Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
58 Cards in this Set
- Front
- Back
|
What are the three basic question societies ask?
|
1.what to produce
2.How to produce the desired product mix 3.How to distribute production |
|
|
What are the our objectives in economics?
|
1. produce oods and services in most efficient way possible (economic efficiency)
2. Those goods should go to those that value them the most (social efficiency) |
|
|
What are the seven outcomes of market equilibriaum?
|
1. consumer need met at lowest price possible
2. consumers maximise their satisfaction 3. capitol allocated efficienctly 4. labour and othe resorces are allocated efficiently 5. producers seek efficient levels of output 6. land is allocated efficienly 7. there is no redistribution of income that will result in an increase in net benefits |
|
|
What are nine assumpions required for markets to yield social optimum?
|
1.firms and consumers are rational maximisers
2.efficient property righs 3.perfect competition 4.free entry 5.perfect inormation 6.mobile labour and capital 7.no externalities 8.priced inputs and outputs 9.satisfactory income distribution |
|
|
What do too little an too much production have in common?
|
They lead to dead weight loss
|
|
|
What is the definition of opportunity cost?
|
The value of the best alternative use of a resource.
|
|
|
What does the proper consideration of oppotunit cost allow us to do?
|
It allows us to ensure that resoures are directed to their best possible use.
|
|
|
What is the effect of a perfect and imperfect market on opportunity cost?
|
In a perfect market prices accurately reflect opportunity costs and market allocates resources to best possible use automatically
In an imperfect market prices do not reflect true costs and so require analysis to accurately calculate actual net gains to society |
|
|
What is equity?
|
-The distribution of wealth and income
-It can be in regards to intra-personal, inter-regional and inter-generational |
|
|
Are equity and efficiency postively correlated?
|
Not usually; A trade off between the two is usually require (log exports vs. appurtency).
|
|
|
What is derived demand and why is it applicable in the forestry setting?
|
It is the demand for a product that is aused by the demand for another product.
This is often the case or forest products, as they are the inputs for numerous things such as housing, newspapersm magazines and furniture |
|
|
What is the extensive margin?
|
The point where the forest inventoy has zero net value and further harvesting is uneconomical.
|
|
|
In perfect competition a particular firm can count on its supply curve being what?
|
Perfectly elastic, the same as the equilibrieum price and the same as the marginal revenue curve
|
|
|
At what quantity point tshould a firm produce to maximise its surplus in perfect competition?
|
Where marginal cost equals marginal revenue (supply curve, equilbium price)
|
|
|
What is the difference between zero or normal profits.
|
There is no "profit" under perfect competition, just zero or "normal profits.
If there are economic profis under perfec compettion it is a sign of disequilibrium |
|
|
Why under perfect competition are the expecte profits only "normal"?
|
Because perfect competition assumes all factors of production are freely available and oppotunity cost is market price.
|
|
|
What is the difference between economic profits and economic rent?
|
Economic rent occurs during market imperfection or inherent diffrences in the productivity or quality of a resource.
|
|
|
What is the mathematical definition of economic rent?
|
The difference between the price paid for a factor and its opprtunity cost.
|
|
|
What is an example of the diffierence between economic rent and profit?
|
You have land that can grow 10% more timber than anyone else.
Does this mean you costs are 10% lower? No, your land is simply that much more productive One could lease the land an enoy rents associtatied with hiher paymens because of productivity. |
|
|
Economic rent....
|
Excess profits assigned to land are called scarcit rent or economic rent.
|
|
|
Why is the market supply curve for economic rent vertical?
|
*****
|
|
|
Is the firm perfect competition equilibrium different for profit and rent?
|
Area between marginal revenue and marginal cost equals rent and producer surplus....
Doesnt look different |
|
|
What happens to rent on forest land when stumpage is applied?
|
Producer loses portion o surplus to government?
Deadweight loss is incured becaue logger will harvest less than optimal The price of product remains constant |
|
|
What is stumpage?
|
The term used to describe the price paid for standing timber
|
|
|
What are three alternative stumpage systems?
|
1. fixed schedule
2. appraisals 3. Competitive auctions |
|
|
What are property rights?
|
The description of ownership rights over resources
|
|
|
Why are property rights important?
|
Onership is a dundamentl starting point over who makes the decisions of how the asset will be utilized, who recieves the benefits and how it will be managed
|
|
|
What is the relationship between property rights and market failure?
|
In the idealized world a basic assumption is that all goods are private and privately owned. However in some cases property rights are either lacking or oncomplete. This can lead to market failure
|
|
|
Why are property rights sometimes lacking or incomplete?
