Assignment 2: Important concepts in Economics 30 points. SHORT ANSWERS
1. Read the articles “Shale Gas Extraction: The Need to be seen to be clean.” and
“Regulation Lax as Gas Wells’ Tainted Water Hits Rivers.” Natural Gas is yet
another source of energy that can be extracted from the ground. This is done via a
process called “hydro fracking”, the impacts of which have been frequently
criticized. Like every other resource, there is a finite amount of natural gas and its
extraction and use comes with potential benefit, direct cost and opportunity cost.
All three can be accounted for in monetary and non-monetary measurements.
a. What are the Macroeconomic Opportunity Costs for the extraction of Natural
Gas, as presented by The Economist & The New York Times Articles? (5pts)
b. What are the micro opportunity costs for “hydro-fracking”? (5pts)
c. What are the externalities associated with “hydro-fracking”? (4pts)
2. Read the article “Rich Man’s Burden”. Use marginal analysis to argue that rich
people should work less than the poor, then use opportunity cost to argue that they
should work more. (8 pts.)
3. Explain how the preanalytic vision of ecological economics leads to the
conclusion that macro-opportunity costs are inevitable. (8 pts.)