Lec4_08 - Why Environmental Problems Exist Administrative...

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Why Environmental Why Environmental Problems Exist Problems Exist
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Administrative Stuff Administrative Stuff Next week’s section: sample problems First homework posted on CTools Due Friday, Jan. 18 After today, you’re ready Check CTools site for useful information
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Last Time Last Time The Benefits & Costs of Efficiency as a Welfare Criterion Environmental Goods as Economic Goods
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BuRec: MC or AC pricing? BuRec: MC or AC pricing? Efficiency criterion Which is efficient? Is it therefore good? 0 10 20 30 40 50 0 1 2 3 4 MAF $/AF MC AC Demand
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Today Today When markets work Why markets fail for environmental goods Other market problems lead to other fields in economics
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Scarce Good Scarce Good Definition: Q D > Q S when P = 0 There is an opportunity cost Q $/Q Demand Supply
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Economics: Study of the allocation of scarce resources Environmental goods are scarce Environmental goods are appropriate for economic analysis
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Making a Market Making a Market What’s needed for trade (even if imperfect)?
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Lec4_08 - Why Environmental Problems Exist Administrative...

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