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Resources and Environmental Economics First Term 2019/2020
Lecture 2
PowerPoint Slides prepared by
Dr. Walaa W. Diab FCOM-BU
Dr. Walaa Wageh Diab
Resources and Environmental Economics
First Term 2019/2020 COURSE SYLLABUS
PowerPoint Slides prepared by
Dr. Walaa W. Diab FCOM-BU
1-‐ Instructor Contact Info. Name: Dr. Walaa Wageh Diab
Office Hours: from 8:30 am to 9 am each Wednesday Online Office Hours: Each Friday at 1pm to 3 pm
Class meets Wednesday Email: [email protected]
Course website: Lecture slides and exercises accessible through My official page:
hVp://bu.edu.eg/staff/walaadyab4
Dr. Walaa Wageh Diab
2- Course Materials A-‐ (Text Book) Book 1: • Tietenberg, T. and L. Lewis. 2015 Environmental and Natural Resource
Economics,10th Edi^on. AddisonWesley: Boston, MA. The 9th edi1on available at:
h6ps://himayatullah.weebly.com/uploads/5/3/4/0/53400977/environmental_and_natural_resource_economics_by_tom_1etenberg_9th_edi1on.pdf Book 2 • Economics: A Contemporary Introduc^on, 7e William A. McEachern
Available at: h6ps://sangu.ge/images/Economics1.pdf
Dr. Walaa Wageh Diab
Book 2: Chapter 1:
The Economic Problem: Scarce Resources, Unlimited Wants | Resources | Goods and Services | Economic Decision Makers | Microeconomics and Macroeconomics| Norma1ve Versus Posi1ve|
Book 2: Chapter 2
Opportunity Cost
Book 1: Chapter 2 The Environment as an Asset
Dr. Walaa Wageh Diab
Chapter 1 The Art and Science of Economics
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
Ø Economics is concerned with the problem of allocating scarce resources among
competing uses. When something is scarce, allocating it to one use means we forgo the
opportunity for another use, creating an opportunity cost. An allocation is good when
it generates net benefits that exceed the opportunity cost. Thus, at the most basic
level, economics is about understanding opportunity costs. All human societies are
confronted with this fundamental problem.
Ø Economics is a Dismal Science---about Constrained optimizations –Trade off
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
Whereas microeconomics examines the individual pieces of the puzzle, macroeconomics steps back to look at the big picture—
the performance of the economy as a whole as reflected by such measures as total produc^on, employment, the price level, and economic growth.
Dr. Walaa Wageh Diab
Economics is the study of how humans make decisions in the face of scarcity. Absolute scarcity does not really exist in the true sense of the word except for a few rare excep1ons and even those excep1ons may not remain relevant in the future.
v Economics is the science of how decisions of either individuals or
societies should be based on the effective allocation ( the Right
choices according to the relationship between ends and means) of
scarce resources among alternative desirable ends.
the Greek word "okonomie" (household management)
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
Scarcity is central to economic theory. Economic analysis is fundamentally about the maximiza^on of something (leisure 1me, wealth, health, happiness—all commonly reduced to the concept of u1lity) subject to constraints. These constraints—or scarcity—inevitably define a trade-‐ off. For example, one can have more money by working harder, but less 1me (there are only so many hours in a day, so 1me is scarce). One can have more apples only at the expense of, say, fewer grapes (you only have so much land on which to grow food—land is scarce). Adam Smith considered, for example, the trade-‐off between 1me, or convenience, and money. He discussed how a person could live near town, and pay more for rent of his home, or live farther away and pay less, “paying the difference out of his convenience”.
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
1. The Economic Problem
q Scarce resource q Not freely available è when its price exceeds zero q Inputs
q Factors of production q Used to produce goods and services Dr. Walaa Wageh Diab
1. The Economic Problem
Central Problems of an Economy
Dr. Walaa Wageh Diab
1. The Economic Problem
Dr. Walaa Wageh Diab
2. The Economic Resources
Dr. Walaa Wageh Diab
Dr. Walaa Wageh Diab
2. The Economic Resources
Dr. Walaa Wageh Diab
2. The Economic Resources
Dr. Walaa Wageh Diab
2. The Economic Resources
ü Capital includes all human creations used to produce goods and services. Economists often distinguish between physical capital
and human capital.
ü Physical capital consists of factories, machines, tools, buildings, airports, highways, and other human creations employed to produce goods and services.
ü Human capital consists of the knowledge and skill people
acquire to enhance their productivity, such as the taxi driver’s knowledge of city streets, the surgeon’s knowledge of human biology, and your knowledge of economics.
2. The Economic Resources
Dr. Walaa Wageh Diab
3. Goods and Services
Dr. Walaa Wageh Diab
3. Goods and Services
Goods and services that are truly free are not the subject maVer
of economics. Without scarcity, there would be no economic problem and no need for prices.
clean air and clean sea-‐ water have become scarce.
Dr. Walaa Wageh Diab
4. Market
Dr. Walaa Wageh Diab
5. Economic Decision Makers or participants, in the economy
Dr. Walaa Wageh Diab
5. Economic Decision Makers or participants, in the economy
Dr. Walaa Wageh Diab
5. Economic Decision Makers or participants, in the economy
Dr. Walaa Wageh Diab
6. Circular-Flow Model
Dr. Walaa Wageh Diab
6. Circular-Flow Model
