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Forest Economics: Question 1. What Are The Limitations of Applications of Economic Principles in Forestry?

The document discusses limitations of applying economic principles to forestry due to its long gestation periods, dynamic production nature, intangible outputs, externalities, lack of market values for some products, tradeoffs between present and future consumption, concurrent roles of flora and fauna as capital and consumption goods, and challenges with pricing and valuing forest products and services. It also lists the key features of a demand curve as having a negative slope, possibly being parallel to the price axis for essential goods, and in rare cases having a positive slope during hoarding situations. Finally, it mentions exceptions to the law of demand can occur due to consumer ignorance, status symbol goods, speculation during price changes, abnormal social conditions like wars or

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Nikhil Agrawal
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281 views2 pages

Forest Economics: Question 1. What Are The Limitations of Applications of Economic Principles in Forestry?

The document discusses limitations of applying economic principles to forestry due to its long gestation periods, dynamic production nature, intangible outputs, externalities, lack of market values for some products, tradeoffs between present and future consumption, concurrent roles of flora and fauna as capital and consumption goods, and challenges with pricing and valuing forest products and services. It also lists the key features of a demand curve as having a negative slope, possibly being parallel to the price axis for essential goods, and in rare cases having a positive slope during hoarding situations. Finally, it mentions exceptions to the law of demand can occur due to consumer ignorance, status symbol goods, speculation during price changes, abnormal social conditions like wars or

Uploaded by

Nikhil Agrawal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ROLL NO.

20 | NIKHIL AGRAWAL 05/04/2020

Forest Economics

Question 1. What are the limitations of applications of economic principles in forestry?


Limitations in application of economic principles in forestry arise because of several distinct
characteristics of forestry activities such as:

1. Long gestation period


2. Dynamic nature of production of forests
3. Intangible nature of many of the forest outputs
4. Numerous externalities
5. Non-existence of market values for many forests produces
6. Trade-off between the consumption by present and future generations
7. Concurrent role of Flora & Fauna as capital resources and simultaneously consumption goods
8. Problems in pricing and valuation of forest products and services

Because of the above stated reasons, the concepts of production, cost of production, marginal cost,
short & long run cost etc. require suitable changes to take care of the time frame and other peculiar
ways of production and harvesting in forestry.

Question 2. Give the salient features of Demand curve


Demand Curve depicts the variation in the demand of a particular commodity with a change in its price.
Its salient features are the following;

1. If other things remain constant, the curve will have a negative slope
2. However, it might not always be true as for some essential commodities, it may be parallel to
the price axis. This means that the demand for that commodity would remain the same
irrespective of its price
3. Under certain conditions, the demand curve will be positively sloped i.e. for an increase in price,
the demand also goes up. This could happen in a situation when a particular commodity is being
hoarded
ROLL NO. 20 | NIKHIL AGRAWAL 05/04/2020

Question 3. Mention some exceptions of law of demand


Exceptional demands have entirely different types of demand curves and they may arise due to
following conditions:

1. Ignorance of the consumers: Under such circumstances the consumer is not aware of the actual
price and he may purchase more quantities even at an increased price
2. Status symbol products: The purchasers will only buy highly priced goods as a status symbol
3. Speculation: Whenever the price increases, it is presumed that the prices will further increase
and under such speculation, people buy more and more quantity than required for the time
being
4. Abnormal Social Conditions: Like in war, famine, epidemics, floods, inflation, rationing, it is
possible that the law of demand does not operate normally
5. In case of Necessities/Essential goods

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