Resource Economics

"Study of how people and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption, now or in the future, among various people and groups in society.

It analyzes the costs and benefits of improving patterns of resource allocation.

  Study of the interactions of living organisms with one another and with their nonliving environment of matter and energy; study of the structure and functions of nature. 
    Environmental Resource
 Something that is useful and valuable in the condition in which we find it. (Ex.-land, water, sunlight, temperature, air) 
   1)Things that are unknown, or for which no uses have been found are not technically considered resources since have no econ. value. 2) Is supply of some useful thing is so large, relative to demand, that it has no economic value, it is not a resource.


    What is not a resource?  (2 things) 
     Amenity Migration 
  What is it called when someone moves to a place because of desirable living conditions? 
   First Law of Thermodynamics 
 Energy is neither created nor destroyed by any physical or chemical process; it is merely transformed from one form of energy to another 
   Second Law of Thermodynamics 
   Any system plus its surroundings tends spontaneously toward increasing entropy
    Open System 
   Both matter and energy are exchanged between the system and its surroundings.
    Closed System 
  Energy, but not matter is exchanged between the system and its surroundings. 
  Life occurs in only a portion of the atmosphere, hydrosphere, and lithosphere, this system, called the ____________ makes up the life-support system for our planet. 
  True or False  The heat energy which leaves Earth environment has lower entropy than the solar enery that comes in. 
  What is an individual living being known as? 
 What is a group of individual organisms of the same kind known as? 
    Natural Community 
  A group of plant and animal populations occupying and functioning in a given area. 
   Natural communities combined with non-living components of the environment
    1. Energy2.

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Chemicals3. Physical factors 

   What non-living (abiotic) components make up an ecosystem?
  1. Producers (autotrophs)2. Macroconsumers (heterotrophs)3. Microconsumers (saprotrophs, decomposers) 
  What are the living (biotic) components of an ecosystem? 
   Climate and Soil 
  What are the two major limiting factors of an ecosystem? 
  1. One way flow of energy 2.

Chemical cycling 

  What are the two basic processes in any ecosystem? 
   Natural Development 
  ______________ refers to natural changes in the quantity and/or quality of biotic and abiotic components of ecosystems. 
  Flow Resource 
  Resource which for a given time period exists as a continuous stream with given quantity and quality dimensions (examples-sunlight, wind,tides,rainfall). 
    Fund Resource 
  Resource which for a given time period exists as a fixed stock with given quantity and quality dimensions (examples-coal deposits,mineral deposits,forests,fish and wildlife pops.) 
    Exhaustible, nonrenewable 
  Fossil Fuels , minerals, and soil are examples of this type of fund resource. 
   Wind is an example of a ____________ flow resource.


  False(they are exhaustible,renewable fund resources) 
    Forests, fish and wildlife populations are exhaustible, renewable flow resources. 
   Malthusian doctrine 
1. resources can support in production of food only at an arithmetic rate (2,4,6,8). 2. population grows geometrically (2,4,8,16) 3.

1 & 2 catastrophe- population growth will be kept in check by limited food supplies (resource availability) at subsistence levels of living-have famine, disease, strife Fundamental points of which doctrine? 

   1) increase in capital, technology, and productivity, allowed for more production of food 2) resource discovery 3) resource substitution  4) demographic transition 
     What are the four things Malthus failed to consider?  
   Neoclassical/human capital perspective 
  Which scarcity philosophy emphasized the importance of capital in the production process, and said that capital investment can be substituted for limited resources and production can be increased or maintained? 
    False(the Materials Balance Approach says this) 
  True or False The Malthusian doctrine stated that we must maintain a healthy environment, conserve and manage resources carefully, in order to ensure continued economic health and high quality of life. 
    1) physical supply2) economic supply3) cost 4) price 5) rent 
  What are the 5 available options for measuring resource scarcity? 
    Physical Supply 
     Which measure of scarcity may be too optimistic since some supplies may never be economical to use? 
    Economic Supply 
   This measure of scarcity refers to reserves (as opposed to resources) and may be too pessimistic because of uncertain changes in price, technology, information, etc.
  True or False As scarcity increases, price increases. 
 1) Speculation based on false information 2) may be distorted by inflation 3) government intervention into markets 4) manipulation of prices through imperfect comp. 5) political uncertainty 6) measurement error 
    Give two reasons why price may be a misleading indicator of scarcity. 
   As scarcity increases, cost _____________. 
  1) Technology 2) Government Intervention 3) Measurement Error 
   Give three reasons why cost may be a misleading indicator of scarcity. 
    David Ricardo 
   Who introduced the concept of land rent? 
     LR= TR-TVC 
   What is the equation used to find land rent? 
    False(increase in LR, means it would be becoming more scarce)
  True or False An increase in Land Rent on high quality land implies that high quality land is becoming less scarce. 
    Royalty= Price – Extraction Cost 
    What equation is used to find the value of a mineral resource in the ground (aka-royalty)? 
    Von Thunen Model 
    What model attempts to explain location decisions and patterns based on differences in land rents? 
1) increases in output price 2) decreases in costs of production 3) improved supply information 4) technological innovations 5) improvements in accessibility 6) government subsidies 
    What are some things that might cause the economic supply of a resource to increase?