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Chapter 8: 1. Critical Thinking Question (page 164)

Why might it be difficult to measure natural resource depletion or pollution and convert the resulting quantity into a dollar-denominated amount

Short Answer

Expert verified

Depletion of natural resources or pollution are not measurable in monetary terms.

Step by step solution

01

Given Information 

We are given to find that why it is not easy to measure the amount of natural resource depletion or amount of pollution.

We also have to find ho to convert quantity into an amount which is denominated measurement.

02

Explanation

  • Depletion of natural resources or pollution is not measurable in monetary terms.
  • This is due to the fact that these items are unable to be traded on the open market and so cannot be assigned a numerical value.
  • Each person places a different value on resource consumption.
  • Pollution control would be less important to someone living in the countryside than it would be to someone living in a very polluted city.
  • Furthermore, the long-term implications of pollution management and resource depletion are difficult to access today.
  • This makes monetary measurements of natural resource depletion and pollution mitigation challenges.

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Most popular questions from this chapter

Consider Figure 8-4. Explain what is special about the year at which the two data plots cross, and why this is so.

Look back at Table 8-3, which explains how to calculate real GDP in terms of 2009constant dollars. Change the base year to2007. Recalculate the price index, and then recalculate real GDP-that is, express column4of Table 8-3 in terms of 2007dollars instead of 2009dollars.

Why do you suppose that many economists worry that including the degree of depletion or pollution of natural resources could make the value of GDP harder to interpret?

Consider the following hypothetical data for the U.S. economy in 2020(in trillions of dollars), and assume that there are no statistical discrepancies, zero net incomes earned abroad, and zero taxes on production and imports of net subsidies.

a. What is gross domestic income? GDP?

b. What is gross private domestic investment?

c. What is personal income?

Which of the following are production activities that are included in GDP? Which are not?

a. Mr. King performs the service of painting his own house instead of paying someone else to do it.

b. Mr. King paints houses for a living.

c. Mrs. King earns income from parents by taking baby photos in her digital photography studio.

d. Mrs. King takes photos of planets and stars as part of her astronomy hobby.

e. Eโ‹†Trade charges fees to process Internet orders for stock trades.

f. Mr. Ho spends \(10,000on shares of stock via an Internet trade order and pays a \)10brokerage fee.

g. Mrs. Ho receives a Social Security payment.

h. Ms. Hernandez makes a $300payment for an Internet-based course on stock trading.

i. Mr. Langham sells a used laptop computer to his neighbor.

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