Ecuafuturo

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Felipe Moya
2010-10-07
Sixth Capricornio
APPLYING ECONOMIC SKILLS

Oil versus Wilderness

In Texas, the federal government owns huge tracts of wilderness that the Bureau of Land Managementmanages. A debate is raging about whether to preserve this land as wilderness or open it to oil drilling. An economist prepared the following PPC to show the trade-off and opportunity cost of eachchoice.

1. According to the graph, how much oil could be produced if no land were set-aside as wilderness?
If no land is set-aside as wilderness, 10 million oil barrels can be produced

2. Howmuch land could be designated as wilderness if no drilling were allowed?
If no drilling were allowed there would be 9 thousand square miles of wilderness

3. What point on the graph representsyour view of a good decision? Why?
For me a good decision would be the point C because at that point we can have a good amount of oil barrels and at the same time we are not destroying too much land4. Tell whether each statement below is positive or normative.

a) If we want oil from this area, we have to be prepared to sacrifice some wilderness. POSITIVE

b)Driving up energy costs just to protect a few animals makes no sense.
NORMATIVE
c) Preserving the wilderness environment should be our highest priority.
NORMATIVE

Applyingan Economic Way of Thinking:

5. Interpreting Assumptions: For each assumption on which the production possibilities model is based, explain why it does not correspond to the real world.
*Resources are fixed:
Resources can never be fixed as they are limited, if resources could be fixed there would be no variables.

* All resources are fully employed:
This is not real worldbecause it is trade off, we cannot use 100% of all resources, if one resource is overused the other goes down. 80% and 20%.

* Only two things can be produced:
This is a real world statement....
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