Understanding Economic Efficiency

• The amount of wages paid out affects a company's willingness to endure maximum production and where the balance lies between production output and labor costs.
• Running machines at maximum output can take employees away from their families.
• Taking time away from an individual benefits the company owner by having machines work at maximum output.

Economic Efficiency Explained

• Economic efficiency occurs when resources are allocated optimally, waste is minimized, and each person is served in the best possible way.
• Maximizing output at $100 signifies maximum output from machines, and can signify the need of more employees to run those machines.
• More employees means paying more money in wages, which then affects profit.
• Consideration must be made about the balance of loss and benefit.
• It is vital to distribute economic resources efficiently in light of their scarcity
• Economic efficiency is reached when states allocate goods and factors of production in a way that maximizes social benefits and eliminates waste.
• Efficient economies feature a balance between social benefits and costs, alongside low production costs.
• It is impossible to re-allocate resources in such a balanced economic state without making specific individuals worse off.

Economic Efficiency Factors

• Production of goods is at its lowest cost.
• No individual can be helped by reallocating the goods, without making another person worse off.
• A balance between loss and benefit indicates economic efficiency.

Illustrative Example

• A clothing factory uses machines to sew clothing, having the potential to generate $100, $75, or $50 from clothing sales.
• The most efficient option is the one that results in $100; anything less is considered inefficient.
• A scenario to produce $100, does not take variables into consideration when considering the amount of labor needed to operate the machines.

Competition & Market Efficiency

• Competition in developed economies is generally seen as desirable for the country.
• Competition aids smooth market economy operation.
• Competition makes the economy more agile and responsive to changes.
• Whether the outcome achieved by competition in a market economy is optimum for society remains controversial, specifically regarding division of the "pie."
• It is necessary to have separate criteria for economic allocation (production and distribution) that is socially desirable versus one that is achieved by competitive markets.
• Competitive markets resulting in the best social outcome relies on how social welfare is defined.
• The Pareto criterion focuses on what is socially "best" by adopting the weakest criterion.
• The Pareto criterion is important for efficiency despite its shortcomings in comparing many social allocations.
• In a two-person economy with Anna and Brewster, any allocation inside the feasible set ABO makes it possible to find a Pareto preferred allocation.
• Any allocation towards the upper right to improve both Anna's and Brewster's utility, from any interior allocation, is a Pareto improvement.
• All allocations lie on the line AB are as good as possible, in a Pareto sense, leading to the notion of Pareto frontier.
• The Pareto frontier consists of all allocations for which there are no allocations that are Pareto preferred that cannot be improved in the Pareto sense.
• Another allocation that is preferred to Z cannot be found if Z is on the Pareto frontier, referring to economic efficiency or Pareto optimality.
• An allocation is inefficient if it is not on the Pareto frontier
• Inefficiency is undesirable because resources are "left on the table."
• Moving to an allocation causes everyone to do better and have more by being interior to the Pareto frontier.
• It is impossible to compare different allocations that lie along the Pareto frontier and cannot say anything about the relative desirability of any points along the frontier.
• Points A and B have all of the utility going to one of the two individuals which is not equitable and cannot say whether A or B is more socially desirable than an allocation.
• When economists call for actions that promote efficiency, it is a basic source of controversy.
• While economists promote efficiency, others may view the social outcome with division of the social pie in mind.

Pollution & Market Efficiency

• A fundamental look must be taken at how social decisions are based on individual preferences, though at a fairly abstract level.
• A detailed examination is required within the context of the economics paradigm.
• Normative issues exist in the economics of specific goods on how much should be produced and who should produce and consume, the production and allocation decisions, and environmental economics.
• Activities that accompany much pollution are beneficial and is also clearly necessary, but too much pollution is undesirable and viewed by economists as "inefficient."
• High pollution becomes an allocation issue and a basic question for economists.
• Achieving a desirable level of pollution is "efficient", it must be determined how to achieve that desirable level of pollution.
• It must be determined which polluters should reduce pollution and by how much in a metropolitan area where ozone levels should be half what they currently are.
• Obtaining the right amount of pollution, but doing it in a way that costs more than necessary, is viewed by economists as "inefficient."
• Efficiency is obtaining the right overall amount of pollution control and efficiency in allocating pollution control responsibility to specific polluters.
• It is shown how market failures and pollution can result in inefficiencies in a market equilibrium that should be corrected by government intervention.
• Cost-benefit analysis is used to determine efficient outcomes in the absence of a competitive market.

Public Goods & Bads

• The fundamental difference to consider is between conventional goods, and environmental commodities, like pollution, which the market fails to allocate efficiently.
• The very nature of pollution leads to market failure and economics has developed the concepts of public bads and externalities to describe the characteristics of these environmental commodities.
• A good is individually beneficial and people want it; a bad does harm and people do not want it.
• The price system does not always work for production and consumption decisions, nor is it always desirable to rely on it.
• The breakdown can occur either on the consumption or production side of the market, causing market failure.
• The production complications can involve scale economies and the existence of a natural monopoly.
• Market failure on the consumption side involves goods that have characteristics of "publicness" or involve externalities.
• Excludability & rivalry are defined as two fundamental characteristics of goods.
• Excludability regards whether it is possible to use prices to ration individual use of the good.
• Rivalry regards whether it is desirable to ration individual use, through prices or any other means.

