res econ test 1

Res econ test 1 - Resource Economics 263 Review Questions for Exam#1 1 Distinguish between normative and positive statements in natural resource

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Resource Economics 263 Review Questions for Exam #1 1. Distinguish between normative and positive statements in natural resource economics. Give an example of each: A. Positive economics (factual/static) -What has actually happened in the use of these resources in these time periods -How the world actually works, in terms of the interconnections of economic variables and the resulting rates of output, prices, and so on - Ie. Analysis of the rates at which mineral mining has grown over the last century, or if someone studies how log prices and interest rates affect the rate of deforestation in some region, or how fishers will respond to certain restrictions on their harvesting practices B. Normative economics (values/dynamic) -statements as to what people ought to do , come under the heading of normative economics -recommendations require placing value judgments on different outcomes that could result from different types of behavior - Ie. If an economist recommends limiting the catch season for a certain species of fish, or initiating certain policy changes to reduce the rate of soil erosion Note: Knowledge about how things actually work (positive) will allow better policies (normative) to be pursued. 2. What are the advantages of using willingness to pay as the basic concept of value in natural resources? A. By using willingness to pay we are able to use ordinary demand curves to measure the benefits accruing to people from given quantities of a good or service. B. Underlies questions such as benefits conferred on people when natural resources are used in production, as compared to the benefits they would provide if preserved. C. Underlies the question of evaluating the impacts of environmental programs and policies undertaken by local, state, and federal governments. D. Monetary index is the most convenient index of making value visible 3. If we do not use willingness to pay as a measure of value, what might be used in its place? A. When WTP is not used a measure of value, social benefits is another measure. B. Marginal Social Benefits are measured by the Marginal willingness to pay of all members of society for a certain good or service. C. MSB and MSC curves are both aggregate relationships – they represent the
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summed marginal cost relationships of all people and firms in our “society”.
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This document was uploaded on 10/07/2008.

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Res econ test 1 - Resource Economics 263 Review Questions for Exam#1 1 Distinguish between normative and positive statements in natural resource

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