MANAGEMENT

Management for Small Planet



Management for Small Planet

Question 1

Economic scale and throughput

Economies of scale occur if an x% increase in the use of all factors results in an increase of more than x% in the amount of product obtained shape the economies of scale leading to lower average costs can be illustrated with an example suppose a firm faces fixed prices of productive factors. That is, not pay lower wages but hire many workers will not get discounts on the price of steel or machinery whatever the quantity purchased in another case, an increase of, say, 100% in the number of all factors raises total costs by 100% as well (At constant prices, dual pricing for double factors.

With economies of scale, however, production increased over 100% with total costs rising more slowly than output, the average cost per unit decreases brings us to an important conclusion: if prices are constant factors the economies of scale imply long-term average costs decreasing. As, economy works against with the natural environment, the natural environment totally depends on the environment.

The economic value of nature

This is in essence a debate about valuation, in particular, about how people should value nature. Whether we call it “wildness” as Thoreau did, “untouched wilderness” as this motion does, “wild nature” as do some nature valuation experts, or the more prosaic “ecosystems and biodiversity” is perhaps less important than addressing what the institution of valuation means and does.

Following Douglass North, if we see institutions as “rules of the road” in an economy (laws, taxation, market regulations, as well as informal norms such as habits, conventions and ideologies), then valuation is another important human institution. Valuation can help us rethink our relationship with nature, alerting us to the consequences of our choices and behaviors.

Valuation raises fundamental questions such as what influences our relationship with nature. How does nature shape social and personal identities? What are the social and environmental consequences of different ways of relating to and using nature? Such questions are a form of self-reflection. Indeed, valuation is a tool for self-reflection, and can be an important feedback mechanism for a society that has increasingly distanced itself from the natural world from which it derives identity, culture and vital resources.

In economics, is there any such thing as “value beyond resources and other utility”? So by the very framing of this motion, we are being invited to a debate beyond the remit of economics, straying into moral philosophy.

The presence of externalities

In the presence of externalities the market equilibrium ceases to be effective: there is a "dead weight (e.g. Deadweight Loss), Pareto efficiency is violated, then there is a market failure. The effect of positive externalities from the consumer is the ultimate growth of the private consumer gain, also equivalent to the limiting gain of society. In this case, it would be best to increase the number of the product, but to make it pay for the ...