Cost-based methods - indirect opportunity cost, Public Economics

Cost-based Methods - Indirect Opportunity Cost

This method is used when individual labour is involved in harvesting or collecting the natural resource. A basic assumption is that capital requirement for such a job is minimal. For example, for gathering &el wood in forests individuals need to spend time and do not need much capital. The opportunity cost of such time spent could be considered as the value of the environmental resource under consideration.

The pitfall of this method is that the value of environment obtained bears no relationship with its cost of production. The value of fuel wood, if taken to be its gathering cost only, then it assumes that cost of production of fuel wood is zero. Secondly, in many cases fuel wood gathering is a subsidiary activity; farmers on their way back home may collect some fuel wood. In such cases it involves joint production (farm output and fuel wood) and separating labour cost of fuel wood is arbitrary.


Posted Date: 12/18/2012 5:45:08 AM | Location : United States

Related Discussions:- Cost-based methods - indirect opportunity cost, Assignment Help, Ask Question on Cost-based methods - indirect opportunity cost, Get Answer, Expert's Help, Cost-based methods - indirect opportunity cost Discussions

Write discussion on Cost-based methods - indirect opportunity cost
Your posts are moderated
Related Questions
Read the titled book 2010 State of the World: Transforming Cultures from Consumerism to Sustainability written by the Worldwatch Institute.Learn through their findings valuable inf

Health Economics - derivation of the contract curve: 01. Consider the Edgeworth box with the production of consumption goods B and health- investment goods I. (a) Briefly expl

The fragmentation and redundancies of the U.S federal system are expensive in terms of coordination and personnel costs. Would you favor or oppose greater consolidation? Why or why

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Question 1: i) Describe the concept of circular flow of income. ii) Comment on the view that ‘GDP is the best measure to evaluate economic growth and standard of living'. iii)

Question 1: "The only social responsibility of business is to increase its profits" wrote Milton Friedman, Economics Nobel prize winner, in an article in the New York Times Mag

examine the efficiency of quantitative credit control instruments.

what are the strengths and limitations of a pluralist society

Question: (a) What is the difference between a News Conference and a News Release? (b) An Organising Committee has been set up to celebrate the Chinese Spring Festival on S