Introduction to Ecological Economics
The Human Sub-System
Sub-module Topic:Markets and Price Theory
Course Learning Outcome(s):
  1. Formulate a whole system approach to the human subsystem structure and function.

Sub-module Outcome(s):
  1. Critique neoclassical theories of the price mechanism, supply and demand.
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Activities:
  1. Read material on price theory covering the basic market equation
  2. Read material on supply and demand and the production and utility functions
  3. Integrative project work: Read the case study on eflornithine. Now, using your project as a case study, can you identify a situation in whichthe market is functioning as intended, but the desirability of the results is questionable? Specifically, explain how the market allocates factors of production to an industry that many would consider less socially desirable, and how it fails to allocate the final product to the consumers who need it most.
  4. Identify problems with the ecological economic production function and offer suggestions for how to correct them. Post your suggestions on the discussion board, and pose questions to at least two of your classmates about their suggested solutions. Answer the questions posed to you.
  5. Project work: Explain the market failures associated with the resources relevant to your problem.
  6. Discussion board. Comment on the following statement: The demand curve is determined by preferences weighted by income. Markets are therefore plutocratic, based on the principle of one dollar, one vote. Democratic societies should reconsider the use of markets for allocation decisions affecting ecosystem services.
Self Check:

Answer the module questions and see the syllabus for additional material you should understand.

Submit as Proof(s) of Learning:

Activities 3, 4 and 7

For more information about this module and its contents, contact your instructor.

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At the end of this section you should be able to answer the following questions:

  • What are markets supposed to do?
  • How do market forces generate prices?
  • How do prices serve as a fulcrum for balancing supply and demand?
  • What are value and efficiency from the perspective of neoclassical economics?
  • What are the normative assumptions underlying the definitions of value and efficiency?
  • How do markets use prices to efficiently maximize monetary value?