Production
Fair

170
Q

What is the drawback of an informal sector? e.g. private ways to distribute water

A

Distribution of commodities in an unregulated way

171
Q

Mechanisms to control and shape the quantity and quality of land development combined with economic principles are used to assign land to ________

A

the highest market value of alternative uses

172
Q

______ are produced at a constant marginal cost

A

Virgin materials

173
Q

_______ material subject to increasing marginal costs

A

Recycled

174
Q

Switch point for renewables is when they become cheaper through _______

A

Hotelling’s rule

175
Q

The resource discovery function follows _____ curves and depends on technology and economic feasibility depending on grade

A

Marginal cost

176
Q

Production is divided into ____, ____, and ____-products

A

main
co -
by -

177
Q

On _____ curve, economic growth goes hand-in-hand with demand, then declines. This can exacerbate _____ and ______

A

Kuznet’s
income inequality
environmental effects / un sustainability

178
Q

For energy and mining, key inputs of ____ and _____ affect production

A

Energy
Labor

179
Q

Price, efficiency, availability are determinants off what?

A

Demand

180
Q

Y - wealth
P0 - price of m&e product
Pc - price of complements
C - consumer preferences
T - technology
[labor and disruptions]
Gov - Government policies
Market structure

Are determinants of ?

A

Mining and energy resource demand (typically 7)

181
Q

______ can be a major alternative source of supply in M&E

A

Secondary production e.g. scrap

182
Q

Foreign, industrial, and trade policies can all be modeled with what?

A

Kuznet’s curve

183
Q

M&E demand is for (short/long)-term changes due to ____

A

short
business cycles

184
Q

M&E supply is for (short/long) run

A

Both!

185
Q

These are all what?

Own price (P^o): firm looking for marginal costs to equal marginal revenues, maximizing profits and increase production, responsive to price signals
Input costs (C): an increase in labor costs will directly shift the supply curve, e.g. labor, energy affecting production cost
Labor: if disrupted, has a significant effect on supply
Market structure: huge impact on supply, especially where cartels or oligopolies exist (i.e. oil and potash which is fertilizer for industrial applications markets)
Gov reframed as Government activities

A

6 determinants of M&E supply

186
Q

What are the 2 types of mineral markets?

A

Fuel (coal, oil, gas) and non-fuel (metals, industry)

187
Q

Intersection between ____ and _____ shows the market price that will be established for quantities in reserves

A

Supply and demand

188
Q

M&E price sensitive to: technological changes modeled in ________, shifts curve down MC1 and MC2

A

Resource discovery function (RDF)

189
Q
  • Two approaches to ______: Thunen and Ricardian
    • Thunen model: _ imposes a cost and enters the profit function
    • Ricardian: _ enters the production function
A

Land rent model
D - distance
F - fertility

190
Q

What is a nexus?

A

Interdependences between systems i.e. trilateral interfaces of water, energy, food

191
Q

Resource supply
End-use demands and requirements
Natural and human engineered technologies
Processes and infrastructure

Are what?

A

Linkages to produce, supply, and deliver the resource to meet the end-use demand

192
Q

How can a nexus ie WEF be used?

A

Defined as an approach to assessment, policy development and implementation that focuses on socio-ecological systems

193
Q

The water, energy, and food system are obtained from a common _____ of natural resources and require connected ______. This requires common policy spaces and may result in cross-sectoral and cross-scales _____

A

Stock
Infrastructure
Risks and uncertainties

194
Q

What links a nexus?

A

Network of feedback which vary in intensity and timing

195
Q

Global risk landscape
Respond adequately to shocks and crisis
Unsustainable patterns of growth and resource constraints
Ecosystem goods and services
Competing land uses
Competing water sectoral demands
Value chain
SDGs

…and more are all examples of what?

A

Conceptual frameworks [applications] for the resource nexus

196
Q

How is climate change expected to modify agricultural productivity worldwide?

