a Why is it difficult to estimate environmental costs and benefits and why is it

Question

a Why is it difficult to estimate environmental costs and benefits and why is it particularly difficult to estimate environmental costs and benefits into the future?

b How is marginal analysis different from analysis that uses averages and why do economists prefer marginal analysis to the use of averages?

c What role does emotion and personal beliefs play in the economic calculation of benefits and costs and do you believe that emotion and personal beliefs enter the calculations of costs and benefits of economists?

Explanation / Answer

(a)Identifying all the consequences of a particular project or policy option is difficult because it involves predicting the future and dealing with the uncertain interactions between human activities and the ecosystems in which they take place. Moreover, there will be unintended and unexpected indirect effects arising from any large project.

(b)marginal analysis:Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits.

The term average is used frequently in everyday life to express an amount that is typical for a group of people or things.for example, on average people watch 3 hours of television per day. We understand from the use of the term average that not everybody watches 3 hours of television each day, but that some watch more and some less.

economists prefer marginal analysis to the use of averages because Using marginal analysis in managerial economics can help make business decisions from hiring additional workers to spending additional hours on projects. where as, averages do not provide a clear picture.

(c) emotions strongly and routinely shape decision making. for example:
a person who feels anxious about the potential outcome of a risky choice may choose a safer option rather than a potentially more lucrative option. yes,emotion and personal beliefs enter the calculations of costs and benefits because general emotions like anger, fear are emotions that influence the decisions of every person. although economists are supposed to think rationally but still emotions somewhere influence their decisions aswell.

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