Emerson+B

=** Unit 3 **= //Stagflation is tough for both the unemployed and the employed. For the employed, it's tough because prices are up, wages have stayed sticky, they have to work harder than normal just to keep their jobs, and, as illustrated, they have to pay to commute to and from work. For the unemployed, it's tough for just that: They're unemployed. And in a time when prices are up, and inflation is skyrocketing, the only benefit would be lower transportation costs.// 10/10 Good point, there are opportunity costs to everything! Although, it would suck to be out of work AND not be able to afford anything.
 * Stagflation **

=** Unit 2 **= Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that may be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permits from those who require fewer permits. The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society. There are active trading programs in several air pollutants. For greenhouse gases the largest is the European Union Emission Trading Scheme, whose purpose is to avoid dangerous climate change. In the United States there is a national market to reduce acid rain and several regional markets in nitrogen oxides. Markets for other pollutants tend to be smaller and more localized.
 * Cap and Trade **

**Cap-and-trade versus Carbon tax and other methods**
Regulation by Cap-and-trade emissions trading can be compared to emissions fees or environmental tax approaches under a number of possible criteria.
 * Cap-and-Trade versus Carbon tax**
 * Responsiveness to inflation:** In the case of inflation, cap-and-trade is at an advantage over emissions fees because it adjusts to the new prices automatically and no legislative or regulatory action is needed.
 * Responsiveness to cost changes:** It is difficult to tell which is better between cap-and-trade and emissions fees therefore it might be a better option to combine the two resulting in the creation of a safety valve price (a price set by the government at which polluters can purchase additional permits beyond the cap).
 * Responsiveness to uncertainty:** As with cost changes, in a world of uncertainty, it is not clear whether emissions fees or cap-and-trade systems are more efficient—it basically depends on how fast the marginal social benefits of reducing pollution fall with the amount of cleanup (e.g. whether inelastic or elastic marginal social benefit schedule).
 * Cap-and-Trade versus Command-and-Control Regulation:** Unlike emissions fees and cap-and-trade which are incentive based regulations, command-and-control regulations take a variety of forms and are much less flexible. An example of this is a performance standard which sets an emissions goal for each polluter that is fixed and therefore the burden of reducing pollution cannot be shifted to the firms that can achieve it more cheaply. So, as a result, performance standards are unlikely to be as cost effective as cap-and-trade emissions trading.

//Cap and trade seems to be the most optimal method to me. It provides a set limit that pollution can reach, whereas a Carbon Tax would theoretically lead to an infinite amount of pollution, providing producers were successful. If they are successful, they produce more (which means they pollute more), they make more money, and can therefore pay more in pollution taxes. The only way a Carbon Tax would work is if the government raised the tax to unimaginably high levels. However, there is a problem with Cap and Trade systems. The most obvious is regulation. Once a business owns some pollution vouchers, they can then sell them or redistribute them to other producers. It becomes a very mess system to keep track of. That then becomes a benefit for Carbon Taxes. It's much easier to manage. However, it defeats the purpose of the whole idea, which is to pollute less. __The only pollution solution is Cap and Trade.__// :D Good discussion Emerson. Lots of good details and issues. 10/10 -SW

=** Unit 1 **=
 * Marginal Thinking **

From an economist's perspective, making choices involves making decisions 'at the margin' - that is, making decisions based on small changes in resources:

On the surface, this seems like a strange way of considering the choices made by people and firms. It is rare that someone would consciously ask themselves - 'How will I spend dollar number 24,387?', 'How will I spend dollar number 24,388?'. Treating the problem in this matter does have some distinct advantages:
 * How should I spend the next hour?
 * How should I spend the next dollar?

> >
 * Doing so leads to the optimal decisions being made, subject to preferences, resources and informational constraints.
 * It makes the problem less messy from an analytic point of view, as we are not trying to analyze a million decisions at once.
 * While this does not exactly mimic conscious decision making processes, it does provide results similar to the decisions people actually make. That is, people may not think using this method, but the decisions they make are as if they do.

//In a production situation, the average costs will tell you just that, what the average cost is. Marginal costs will tell you how much more producing another item will cost you. Or, for example, at the pet store. If you look at your average costs, and say you wanted to get 10 cats, your average cost will be whatever the average has been historically for 10 cats. However, marginal thinking will tell you how much more it will cost to add another 2 cats. And then you can spend your days as a crazy old cat lady. // Hmmm, what's the intersection between economists and cat ladies? Good application. 10/10