A

Lower food production and higher food prices
Global welfare and GDP decrease
At regional level produces winners and losers
Worldwide analysis is needed to account for impacts

197
Q

Most important nexuses:
______ > it supports population growth, projected to ~10B by 2050
______ > everything has a cost to productivity, also consider bioenergy and biofuels

A

water - food
energy - food

198
Q

Models each have a generic nexus type, ____ application, ______ technique and limitations / caveats
______ is one of the main limitations

A

geographic
modeling
data

199
Q

Nexus is meant to show how everything is ______ and requires _____

A

interrelated
trade offs

200
Q

_________ are often used in scenarios like modeling socio-political feasibility of energy transition or understanding the dynamics of resource usage

A

System dynamics

201
Q

The _______ is that for many mineral resource-rich countries, they experience a relatively low rate of growth. This seems counterintuitive, as abundance of natural resources should promote economic development.

A

Resource curse/paradox

202
Q

To combat the resource curse, _______ play a key role who are responsible for economic management and growth

A

Institutions

203
Q

Lower economic growth
Increased inequality of wealth
Entrenchment of democratic regime
Poor decision making
Failure to create a productive, efficient economy
Increased conflict in society
Degradation of environment and human rights

Are alleged symptoms of what?

A

The resource curse

204
Q

How can governments turn _____ to riches?

A

rents

205
Q

Gross _____ + ______ added + profit = derivation of _____

A

income
value
rent

206
Q

Land rent requires what to be of economic value?

A

extraordinary profit

207
Q

The sales price of rent is comprised of:
_____ profit
_____ profit
_____ costs (wages)
Cost of intermediate ____
Capital cost (_____)

A

Extraordinary
Normal
Labor
Inputs
Depreciation

208
Q

What government sector manages generating and distributing resource rents?

A

Ministry of finance

209
Q

What are the four institutional mechanisms for rent capture?

A

[TOLP]
Ownership and control
Legal framework
Taxation
Processing requirements

210
Q

Which country has the largest oil reserves?

A

Venezuela

211
Q

What is a tax on profits called?

A

Corporation tax

212
Q

What is a tax on production or sales

A

Royalties

213
Q

Extraction contracts and taxation are the link between _____ and ______ in the state-society-developer triangle

A

Developer
State

214
Q

Spending and investment are links between ____ and _____ in the state-society-developer triangle

A

State
Society

215
Q

Local content programs/oversight are the link between _____ and _____ in the state-society-developer triangle

A

Developer
Society

216
Q

Type of rule that’s less inclusive/less collectively oriented and less credible/weaker enforcement

A

Patrimonial rule - individualized political authority built on a hierarchy of cronyism

217
Q

Type of rule that’s less inclusive/less collectively oriented and more credible/stronger enforcement

A

Hegemonic government

218
Q

Type of rule that’s more inclusive/more collectively oriented and less credible/weaker enforcement

A

Clientelist pluralism - political competition based on extensive use of clientelismo; low horizontal accountability

219
Q

Type of rule that’s more inclusive/more collectively oriented and more credible/stronger enforcement

A

Programmatic pluralism - electoral competition based on programs geared toward collective welfare enhancement; provision of public goods; horizontal and vertical democratic accountability

220
Q

Global CO2 emissions have _____ since 1900

A

more than tripled

221
Q

The warmest period of global surface temperature began in ______

A

1850

222
Q

The biggest sectors for CO2 emissions are:
_____ 29%
_____ 23%
_____ 23%

A

Power coal
Transport
Industry

223
Q

________ shows the emission abatement potential and associated abatement costs

A

Marginal abatement cost

224
Q

________ is the net present value of climate change impacts of one additional ton of carbon emitter to the atmosphere today

A

Social cost of carbon

225
Q

SCC and MAC (marginal abatement cost) can be graphed against _____

A

GHG abatement in period 0

226
Q

Rising social cost of carbon requires higher ____ projects

A

marginal cost

227
Q

Ordinal utility = _______; defined by ______, with more money U is higher for a person

A

happiness
resources

228
Q

Functions of navigation, flood control, power production, erosion control, irrigation, recreation and public health are examples of what?

A

Integrated water resource management (IWRM)

229
Q

To explore ____ formulation related to the resource nexus, the best candidates are management tools eg ____ WEAP, ____ LEAP, or combination (Spataru)

A

policy
Water Evaluation and Planning
Long-range Energy Alternatives Planning

230
Q

_____ is about maximizing efficiency at a given point in time, while _____ is about achieving efficiency over time

A

static efficiency
dynamic efficiency

231
Q

______ is the condition in which the economy cannot increase the production of one good without decreasing the production of another good

A

Static efficiency

232
Q

What did Adam Smith do?

