External effects and standard of living

• Economie
• Middelbare school
• vwo
• Leerjaar 3

External effect

Standard of living

What is the reason we are such a big importer of soybeans

What are reasons that the production of soybeans isn't exactly environmentally friendly?

Reasons

Forests disappear in Southern America to create soyfields --> less absorption of CO2, less oxygen

A lot of water is required for the production of soybean

Erosion of land

biodiversity decreases, certain animals become extinct

Soy is needed as food for kettle --> meat industry causes a lot of CO2 emissions

External effects

A side-effect of the market (consequence of the supply or demand for which nobody pays)

External effects Aviation:

• Noise
• Pollution--> CO2 emissions
• Effects the health of citizens near the airport (negatively)

Costs to society

The price of a ticket reflects the business costs:

staff, kerosine, landing permitt, maintenance

The costs to society (increasing health care costs)

are not included in the price

What are the external effects of consuming products like cigarettes

Think of another example of an external effect

Standard of living

The degree to which people are capable of satisfying their need for scarce products and services

Depends on:

Income --> higher income, higher SOL

Prices --> lower prices, higher SOL

Standard of living decreases

Price petrol increases --> supply of oil decreases

gas and electricity more expensive --> supply of gas decreases

Increase price level groceries

Government: 

Lowers tax on gasoline and diesel (April)

Lowers VAT (BTW) on energy from 21 % to 9 % (July)

Raises allowance energy low income groups (€ 800) 

Causes price increase groceries

Price increase energy --> greenhouses/ factories

Shortage of containers on ships --> price increase

Price increase petrol

Shortage labourers greenhouses/ factories --> increase wages

Price increase materials --> grain/ carton packaging

Production in Ukraine

Grain --> 25 % of total grain production

Poor countries buy 60 % of their grain from Ukraine

Large producer of maize, sunflower oil and cement

Exercise 1 - 5

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