Chem395:Practice Problem Set 1 Answers

This is the answer key for practice problem set #1.

1. Explain the following terms in a sentence or two: natural capital, carrying capacity, intellectual capital, externality, the triple bottom line.

Natural capital

• Those features of nature, such as minerals, fuels, energy, biological yield, or pollution absorption capacity, that are utilized or potentially utilizable in human social and economic systems.

The earth’s carrying capacity

• May refer to the population that a given ecology can support over the long term.
• Alternatively defined as the earth’s ability to provide required inputs and outputs as well as assimilate the waste outputs for a given population.

Intellectual capital

• Two sources of intellectual capital in an organization- human capital and organizational capital.

• Human capital = knowledge & ability.
• Organizational capital = hardware, software, technology, management methods.

An increase in intellectual capital leads to a more efficient use of resources and reduce waste.

Externalities

are external to the buyer & seller. Traditionally environmental costs are considered externalities. For example the cost of a tonne of fertilizer does not include the costs for cleaning up any environmental damage it causes (this may be very variable and hard to predict, anyway).

The Triple Bottom Line

• Traditional economics determines quality of life using only monetary measures (e.g., GDP)- economic capital.
• Marxism & liberalism seek to include social factors- social capital.
• Environmentalism also includes natural capital.

The triple bottom line therefore includes economic, social and natural capital.

(Questions 2 onwards to follow)