A

Coined the terms “self interest” and “invisible hand” in Wealth of Nations (1776) that describe market function to reach equilibrium in a way that benefits individuals

233
Q

What did Bergson do?

A

Defined “social welfare function” to determine social utility by way of welfare of each member of the community

234
Q

For the second fundamental theorem of welfare economics, what does a Pareto-optimal allocation of resources depend on?

A

Appropriate distribution of initial endowments and property rights through optimization of individual behavior aka perfect competition; but depends on efficiency in allocation corresponding to utility from further reallocation

235
Q

What do the first and second theorems of welfare economics describe?

A

What is efficient?
What alternative allocations can also lead to efficiency?

236
Q

The _____ is the total cost of a product or service before any deductions such as taxes or discounts. On the other hand, the ____ is the amount that remains after all such deductions have been made. It represents the actual amount paid or received for the product or service.

A

Gross price
Net price

237
Q

______ in economics refers to a situation in which different entities such as individuals or companies strive for the same resources or customers within a particular marketplace. It is a fundamental concept in capitalism and is considered essential for the functioning of a ______ economy, as it often leads to innovation and development.

A

Competition
Dynamic

238
Q

Taxation rates are based on what?

A

Marginal external cost, the willingness to pay

239
Q

Externalities are a source of market ____. The solution is to ______ and bargain. In some cases, the individual bargaining can also apply to firms but ______ hardly happens.

A

Failure
Assign property rights
Joint profit maximization

240
Q

When there is more than one source of market failure, only correcting one of them may make the problem worse. What kind of problem is this?

A

“Second-best” problems that do not improve efficiency

241
Q

Dutch disease model divides economy into 3 sectors: a tradeable ______ sector, a tradeable ______ sector, and a ______ sector. The higher resources are, the smaller the others are

A

Natural resource
Manufactured (non-resource)
Non-traded

242
Q

Bid-rent refers to the maximum amount that a person or business is willing to pay for a specific location. The bid-rent function describes how the _________ changes as the distance from a central point increases. It’s typically used to explain the distribution of different types of land uses in a city, in relation to the distance from the city center

A

Willingness to pay (or rent)

243
Q

Sector organization, regulation, collection of taxes/royalties, revenue distribution, and implementation of sustainable development policies are referred to as what?

A

Natural resource management value chain
[SeOrg Reg! Colonel TR; RevD SustyD Pol]

244
Q

What are the four key dimensions of sector organization?

A

[LfARMo]
Legal and regulatory frameworks
Models of ownership
Allocation of rights (exploration, production, extraction)
Regulating and monitoring capacity of gov’t agencies

245
Q

What are the four allocation principles?

A

Efficiency
Accountability
Basic needs
Strict equality

246
Q

Two climate system impacts of climate change

A

Water resources
Extreme temperatures

247
Q

What are the policy goals of IWRM?

A

3 Es:
equity - basic need and therefore everyone should have it
ecological integrity - sufficient quantities and quality of water should persist in the environment, use sustainability
efficiency - used with maximum possible efficiency because of its finite and vulnerable nature, priced according to economic value

248
Q

Enabling ____, _____ roles, and ______ instruments are the toolbox for IWRM

A

Environment
Institutional
Management

249
Q

_____ principle: persons should be remunerated in proportion to their effort
_____ principle: distributed according to users’ productivities
_____ principle: ensure all members of society survive in a decent way
_____: egalitarian view

A

Accountability
Efficiency
Basic need
Strict equality

250
Q
  • Utility possibility frontier can be derived if output transfers are feasible (helpful for allocation/redistribution)
  • If no transfer possible, allocation determined by _________
A

Maximizing the sum of utilities

251
Q

Integrated water and environmental management
Follow a systems approach
Full participation by all stakeholders, including workers and the community
Attention to social dimensions
Capacity building
Availability of information and the capacity to use it to anticipate developments
Full-cost pricing complemented by targeted subsidies

Are principles for what?

