EC238 Lecture 33: EC238 – Chapter 1 & 2
Document Summary
Economic efficiency when all resources are being put to their highest value use or the economy reaches the desired outcome using the least possible resources. Horizontal equity treating similarly situated people the same way. An environmental program that has the same impact on an urban dweller with k income as a rural dweller with k income. Vertical equity how a policy impinges on people who are in different circumstances, in particular on people who have different income levels. Intergenerational equity whether future generations have the same opportunities as current generations. Externality when the actions of one or more individuals affect the wellbeing of other individuals without any compensation taking place. Precautionary principle society should weigh the trade-off between the cost of measures taken today versus benefits in terms of reduced future risk. Community indifference curve graph of the relative values that people in society place on conventional economic output and environmental quality.
