EC238 Lecture Notes - Lecture 9: Ecological Stability, Demand Curve, Itunes
Document Summary
A unit of common access resource can be used only once, but no one can be prevented from using what is available; ie. ocean fish. Biological diversity the amount of genetic variation among individuals within a single species and the number of species in a community. Species have value beyond intrinsic value by providing ecological stability, and potentially providing sources of food, raw materials and medicines. The private market will not produce the efficient amount of biological diversity. Consumption is said to be indivisible when one person"s consumption of a good does not diminish the amount for others: ie. Underprovided in a private market because of free-riders. Free-rider someone who derives benefits from a commodity without contributing to its supply. For example, someone who does not pay taxes cannot be excluded from the provision of national defence. Efficient allocation is determined by the intersection of the demand curve and the marginal cost curve (msb = msc)
