GEO3502 TR 3 35 4 50 Study Guide Quiz 2 Natural Resources Balance Oriented Lifestyles Neo Malthusian argument that there is a carrying capacity Limits consumption A Maximum sustainable population Growth Oriented Lifestyles Social factors determine carrying capacity Optimists believe in saving grace of modern technology Renewable Resource Can yield output indefinitely without impairing productivity Nonrenewable Resource Usage leads to depletion Finite masses Note Resource Naturally occurring substance of potential profit Designation of something as a resource depends on specific technical and cultural appraisals Reserves Known and available for economic exploitation with current technologies and prices Projected Reserve Estimates of the quantities likely to be added to reserves because of discoveries and changes in prices and technologies within a specified period Strategic minerals Minerals deemed vital to defense and modern technology Chromium cobalt graphite lithium manganese nickel tin etc US dependence on mineral imports has grown steadily since the 1950s No rare earths mined in US in 2010 Tragedy of the Commons Costs of actions are not captured in market prices Benefits are privatized but costs are collectivized One person gets benefit costs paid by everyone Solutions Privatize property regulate public property hold property communally Tragedy of the Anti Commons Underutilization of privately held resources Example Copyrights When the collective royalty costs are so high it prevents a good from being successful all of the copyright holders lose out Scarcity of Food World food production has been increasing faster than population Populations in industrialized countries are well fed Less developed countries have more problems Undernutrition Lack of calories Chronic Malnutrition Lack of nutrients 800 million are malnourished Most are food producers in rural areas Main cause of food shortages Population growth Others Poverty war government debt etc Overall People are now better fed and live longer Malthus wrong Silent Famines 42 of pregnant women worldwide are anemic Green Revolution Experienced differently throughout world based on geography history Largely successful in Asia failed to take off in Africa Environmental Degradation Pollution Air Pollution Water Pollution Desertification Degradation of lands in dry lands Middle East North Africa Environmental Determinism Nature is a direct cause of social economic outcomes E g El Nino causing violent conflicts floods droughts disease crop loss Environmental Possibilism Nature sets the conditions but people decide Fossil Fuels 2 3 of world oil reserves in Middle East U S uses 25 of total fossil fuel consumed each year Imports satisfy 58 of US demand for oil Natural gas produced largely in Russia Energy Energy surplus countries rare Saudi Arabia Iraq Mexico Venezuela etc Heavy energy users US Canada Norway Japan Australia Note Developing countries have 80 of world population but only use 30 of world energy U S uses 1 3 of worlds energy Transportation is huge portion of US energy consumption Cars waste a lot of energy to heat friction and moving themselves Highest consumers are also highly productive Economic Geography Theory basis Theory A way of looking at the world separates description from explanation simplification of world Human Capital Skills knowledge experience that make labor productive Industrial Inertia due to fixed capital investments world is evolutionary Transmaterialization Brain power displacing machine power in terms of total economic importance Economies of scale Describes when an increased production results in lower cost per unit of production Diseconomies of scale Describes the opposite relation more production will increase the per unit costs Agglomeration economies benefits that firms gain by clustering near other firms in the same field E g Ad agencies on Madison Avenue Vertical Integration firm controls more up and down in the total production process E g car company owning iron ore companies to produce their own steel Horizontal integration Firm controls an increasingly large market share of a given niche in a particular industry Division of Labor specialization of cooperative labor in specific circumscribed tasks and like roles Diversification Firm enters a different product market from the one in which it has traditionally been engaged Location Factors Labor Land Capital Managerial Technical Skills Labor Most important factor Contribution of labor varies by industry May be mobile Myth that firms always want cheapest labor Skill level required affects size of its labor market Response of labor to changing markets is not instantaneous Only factor input that is sentient can strike unionize etc Land Capital At local level availability and cost of land are most important locational factors affecting firms Accessibility nearness to city is primary determinant of cost of land Fixed capital machinery equipment plant buildings Financial Capital intangible revenues corporate profits savings loans stocks bonds etc Most mobile factor of production can be transferred instantaneously Capital intensification When capital substitutes for labor Managerial Technical Skills Management allocates resources raises capital negotiates financial markets monitors competition etc Often concentrate in cities Technopole Center for development innovation E g Silicon Valley Weber s Location Model Emphasizes transportation costs in industrial location decisions Assumes that transportation costs are linear function of distance and producers face neither risk nor uncertainty Two major components Raw materials finished goods products Location Site of raw material market Material oriented total transport costs are lowest at the source of raw materials E g Mining industry only a small amount of the rock is the desired mineral so processing the rock near the mine to extract the gold for instance from the ore will reduce the shipping weight cost Market oriented total transport costs are lowest at the market Processing creating the finished product adds weight so you ll want to do this near the product s market E g Soda bottling Methods of growth firms Firms expand for 2 reasons survival and growth Growth strategies are Integration or diversification Methods to grow are internal retention of funds or external acquiring assets Forward Integration Firm begins to take control of outlets for its producers Backward Integration Firm takes over