ECONOMICS AND THE ENVIRONMENT. HOW CLEAN IS CLEAN ENOUGH ? WHAT IS THE RIGHT AMOUNT OF POLLUTION? WHAT IS THE RIGHT AMOUNT OF RAINFOREST? WHAT IS THE RIGHT AMOUNT OF WHALES?. ECONOMIC CONCEPTS. SOCIAL GOALS ALLOCATION OF RESOURCES ALLOCATIVE EFFICIENCY COST EFFECTIVENESS NET VALUE.
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HOW CLEAN IS CLEAN ENOUGH?
WHAT IS THE RIGHT AMOUNT OF POLLUTION?
WHAT IS THE RIGHT AMOUNT OF RAINFOREST?
WHAT IS THE RIGHT AMOUNT OF WHALES?
SUPPOSE THERE ARE TWO KINDS OF DRILL BITS THAT MAY BE USED TO DRILL FOR OIL…ONE MADE OF A SPECIAL STEEL ALLOY, THE OTHER OF DIAMONDS. THE HARDNESS OF THE DIAMONDS ALLOWS THE DIAMOND DRILL TO CUT THROUGH 10,000 FEET OF ROCK BEFORE IT HAS TO BE REPLACED. THE STEEL BIT MUST BE REPLACED EVERY 2000 FEET. THE DIAMOND BIT COSTS $2000 WHILE THE STEEL BIT SELLS FOR $300. WHICH DRILL BIT IS MORE EFFICIENT?
AS WITH EVERYTHING IN ECONOMICS: IT DEPENDS!!!
if its goal is allocative efficiency?