|
It can be caused by governance issues (land title in south america), a matter of policy (not establishing rights), or an inherent characteristic of the good.
|
|
|
What are some causes of market failure related to property rights?
|
1. failure can occur due to presence of externalities
2. due to inherent characteristics of the good, example public goods 3. rights may be assigned but they are ineffective (common property and open access) |
|
|
What are rival goods?
|
The consumption or use detracts from someone else's
|
|
|
What are excludable goods?
|
Goods that you can "put a fence around" or prevent someone from using
|
|
|
What is the term for excludable and rival goods and what are some examples?
|
Private goods. bottled water electric power, backpacks
|
|
|
What is the term for non rival but excludable goods?
|
Club goods. Public land recreation, pay television, uncongested library
|
|
|
What is the term for rival but non-excludable goods?
|
Common pool. shared aquifers, shared grazing land, oil deposits
|
|
|
What is the term for non-rival and non excludable goods?
|
public goods. common knowledge, flood control, lighthouse
|
|
|
What is the problem with public goods?
|
Market will not produce the right amount. This causes problems with knowing the optimal level to produce and the free rider problem
|
|
|
What are some potential solutions to the problems with public goods?
|
-government ownership or provision
-tax incentives or subsidies |
|
|
What are some examples of different institutional arrangements over forest rights?
|
-collectively owned forests (indigenous groups)
-public ownership of land but private ownership of timber |
|
|
What are the four key features of ownership rights?
|
1. the right to ues the good
2. the right to benefits from that good 3. the ability to transfer that right 4. enforcement of those rights |
|
|
What are the keys to home ownership?
|
-right to build home
-enjoy home rent home |
|
|
What are the different aspects that affect the value of ownership rights?
|
1. comprehensiveness
2. duration 3. transferability 4. exclusitivity 5. benefits conferred 6. divisibility |
|
|
How do governments create forest tenure?
|
By transferring certain property rights to forest resource from crown to private sector individuals or groups for differing time periods and subject to various conditions
|
|
|
How comprehensive are BCs forest tenures?
|
Apart from community forest agreements the only rights provided by the various forms of tenure is right to harves crown timber
|
|
|
What are the characteristics of the size and type of BC crown tenure?
|
Compared to other provinces volume based licences are important
-More than 70% of bc aac is allocated through volume based tenure |
|
|
What are the transferability and divisibility characteristics of bc tenure?
|
Currentyl licenses can be subfivided and transferred without requiring consent
|
|
|
What are the fiscal obligations of bc crown forest tenures?
|
-must pay stumpage to provincal government
-annueal rent levied on a per hectare basis for are tenures and on basis of allocated aac for volume baesd tenures |
|
|
What are some of the problems associated with current bc tenure system?
|
1. limited rights for licensees
2. no licencesee equity in 2nd growth timber crops 3. prevalence of volume based tenures 4. increasing attenuations of licensees rightst 5. insecurity |
|
|
What are three desirable qualities of taxes and charges?
|
1. nuetrality. neutral charges do not create incenties to change behavioud
2. equity. distribution of income. forest owners capture economic benefits that would otherwise go to someone else 3. simplicity. the ease of administrtion, understanability, and costs of enforcement |
|
|
How is upset stumpage priced?
|
1. volume estimated from inventory data
2. value of price is determined from market information. 3. harvesting costs are assessed 4. allowance for operators profit and risk are deducted |
|
|
What is the MPS?
|
Market price system, which attmpts to let market forces determine stumpage rates
|
|
|
When does an externality occur?
|
when a market transaction between a buyer and a seller directly affect a third party (a bystander) and that third party recieves no compensation for impacts produced by transaction. positive or negative
|
|
|
What is a common pool resource?
|
A resource for which it is costly to exclude use. it is associated with common property arrangement. The problem with it is that overuse tends to occur
|
|
|
In an open access situation do the users typically maximise the total benefit of the group as a whole?
|
NO
|
|
|
What are the trade-offs between common propert and private property?
|
Exclusion and coordination costs
- private property favoured where exclusion costs are lower and coordination costs are higher - common property favoured where exclision costs are greater and coordination costs are higher |
|
|
When are privatization and assignment of liability useful?
|
When there is no market (no rights assigned) or rights are lacking there may be the possibility of using market arrangements
|
|
|
What arent non-market forest values marketed?
|
1.market wont work
2. too expensive to devise market system 3. govt want to give away for free |
|
|
What are the two approaches to value non-market goods?
|
revealed preference (look at how much people pay indirectly for product)
stated preference (ask people) |
