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Econ 30 (Cost/Benefit Analysis (Taxonomy of Cost (Compliance Cost (Cost…
Econ 30
Cost/Benefit Analysis
Taxonomy of Cost
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Social Welfare Cost
Cost accumulated when something affects the people unexpectedly. When something affects the public through indirect cost to the economy.
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Taxonomy of benefits
Use Value
Benefits that can be calculated. Such as the provisional benefits that stye have or the cultural ex. Education or recreation. Another would include servicing benefits or ecosystem services such as CO2 sequestration.
Non-use Value
Existencial value- the benefit we get from knowing that it exist. also, the benefit that we get knowing that our children will get to experience such beauty.
Ways to measure cost
General Equilibirum
Calculating the cost of the general economy of the place not trying to find the specific equilibrium of the place
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Ways to measure benefits
Market Value Analysis
Use how it affects the economy of their or how the benefits to people are affected. Ex: Pollution will negatively affect people who run a fishery because there are less fish.
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Free Riding
Occurs with non-excludable resources where people take advantage of someone doing all the work and they benefit the same even with paying nothing and no work.
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open-access resource: Non-excludable but rival because no one can be denied use but them taking it will affect someone else. The best example is fishing- no prohibits toward fishing in some places but when someone takes all the fish no one else can benefit.
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