Excludability Explained

• Ensure that consumers do not consume a good unless a appropriate price has been paid in order to allocate goods with prices.
• Take possession of the good or bad for which the price is being paid for a price system to work.
• Exclusion must not only be physically possible but also be a good idea, given the cost of exclusion compared to the benefits.
• The benefits involve the additional social value of having limited as opposed to unlimited access to the resource while using resources.
• If the good is being provided privately, the benefit is the revenue that can be gained by charging admission.
• The legal aspect of excludability could apply to ordinary goods with laws protecting property and outlawing stealing, and all goods would be community property without being possible.
• There have been changes in the excludability of environmental goods through legal rather than technological changes, such as laws against littering turning garbage from a non-excludable good into an excludable one.
• People can selectively choose to trade money and garbage, which serves the economic transaction of the trash collector and the household.
• Space plays a particularly important role, and confusing one, with regard to exclusion, where most no excludable goods and bads are provided locally.
• A consumer can effectively be excluded through location, since most nonexcludable goods and bads are provided locally, and cannot consume those goods if it to be too costly too travel to consume those goods.
• The importance of excludability lies in its necessity for a price system to function for a price to be paid for the good or bad.
• A good is excludable if it is feasible and practical to selectively allow consumers to consume the good. A bad is excludable if it is feasible and practical to selectively allow consumers to avoid consumption of the bad.
• To attach a price to the consumption of a good or bad, the consumption must be denied if the price is not paid, in order for the market allocation can function.
• Exclusion must be not only technologically possible but also not too costly, relative to the benefits of exclusion.
• Two factors play a major role in excludability, these being the cost of exclusion and the technology of exclusion and how it changes over time.
• Garbage, is not excludable unless there are littering and tresspass laws, making it not excludable without those laws.

Rivalry Explained

• This is contrasted between consumption of a hamburger and that of a flower garden as an example. consuming the act of the hamburger destroys the good and makes it unavailable for anyonw else to consume.
• Rivalry pertains to the matter in which a good is consumed, and is a slightly more subtile concept than excludability.
• A good is rival in consumption if the act of consumption reduces the amount of the good that might be available for other consumers.
• A good is nonrival if consumption does not diminish what is available for others.
• Rivalry is a more fundamental characteristic of a good or bad than is exclusion that might change with technology or costs.
• When I "consume" a bag of garbage, I am taking control of the bag, perhaps storing it in my backyard, so it is unavailable for others to consume.
• Air pollution on the other hand is nonrival when I take a deep breath in downtown London, I in no way diminish the ability of others to "enjoy" dirty London air.
• The global climate is the purest example of a nonrival good since one person's enjoyment is no way impunges on the enjoyment of others.
• The idea of rivalry can be viewed through opportunity cost.
• The definition of a bad (good) is rival if one person's consumption of a unit of the bad (good) diminishes the amount of the bad (good) available for others to consume.
• A bad (good) is an example of negative or (positive) social opportunity for others when associated with consumption and is otherwise nonrival.
• The typical reason for congestibility is an indivisibility closely related to economies of scale.
• If that is the case, it is relatively easy to exclude.This is because rivalry involves physical possession and de-struction for consumption.
• It is typically in consumption where the difficulty lies for pollution characteristics to cause market failure.

Public and Private Goods & Bads

• Goods based on excludability and rivalry can be classified, where the degree of rivalry is shown horizontally, and the degree of excludability is shown vertically.
• At the right goods are rival and to the left goods are nonrival, where the top represents excludable goods and bottom represents nonexcludable goods.
• Since noise dissipates with distance, noise can be made excludable which is why it could be both excludable and nonexcludable.
• In the lower left-hand corner, bads are the figure (nonrival, nonexcludable) are termed public bads, in the upper right are termed private bads and the significance is that private goods bads.
• Pure public bads will not be provided by the market, primarily because nonexclusion makes it impossible to charge or compensate for use. The nonrivalness of these goods makes such prices undesirable anyway,
• Its difficult to generate examples due to redundancy between rivalry and excludability.

Public Goods & Bads Provision

• It is impossible to infer the market price for a nonrival good due to individual demand that will be quite low at the price where supply and demand for is very rare, it must be the sum of individual willingnesses to pay.
• Efficient use calls for everyone having access to the park, therefore, efficient admission is for anyonw to have their utility increased when excluding anyone with changing costs.

Lindahl Prices and Free Riding

• The individual demand must be charged, since is a theoretical but impractical solution for pricing public goods and bad, after deciding how much public good to provide and where aggregate demand and supply are in intersection.
• This, by construction is where marginal cost of provisoin is set as what sum is for what one is total willingies to pay.
• Information on individual demand curves is what leads to one of the main failings of the Lindahl equilibrium needing Individuals to volunteer in making one's one demand curves must be provided voluntarily since incentives are to distort.
• The greater demand will in paying one to pay since incentives will be for all articulated to demand one to assume ,since all contribute to undestating to known anmounts so.

