Chapter+2 - Chapter 2 Valuing the Environment Concepts...

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Chapter 2 Valuing the Environment: Concepts
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Introduction This chapter introduces the general conceptual framework used in economics to approach environmental problems.
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Objectives Define the economic approach and distinguish between positive and normative economics. Derive and define a demand curve and distinguish between individual and market demand, total and marginal benefits, total willingness to pay and marginal willingness to pay. Define opportunity cost. Derive and define the marginal cost curve. Distinguish between marginal and total cost. Define present value and the discount rate. Illustrate the basic discounting equations.
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Objectives Calculate the present value of net benefits and show how benefit-cost analysis can be used to evaluate specific options. Derive net benefits graphically. Define optimality and economic efficiency. Distinguish between static efficiency and dynamic efficiency. Use the equimarginal principle to illustrate both efficiency and inefficiency. Define Pareto Optimality. Apply these concepts to real world examples.
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The Economic System and the Environment
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The Environment as an Asset Closed system vs. Open system Closed system: A system where there are no inputs and no outputs of energy and matter
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This note was uploaded on 04/14/2010 for the course ECON 370 taught by Professor Helfand during the Winter '08 term at University of Michigan.

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Chapter+2 - Chapter 2 Valuing the Environment Concepts...

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