APEC 1600 final

Much of the large-scale railroad construction in the United States was paid for using:

Land Grants

"Once costs of transportation are accounted for, the prices of homogeneous goods should be the same in all spatially separated markets" is known as:

The Law of One Price

A political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by elites is known as:

Populism

In the late 1800s, railroads could be characterized as a natural monopoly.

True

Which federal agency is tasked with water management, particularly for providing water for irrigated agriculture?

Bureau of Reclamation

Which principle of economics can best help us understand why very few dams have been built in the United States in recent years?

Diminishing Marginal Returns

Which would be the best example of an industry with high fixed or startup costs?

An electricity generation company

By 1932, what percentage of rural America had access to electricity?

About 10%

Governments often make subsidized loans to individuals and organizations. Examples include student loans and loans to utility cooperatives. What distinguishes a subsidized loan from other loans?

Subsidized loans have a rate of interest lower than the market rate

Riparian doctrine

Systems of water rights among those who own land adjacent to water. Based on English common law.

Water rights

Riparian water rights work fine if plenty of water \n Common in eastern U.S.

Principles

\n •Water adjacent landowners have “reasonable use” rights—cannot materially \n damage other users \n •“Parity” not “Priority” \n •Rights cannot be sold separately from the land

Appropriative rights doctrine (prior appropriations)

Water rights and mining rights developed concurrently

Beneficial use doctrine

Not allowed to claim the whole river. "use it or loose it"

What normally happens when a resource is scarce?

•Prices rise! \n •But water is not allocated by prices, but by rights.

Free Market

An economic system where market transactions occur \n with little or no government interference.

Fixed Cost

A cost that does not increase or decrease with the amount \n of a good or service produced, at least in the short run.

Variable Cost

A cost that varies directly based on the quantity of a \n good or service produced.

Infrastructure

Facilities, networks, and systems needed for the \n operation of a society or enterprise; examples include buildings, roads, \n power grids, and fiber optic cables.

Public Investments

Investments made by federal, state, and local \n governments.

Bureau of Reclamation Definition

Federal agency tasked with water \n management, particularly for providing water for irrigated agriculture.

What did the Bureau of Reclamation do?

Bureau of Reclamation: \n •Manages 491 dams \n •Delivers 10 trillion gallons \n each year \n •Operates 53 hydroelectric \n powerplants

Public Utility

An organization that maintains infrastructure for a public \n service (e.g. power lines) or the \n services themselves (e.g. electricity)

Natural Monopoly

A type of monopoly that occurs dues to high \n fixed or startup costs associated with \n operating in a specific industry, or in \n industries that require unique \n technology or raw materials to \n operate.

The Hoover Dam

Completed 1936 \n •Lake Mead—largest reservoir in \n U.S. (when full) \n •Large impact of estuarine \n ecosystem \n •no water reached mouth of \n Colorado for six years after \n completion

Why is there only one power company in the nation?

Because of Natural monopoly. Average Costs fall as production increases \n •Fixed costs spread over more units \n •Competition may actually increase costs

Why build dams?

•Electricity \n •Irrigation/Water Storage \n •Recreation \n •Flood Control/Risk Reduction

Law of diminishing returns or principle of diminishing marginal \n productivity

An economic law stating that if one input in the production of a commodity is \n increased while all other inputs are held fixed, a point will eventually be reached \n at which additions of the input yield progressively smaller, or diminishing, \n increases in output.

Examples of Law of diminishing returns

Fertilizer and crop yield \n •Workers in a restaurant \n •Studying for an exam \n •Water!

Benefit Cost Analysis

A systematic approach to comparing the estimating the strengths and weaknesses of a proposed action by placing them in common terms, such as dollars.

The Future of water in the west

Urban areas will buy water rights from Agriculture and Native Americans \n •Conservation and recycling regulations will increase—more treated water \n •Urban water prices will increase, more block rate pricing

Practical/useable electricity introduced in 1880s by?

Thomas Edison and George Westinghouse

New Deal

\n A series of government programs instituted in response to \n the Great Depression which increased government investment in infrastructure and the social safety net.

Examples of the New Deal

Social Security \n •Rural Electrification Administration \n •Civilian Conservation Corps \n •Tennessee Valley Authority \n •Public Works Administration \n •Works Progress Administration.

Rural Electrification

The intervention by the US government to encourage extension of electrical service to rural customers, primarily from 1930-1950, resulting in nearly complete access to electricity across the United States

Rural Electrification Administration

Agency tasked with providing infrastructure to rural communities.

Utility Cooperative

Non-profit organization owned and controlled by \n members to provide a public utility like water, electricity, or \n telecommunications to the organization’s members.

What was Utility Cooperative used for?

Used extensively to provide electricity and other services to rural customers. \n •Cooperatives could obtain government assistance in the form of grants \n and subsidized loans

Subsidized Loan

A loan offered by a government entity with a rate of \n interest below the market rate.

What does subsidized mean in “Subsidized Loan “?

the amount of money paid back is less than what was \n originally borrowed.

The R.E.A. was

essentially a government-financing agency

What did the REA provide?

subsidized loans to private companies, public agencies, or \n cooperatives for the construction of electrical supply infrastructure in rural regions. \n •The loans were guaranteed by the federal government, had low interest rates and a generous repayment schedules.

Transcontinental Railroad

The first rail line across the United States, a 1,912 mile track built between 1863 and 1869 connecting the existing rail network (which ended in Nebraska) to San Francisco

Market Access

The ability of a company, city or country to sell goods \n and services in another city or country.

Transportation Costs

The expenses associated with moving goods and \n services from one location to another.

Law of One Price

Once costs of transportation are accounted for, the \n prices of homogeneous goods should be the same in all spatially separated markets.

Farm Unrest

A series of protest movements following the Civil War \n by farmers, primarily in the Plains and Midwest that ultimately led to the formation of the Populist Party (also known as People’s Party).

What did the Farm Unrest do?

Increased farm output—lower prices \n •Farmers were now competing on national scale \n •Railroads charged monopoly prices for transportation \n •Banks charged higher rates of interest on frontier \n •Lack of political influence: said monopolies owned the politicians \n •Anger at widespread corruption

Populism

a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups

Populist Party

left-wing agrarian political party in late 1800's

Granger Laws

Series of laws passed in Midwestern states regulating railroad and grain elevator companies in 1860s and 1870s, Led to court cases that established the constitutionality of regulating railroads and grain elevatorsMonopoly A market in which there is a single seller, A seller with "market power"

Monopsony

A market in which there is a single buyer, A buyer with "market power"

Market Power

The power to raise prices and not lose all your customers (monopoly), The power to lower prices and still buy (monopsonist), Market power is usually a matter of degree—not yes or no

Barriers to entry

Circumstances that prevent or impede the ability of a competitor to enter a market

Standard Oil

The first great industrial monopoly. Established by John D. Rockefeller and Henry Flagler in 1870. Dominated the oil products market by lowering costs and undercutting competitors.

Anti-trust Era

movement prompted by farmers, labor unions, and others to restrain monopoly power and corruption in business and politics

Sherman Anti-Trust Act

(1890) "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade."

Business Trust

When the assets and property of a business corporation are entrusted to an appointed trustee. The trustee will manage the operation and assets of the business, not for their own profit, but for the profit of the beneficiaries