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Final 23 - Study Guide Chapter 23 Economics Environment and...

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Study Guide - Chapter 23 - Economics, Environment, and Sustainability \ Core Case : A New Economic Environmental Vision Economic growth and development centers on human needs, food, shelter, physical and economic security, and good health, with a bigger economy being a better economy. The debate over whether there are limits to economic growth has changed to a debate over the kinds of economic growth we should encourage. Neoclassical economists do not view natural resources as indispensable because substitutes can be found, and that continued unlimited economic growth is necessary for profit and jobs. Ecological economists emphasize that there are no substitutes for many vital natural resources, such as air, water, soil, and biodiversity. They believe conventional economic growth is unsustainable, as it degrades natural capital, and a new economic design of environmentally benefit development is needed. Environmental economists take a middle ground view, seeing some forms of economic growth as unsustainable, but believing it is best to reform current economic systems of resource use and not redesign them. The environment and the economy are intimately linked and a shift to an environmentally sustainable economy would create new jobs and new investment opportunities that sustain all life on the planet. How Are Economic Systems Related to the Biosphere? An economic system is a social institution where goods and services are produced, distributed, and consumed to satisfy people’s needs and wants. These systems are supported by three types of resources: 1) natural capital : resources and services produced by the earth’s natural processes, 2) human capital : people’s physical and mental talents-labor, innovation, culture, and organization, and 3) manufactured capital : the items made from natural resources by humans, machinery, equipment, and factories. In a market-based economic system , buyers and sellers compete in markets to make economic decisions on good and services to be produced, distributed, and consumed. The supply, demand, and price govern the competitive interacts. When supply and demand are equal the market price will be at equilibrium and the supplier’s price will match what the consumer is willing to pay for the item. Free-market economists believe in private ownership of all resources and that operating without government interference will solve environmental problems. They argue: 1) the true value of resources will be determined by market interaction and 2) resources that are privately owned have great value to their owners. To operate, free- market economics requires that buyers and sellers not coerce or mislead one another, but in capitalist markets, competitors try to increase profits by driving one another out of business.
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