INTRO POLICY ANAL
INTRO POLICY ANAL ESM 251
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This 3 page Class Notes was uploaded by Weston Batz on Thursday October 22, 2015. The Class Notes belongs to ESM 251 at University of California Santa Barbara taught by Staff in Fall. Since its upload, it has received 43 views. For similar materials see /class/226969/esm-251-university-of-california-santa-barbara in Environmental Science and Resource Management at University of California Santa Barbara.
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Date Created: 10/22/15
ESM 251 Sections 11102008 1 Survey of previous experience in Micro 0 classes 1 Z to majored in econbiz econ 9 Please give feedback about the speed and difficulty of the course 2 Policy Analysis 7 why do we need it Schelling 7 why are so few people sitting in the front row today 7 buffer zone Stavins article 7 public good externalities env v resource economics We affect each other This might be one of the reasons you are studying here at Bren And why must it be rigorousquantitative is there a right way Economists usually use a benefit7cost analysis positive and choose between projects based on efficiency greatest net benefit normative 3 Challenge Assumptions 9 Video 4 Assessing the assumptions and principles 7Choices Opportunity Cost and Surplus 7Thinking at the margin Consumer Theory Consumers have preferences over choices 9 completeness 2 These preferences are well7ordered 9 transitivity 3 Law of demand a More is better 9 non7satiation b Diminishing marginal willingness to pay 7 each additional unit has less value a relates to TOTAL demand relates to MARGINAL demand 7 should be able to graph these two concepts and relate them 5 ln7class problems Opportunity Cost 7 Going skiing is worth 80 per day to you It only costs 40 to go skiing travel ski lift tickets equipment Alternatively you can work as my research assistant for the day for 45 In fact you find my research so fascinating you would do it for free These are your only two options for the day Should you go skiing or work as my assistant What is your surplus Show quantitative work Skiing 80 7 40 40 value RA 45 7 0 45 value 9 choose RA with a 5 surplus 45 7 40 ESM251 Dwscusswon 11074022000 ECONCNH COUNT NG mphcn 00639s Remembeno coum may you are gwmg up Opponunny cost we value a me mghest oppo urmy 09 Why 5 merest avahd opponunn Cost Dmerenoe between pre erenoesvames and woe006W awed margma costs or benem Farmerma has growmood and 5 already at market Factory ayeaay bum Focus on EU me re evam costs a 2004 Toyda F an MOOma 40 mpg or a 2004 Ford F450 woomo 15 mpg Vou mosuy We ms orcarpod and omy pan to dnve 000 rm m month max vymcn cardo you rem Do you need more n39orma on per ga on M may pnoe o g are you mdmerem between me twovemdes and mess onsets are more cosny Vorme F7150 dashed mes mugure 3 per ga on7 lt Frwsu U BUD Wes SUPPLY DEMAND EQUILIBRIUM Seasonality Why do apples go down in price during months when they are consumed the most while price of beachfront cottages go up Finding the equilibrium Graphically v Algebraically Market Supply P 2 3Q Market Demand P 10 Q Equilibrium Where the lines intersect and setting the equations equal to each other is exactly the same Suppose a market has 30 consumers each with individual demand curves willingness to pay of P 120 60q What is the MARKET DEMAND Change in equilibrium v SurplusShortage These are distinct terms When demand or supply shift from an external MARKET force then there is a change in equilibrium price and quantity When price or quantity is fixed by the GOVERNMENT policy then there is said to be a shortage or surplus from a price floor or price ceiling ELASTICITY Ownprice Income Crossprice elasticity Elasticity Elasticity Formula AQ AQ AQA AP AI APB Discrete point Qz Q1P2 P1 Qz Q1I2 I1 02A Q1AP23 P18 also called arcelasticity Q1 Q1P2 P1 Q1 Q1I2 I1 Q1A Q1AP23 P13 Responsiveness to change in price ep 1 Unit Elastic ep gt 1amp lt O lnelstc ep lt 1 Elastic Calculus dQlP dQll dQAlPBl dP Q dl Q dPB QA Interpretation Elastic Inelastic Normal llnferior Complement Substitute e1 gt 0 Normal e1gt 1 Luxury e1 lt O Inferior ecp gt 0 Substitute ecp lt O Complement
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