AREC/ECON 478 PROFESSOR LUECK NATURAL RESOURCE ECONOMICS Spring 2009 HOMEWORK ASSIGNMENT #5 1. E ARTH D AY B ET . On Earth Day, 1980 there was a bet between economist Julian Simon (author of The Ultimate Resource and other “optimistic” books on growth) and ecologist/environmentalist Paul Erlich (author of The Population Bomb and other similar “doomsday” books). Erlich selected $200 worth of 5 metals, for a total value of $1,000. Simon bet that the price of the portfolio of metals would fall (in real terms) by Earth Day 1990, while Erlich (ever the pessimist) bet that they would increase during the same period. When 1990 came and the data were checked Simon easily won; prices had fallen from $1,000 to $423. Does this show that these natural resources were less scarce in 1990 than in 1980?
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