Economics of Public Issues Comments on Chs. 6, 10 and 15

Ch. 6 Is Water Different? Water is a renewable resource Water depletion/shortage is a worldwide problem (Mono Lake, SW, GA) Water is an “economic good” Water is often “underpriced” Economists argue for the “accurate” pricing of water

Is Water Different? Price elasticity of demand for water Why is price elasticity of water greater in the long run? Economists support the establishment of water markets (and the trading of water rights) Discussion questions on p. 46

Is Water Different? Concepts: scarcity, economic good, renewable resource, market price, government regulation QCC’s: 1, 2,7, 11 and 22

Water Issues in Georgia Alabama, Florida, and Georgia need to agree on how to divide up water in region Atlanta MSA growth had lead to a significant increase in water demand Georgia is current developing a state water use plan

Water Challenges Who is most deserving of water, farmers or suburbanites? Is water a private resource or a public resource owned by the state? Should water be bought and sold like any other good? Should we transfer water between regions?

Ch. 10 Rent Controls Basis for support of rent controls on apartments: the need for low cost housing, the need to regulate landlords, etc. Problems associated with rent controls include housing shortages, poor maintenance, discrimination, and negative impact on worker mobility Many rent control laws have been modified to deal with the above problems

Rent Controls Why do economists generally oppose rent controls (or price ceilings in general)? Reasons include a strong belief in the efficiency of markets, incentives to maintain property, incentive to add units, less bureaucracy, etc. Discussion questions on p. 73-74.

Rent Controls Concepts: scarcity, supply and demand, market price, economic incentives, government regulation QCC’s: 1,2,8,11,22

Ch. 15 Cartels Defined as “an agreement among firms in a market about quantities to produce or prices to charge” Why do this? (search for “excess profits”) Requirements for success: share, substitutes, stability, solidarity

Cartels Examples of cartels: early U.S. rail industry, shipping, OPEC, DeBeers Price Fixing (railroads, shipping lines) vs. quotas (OPEC, Debeers) Discussion questions on p. 105.

Cartels Concepts: price determination, supply and demand, market structure QCC’s: 11,16