Unit 3: Learning Objectives and Lesson Flashcards
How can pollution and environmental damage be represented in economics
Externalities
Internalizing Externalities: taxes/ quotas
Optimal Pollution levels
What economic policies can be instituted to respond to environmental problems
-Pigovian taxes
-Coase Theorum
Why are resources such as fisheries often damaged through excessive use
Common Property: Tragedy of the Commons
What policies are effective for managing common property resources
Quotas
License Fees
Transferable Quotas
What is Elasticity
% Change in Quantity demanded/ % Change in Price
What does an Inelastic Demand Curve look like
Vertical
What does a complete elastic curve look like
Horizontal
If a Slope is Steep what type of elasticity is it
Inelastic
If a slope is flat what type of elasticity is it
Elastic
What happens to price and supply when externalities are introduced
Less quantity at higher price
Social Price & Social Quantity: will be less than Market equilibrium
How can we internalize Externalities
Pigovian tax: tax forces supply curve to the left: less quantity demanded, less supplied
Coast Theorem: assign and enforce property rights
What are some challenges of Pigouvian tax
What do you set price at
Equity concerns
Political difficulties
What are the 4 classes of Goods
Common Property
Public Goods
Private Goods
Club Goods
How to control Tragedy of the commons
Tradeable Quotas: efficient if TRANSFERABLE/ ENFORCEABLE/ EXCLUSIVE
Pigouvian tax
Coercive Laws
Self Government Institutions
