ECON 111 Notes - Common Resources

ECON 111 Notes - Common Resources - Econ 111 Notes Common...

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11/18/11 Econ 111 Notes – Common Resources I. Common Resources a. Characteristics a.i. Non-Exclusive a.ii. Rival b. The Problem (See hand-written notes) b.i. Overuse/Inefficient Overuse b.i.1. Depletion of the resource c. The Solution c.i. Privatize the Common Resource c.i.1. Example: Chickens, Turkeys, Pigs, Cows, etc. are the most slaughtered animals but aren’t extinct. Elephants, Pandas, etc. are the least slaughtered animals but are getting extinct. Why? Because animals like chickens, turkeys, pigs, and cows are privatized and are considered common resources as animals such as Elephants and Pandas are Public d. The Problem with the Solution d.i. Too expensive to Privatize II. Externalities a. Definition a.i. An externality is a cost or benefit that is incurred by a party that is not involved in an economic activity
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Unformatted text preview: a.i.1. Production or Consumption affects 1 st Party a.i.2. Negative or Positive Benefits affects 3 rd Party a.ii. Key: Not every economic activity has an externality a.iii. Problem is that you get too much or too less a.iv. Solution = Regulate, tax, or assign a property right a.v. Problems with regulation is that government don’t know optimum amount for regulation If there is barrier to entry, you’re not going to get the optimum social outcome III. Elasticity A. Price E of Demand 1) Formula 2) Classification 3) Graphs 4) Categories 5) Relationship to Total Revenue B. Price E of Supply 1) Formula 11/18/11 2) Classification 3) Graphs 4) Categories C. Income E of Demand 1) Formula 2) Categories D. Cross-Price E of Demand 1) Formula 2) Categories...
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