Lecture_2 - NR Econ Lecture 2. Topics today: 1. Economic...

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NR Econ Lecture 2. Topics today: 1. Economic welfare: review and extensions to scarcity rent 2. Module II: Land Use A. Introduction B. Model 1: Heterogeneous Quality and Ricardian Rents C. Empirical Application: The Projected Impact of Global Warming on U.S. Agriculture
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The Ecological Footprint (recall from last time) Take the quiz at http://www.myfootprint.org/
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Economic welfare: review and definitions Definitions Economic welfare: the level of individual well-being or group well-being in a market or in the economy Welfare economics: the study of the level and distribution of individual and group well- being
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Economic welfare (cont.) Consumer’s surplus: a monetary measure of consumer well-being; measured as the excess of willingness-to-pay over price from consuming a good or service. Producer’s surplus: a monetary measure of producer well-being; measured as the excess of price over marginal cost from selling a good or service.
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Economic welfare (cont.) Scarcity rent: the monetary surplus accruing to an input in fixed supply. a form of producer’s surplus created by the excess of price over marginal cost of producing the input important to the topic of natural resources; many natural resources are in fixed supply
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Types of scarcity rent Ricardian rent. Rent created by variation in quality of a particular resource. Von Thunen rent. Rent created by spatial variation , or location, of a particular resource. Hotelling rent. Rent created by the finite supply of a nonrenewable resource that is depleted intertemporally.
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David Ricardo, 1772 – 1823. One of Ricardo's chief contributions, arrived at without mathematical tools, is his theory of rents . Ricardo explained that as more land was cultivated, farmers would have to start using less productive land. But because a bushel of corn from less productive
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Lecture_2 - NR Econ Lecture 2. Topics today: 1. Economic...

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