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Ace 310 Group Project Regarding the Usage of Natural Resources

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ACE 310

Team Assignment

Group 7

1. Explain two methods to increase the demand for recycled goods. Use a graph to show the relative change between recycled material and virgin material for one of the methods.

Increasing the demand for recycled goods can benefit both individual firms and society as a whole. By increasing the recycled ratio, firms increase the amount of goods recycled compared to their total amount of goods. By increasing the amount recycled the firm is not wasting any resources and producing the most cost efficient level. Society then in turn benefits by the decrease in wasted resources and great sustainability.

The Government has two legislative ways to increase the demand for recycled products. The first being minimum recycled content mandates. These mandates require manufacturers to include a certain percentage of recycled material in certain products. By doing this, the government is forcing the demand for recycled goods to increase by placing a percentage of recycled goods in all of these products.

The second way the government increases demand for recycled products is requiring the labeling of recycled products. By forcing producers to label their products with the amount of recycled material gives the consumers the power to make educated decisions on what they purchase and its potential affect on the environment. This also can prompt a competition between companies to have the highest recycled material percentage in order to use it as a marketing tactic. This in-turn then drives the demand for recycled products higher.

Both of these methods increase the total amount of goods recycled, the first by a command and control effort. The labeling of recycled products also can be a command and control but also creates an incentive based control where firms use their labeled increased amount of recycled products as a marketing tactic. For example, with the minimum amount of recycled material in products mandate, each year the government can slightly increase the minimum level. The graph below shows over the three-year period the slow growth of the percentage of recycled goods produced in comparison to the total goods produced.

2. Does increasing energy efficiency always decrease consumption of energy? Support your answer.

According to the core assumption of conventional energy, the model that analyzes the energy efficiency is linear and direct. Meaning, when a given percent of efficiency is gained, there should be an equivalent percent reduction in the total energy use. However, in the real world, things are more complicated than what the economics models have forecasted.

In a lot of cases, an increase in energy efficiency will result in a decrease of consumption of energy. However, there have been evidences showing that there is the rebound effect that will actually lead to an increase in energy's consumption. From the producers' aspect, an increase in energy efficiency will reduce the cost of production for the companies, which makes them demand for a higher production. From the consumers' aspect, the cost-efficient saved them money, but might makes them re-spend money saved through efficiency on other energy-consuming goods and services which will eventually increase the total usage of energy as a whole.

3. Show that if the marginal costs of water supply are downward-sloping, then pricing so that marginal cost equals marginal wiliness to pay means that the water company will experience losses.

In the case of ample supplies and where relatively modest additions to the conveyance system are sufficient to provide substantially more capacity, the marginal cost of water supply goes down. At this level, the water company will have revenues insufficient to cover costs.

According to the graph above, if we set the price at MC=WTP, the benefits we receive is actually lower than the cost, which means the company is losing money.

4. Explain why urban sprawl occurs (using economics). Is this the best use of land?

By definition, urban sprawl occurs when "urban or suburban areas with lower population densities overrun rural areas." Nowadays, with the population of urban increase rapidly, more land is needed to build housing



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