Optimal Producer Price

• Smoke benefits a producer so those that will pay no need will inturn ignore consumers when an balanced budget when will require savings to be paid to those that are being harmed. This then an overprovide the bad to much that more would generate so in that an compensation does to compensate that bad with what an incentive would there need that is an overprovide bad, and that will intend to over provide.

Taxonomy: Mineral Resources

• A variety of terminologies by workers in the minerals area are in describing and cataloging mineral resources.
• Some terms gained widespread usage and acceptance, even with varying meanings.
• The U.S. Bureau of Mines and the U.S. Geological Survey gather mineral resource data from different angles and for various objectives.
• Bulletin 1450-A from the U.S. Geological Survey, "Principles of the Mineral Resource Classification System of the U.S. Bureau of Mines and U.S. Geological Survey," was published in 1976 and established by a team of staff from both organizations.
• Several adjustments were required due to experience using the resource classification system to make it more practical and beneficial for long-term planning.
• The U.S. Bureau of Mines and U.S. Geological Survey worked together to update Bulletin 1450-A, which was revised in cooperation.
• New deposits, efficient extraction methods, and understanding of available resources are needed for long-term public and commercial planning.
• Resources must be continually re-evaluated based on geologic knowledge, advancements in science and technology, and changes in the political and economic environment.
• The grade, quality, tonnage, thickness, and depth of the material, alongside profitability analyses should be classified from two viewpoints to best serve planning needs.

Definitions: Resource/Reserve

• The adapted dictionary definition of resource: "something in reserve or ready if needed," includes mineral and energy resources with present or anticipated future value.
• A mineral and energy resource in geologic terms has naturally occurring solid, liquid, or gaseous materials in the Earth's crust in such a form requires economical extraction.
• Material classified as a reserve can be produced at a profit at the time of classification, within an identified resource
• Resources have are materials that have present or future value and comprise identified and known materials, plus those not yet identified based on geologic evidence.

Classifications: Resource Categories

• Resources estimated based on assumed continuity beyond the reserve base which there may be no samples or measurements.
• Reserves represents the part of the reserve base that could be economically extracted or produced at the time of determination, but needs not signify that extraction facilities are in place and operating.
• Reserves includes only recoverable materials, and that terms such as "ex-tractable reserves" and "recoverable reserves" are redundant.
• Marginal Reserves are the part of the reserve base bordering on being economically producible, which its essential characteristic is economic uncertainty.
• Included are resources in marginal reserves that would be producible, given postulated changes in economic or techno logic factors.
• Economic characteristics under defined investment assumptions establishes profitability demonstrated has been analytically.
• Sub-economic Resources represents part of identified resources but there do not meet the economic criteria of reserves and marginal reserves.
• Undiscovered Resources are only postulated to exist and comprise deposits that are separate from identified resources.
• Undiscovered resources may be postulated in deposits of such grade and physical location to render them economic, marginally economic, or sub-economic
• To reflect varying degrees of geologic certainty, two parts can divide into undiscovered resources: Hypothetical & Speculative.
• Hypothetical Resources are Undiscovered Resources (similar to known mineral bodies) that that may exist in districts or regions under similar geologic conditions.
• To be reclassified to identified resources, their existence and quality, grade, and quantity, needs to be verified through exploration .
• Speculative Resources may occur in known deposits but haven't been made or in types of deposits which are yet unrecognized for its potential.
• Restricted Resources/Reserves only differ by extraction by laws or regulation.
• All other categories are the same outside of the law.

Identifying resources

• Identified resources' location, grade, quality, and quantity are known or estimated from specific geologic evidence, and these are also demonstrated, measured, indicated, and inferred.
• Measured quantity with size shape and depth, revealed in outcrops, trenches, workings, or drill holes and sampling quality of are all resources are well researched.
• Inferred Resources are estimated by the geologic evidence, and its supported by points of observed analysis.
• Quantity estimates with quality, that cannot be guaranteed.
• The Reserve Base is a that resources is that have enough and is also that current standard meets with the practice of depth grade and quantity.

Resources: Development & Use

• Actual resources utilized in the present time
• Consists of natural resources which include water, land, forest, minerals, and fossil fuels to use on agriculture & industry, water, transportation including for use on all generation.
• Potential are currently that are available on but is not to various factors that need to be to that need to happen by potential of by what needs to take place when.

Resource Types: Origin

• Biotic come from organic materials (forests, livestock, fisheries, crops), where their management is renewable for their continued supply.
• Abiotic consists of oil, rocks, that are nonrenewable as for management and is more critically managed.

Resources: Stock

• Renewable are can make and have again for the resources that and these can again and again use to be they the a method that to cause.
• Non-renewable depletes without what means and have for of limited use and are expected their conserve.

4. Distribution & Availability: Resources

• Ubiquitous resources are always and ubiquitously that is with sunlight, water, air through political boundaries to share.
• Localized resources that are only in small that limited and require careful regulation include minerals location.