A

IWRM

252
Q

Simplifying assumptions for welfare economics:
Economy consists of _____ people
_____ goods
_____ productive resources, each available in ____ quantity
____ externalities
All goods produced are _____ goods

A

Two: A, B
Two: X, Y
Two: K, L - capital, labor, fixed
No
Private

253
Q

______ describes what goods are produced and in what quantities they are produced, which combinations of resource inputs are used in producing those goods and how the outputs of those goods are distributed between persons

A

Allocation of resources

254
Q

Two components of an open-access model (e.g. fishery)

A

Biological and economic sub-models

255
Q

Steady-state solution for fishery:
Resource stock size (doesn’t/does) change over time i.e. biological equilibrium
Fishing fleet (doesn’t/does) have net inflow and outflow i.e. economic equilibrium
Both of these equilibriums are referred to as ______

A

Doesn’t
Doesn’t
Bioeconomic equilibrium

256
Q

What is an adjustment path?

A

Moving from one equilibrium point to another as conditions change

257
Q

What are the ways to increase recycling?

A

Reducing the total demand for a material
Investing in the recycling industry
Increasing the cost of virgin materials

258
Q

What is the difference between the accountability principle and the efficiency principle?

A

One is based on effort and the other output

259
Q

Changes in price and time all change quantity of ______. Graphs that show this subject to ___ and ___.

A

Resource extracted
Social utility discount rate
Depletion (e.g. water goes down)

260
Q

For maximization of utility and social welfare over any time, need conditions (4) of resources

A

QORC
- Quantity of resource to be extracted in each period; subject to constraint of initial stock (S-bar)
- Optimal value for T; point in time at which depletion of stock ceases
- Remaining stock of resources at time St
- Change in stock wrt time Sd = ds/dt

261
Q

FROM ALVARO’S STUDY IN SOUTH AFRICA:
Climate change would modify agricultural productivity through five main factors:

A

changes in precipitation, temperature, carbon dioxide (CO2) fertilization,climate variability, and surfacewater runoff > P-SWR T CO2 CV
Crop production is directly influenced by changes in precipitation and temperature. Precipitation is the main source of allfreshwater resourcesand determines the level of soil moisture, which is a critical input for crop growth.

262
Q

According to the Stern Review, emissions can be decreased by (3)

A

increased energy efficiency, changes in demand, and adoption of clean tech (power, heat, and transport)

263
Q

What are 4 shared frameworks for international action on climate change?

A

[AATE]
- Emissions trading
- Technology cooperation
- Action to reduce deforestation
- Adaptation > particularly for development policy

264
Q

Large revenue flows plus insecure property rights, poorly functioning legal systems, and imperfect markets leads to ______

A

Rent-seeking / exploitation

265
Q

These are all what?

income (Y), own price (P^o), the price of substitutes and complements (P^S and P^C), technology (Tt), consumer preferences (Cons), and government policies (Gov)

A

Determinants of M&E demand elasticity during period t

266
Q

How does M&E demand and supply elasticity change over time?
Immediate
Short
Long
Very long

A

Changes from inelastic to elastic
Own price elasticity of demand is < 1 (inelastic) in short run and > 1 (elastic) in the long run
Linear declining function gets steeper for each
Supply is inelastic in the short term due to output, capacity constraint and then changes in technology over time make it more elastic only subject to known deposits / reserves

267
Q
  • Award of contracts and licenses
  • Regulation and monitoring of operations
  • Collection of taxes and royalties
  • Revenue distribution and management
  • Implementation of sustainable development policies and projects

All form part of what?

A

Extractive industries value chain

268
Q

What are examples for the two types of economic instruments for recycling:
those that create a financial disincentive for not recycling (2),
those that create a financial incentive (2),
and a mix of both (2)

A

Polluter pays = taxes and charges
Subsidies and public facilities
Deposit-refund schemes and variable pricing

269
Q

There are two main types of static efficiency: ___ efficiency and ____ efficiency. _____ efficiency occurs when a firm is producing at the lowest point on its average cost curve. _____ efficiency occurs when a firm is producing the goods that consumers want at the lowest possible cost.

A

Productive
Allocative

270
Q

If produce price were to increase, what is the effect on land rent?

A

New D’max is established (which reaches zero output per hectare), previously submarginal land not used in Dmax now used for production

271
Q

Renewable resources are ____-genous

A

Homo

272
Q

Dynamic optimization problem involves the choice of a path of resource extraction
Rsubt over the interval t = 0 to t = T that satisfies ____ (2)
To maximize, _____ rate must be equal at each point in time. If this weren’t the case, ____ could increase by shifting extraction.

A

The resource stock constraints and maximizes welfare
Discount
W

Economics & Policy (2 decks)

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