The forest economics
Definition:-
Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. By Alfred Marshall
Economics is a study of man in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus, it is on the one side, the study of wealth and on the other and more important side, a part of the study of man by Lionel Robbins
Forest Economics
FOREST economics is the application of economic principles to a wide range of subjects extending from management of the various forest resources through the processing, marketing and consumption of forest products. Forest economics has much in common with Agricultural economics, but although the latter discipline has an established academic history in Canada, no departments of forest economics exist in this country. Forestry students may, however, emphasize economics subjects, supplementing a single forest economics course with courses of sociology, agricultural economics, outdoor recreation economics and forest policy.
Forest economics courses per se concentrate on the evaluation of the forest resource, on Business management,
principles as applied to forest regeneration and stewardship, and forest products industries, and on the relation of the forest resource and its exploitation to national economic and social policies. Thus courses address factors affecting the financial viability of a given operation, the industry in general, and the objectives of society as a whole.
principles as applied to forest regeneration and stewardship, and forest products industries, and on the relation of the forest resource and its exploitation to national economic and social policies. Thus courses address factors affecting the financial viability of a given operation, the industry in general, and the objectives of society as a whole.
Fiscal factors that affect the success of a particular operation include the revenues and costs involved in licensing of public timberland; Taxation; industrial legislation and regulation; costs of inputs and prices of commodities; geographic distribution of customers (as it affects transportation costs); marketing constraints; LABOUR MARKETS; and various federal and provincial policies. The forest economist must also be familiar with technical
aspects of forest management and industrial production, and should have at least some knowledge of forest ecology, the processing of timber products, technological innovation and wildlife management
Role of Forests in Economic Development of a Country!
Forests play an important role in the economic development of a country. They provide several goods which serve as raw materials for many industries. Wood grown in forests serves as a source of energy for rural households.
Most of the world’s paper is made from wood and one rather reliable index to the degree of economic development of a country is its per capita consumption of paper. As an economy develops economically, paper is used as packaging material, in communications and in scores of other uses. No really satisfactory substitute for paper exists for many of its uses.
While it has long been recognized that forests play many roles in the economic development of a country in addition to providing wood fiber for many uses, the non-wood outputs of forests are coming increasingly to be recognized and valued everywhere in the world. Forests have watershed values especially in areas with fragile and easily eroded soils; tree cover may be highly valuable simply as protection to the watershed.
Forests are valued as a place for outdoor recreation. The kinds of forests most valuable for outdoor recreation are not always the same as the kinds most valuable for wood production and vice versa. The dense forest with trees closely spaced to take full advantage of the sunlight, moisture and fertility to grow wood, is often less attractive to the recreationist than a more open forest.
Forests are the home for many species of wildlife including mammals, reptiles and birds. Some of these forms of wildlife are clearly valuable to man. Ecologists have been much disturbed at the reduction in wildlife numbers, sometimes to the point of extinction, as tropical forests are cleared.
Forests stabilize our ecological stability.
Some important services provided by forests are as follows:
(a) Water:
Forests absorb rainwater and release it gradually into streams. It prevents floods.
(b) Watershed:
Forests keep soil from eroding into rivers.
(c) Climate:
(d) Recreation:
Forests serve people directly for recreation. National parks and biosphere reserves sanctuaries are a great attraction for tourists. Biosphere reserves are multipurpose protected areas created to deal with conservation of bio-diversity and its sustainable use. In biosphere reserves local area resources are developed. Agricultural activities are allowed to the local communities and employment is provided to the people. Tourism in parks, sanctuaries and biosphere reserves brings revenue to the authorities that manage them.
Demand
Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.
Types of the demand
Price demand:- It refers to the various quantities of the commodity or services that a consumer will purchase at a given time in a market at various hypothetical prices, things such as consumer income, his taste, & prices of interrelated goods (bread & butter) remain unchanged
Income demand: - The income demand refers to the various quantities of goods and services which would be purchased by the consumers at various levels if income. Hence would assure that the prices of the interrelated goods and taste and desire of the costumer don’t change. Just as the price demand express relationship between prices and quantities income demand shoes the relationship between income and quantity demanded
Cross demand:- The cross demand means the quantity of a good or services which will be purchased with refers to the change in prices not of the goods but of other interrelated goods, these interrelated goods are either substitute goods or complementary goods
The relationship between demand and supply underlie the forces behind the allocation of resources. In market economy theories, demand and supply theory will allocate resources in the most efficient way possible.
A. The Law of Demand
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Fig from Google |
A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation between quantity demanded (Q) and price (P). So, at point A, the quantity demanded will be Q1 and the price will be P1, and so on. The demand relationship curve illustrates the negative relationship between price and quantity demanded. The higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C).
B. The Law of Supply
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.
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| (Credits goes to Google) |
A, B and C are points on the supply curve. Each point on the curve reflects a direct correlation between quantity supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and the price will be P2, and so on. (To learn how economic factors are used in currency trading, read Forex Walkthrough: Economics.)
Let's say there's a sudden increase in the demand and price for umbrellas in an unexpected rainy season; suppliers may simply accommodate demand by using their production equipment more intensively.
Goods
• Inferior good: An inferior good means an increase in income causes a fall in demand. It has a negative YED. An example, of an inferior good is Tesco value bread. When your income rises you buy less Tesco value bread and more high quality, organic bread.
• Normal good. This means an increase in income causes an increase in demand. It has a positive YED. Note a normal good can be income elastic or income inelastic.
• Luxury good. A luxury good means an increase in income causes a bigger % increase in demand. It means that the YED is greater than one. For example, high definition TV’s would be luxury. When income rises, people spend a higher % of their income on the luxury good. (Note: a luxury good is also a normal good, but a normal good isn’t necessarily a luxury good)
Other types of goods
• Complementary goods. Goods which are used together, e.g. TV and DVD player. see: Complementary goods
• Substitute goods. Goods which are alternatives, e.g. Pepsi and Coca-cola. See Substitute goods.
• Giffen good. A rare type of good, where an increase in price causes an increase in demand. The reason is that the income effect of a rise in the price causes you to buy more of this cheap good because you can’t afford more expensive goods. For example, if the price of wheat rises, a poor peasant may not be able to afford meat any more, so has to buy more wheat. See: Giffen goods
WANTS
Economics has defined want very scientific way . Wants include all human's desire which he desires to get because he is social animal and when he see other people with these material . He thinks that he wants same thing . In other world we can want to money or any other thing which attracts our mind and brain .
Characteristics of Human Wants:
A careful study of the nature of human wants snows mat they have some well- marked characteristics.
The important ones among these characteristics are explained below:
Human Wants are Unlimited:
There is no end the human wants. When one want is satisfied, another crops up to take its place. The never-ending cycle of wants goes on and on. Man’s mind is so made that he is never completely satisfied. He always hankers after more and more goods and services. There is no limit to his wants so long as he breathes. Human wants keep on multiplying.
Any Particular want is Satiable:
Although wants in the aggregate au unlimited, yet it is possible to satisfy a particular want, provided one has the means. If, for instance, a man wants a car he can have it and be satisfied. If he is hungry, he takes food and the want is satisfied. Thus a particular want can be satisfied, if one has money enough for the purpose.
Wants are Complementary:
Very seldom does one commodity by itself Satisfy a human want. Usually it calls for something else in audition. It we want to write a letter, we must buy a pen as well as ink and paper. The pen alone is not enough It is a common experience that we want things in groups. A single article out of a group cannot satisfy our wants by itself. It needs other things to complete its use. Thus, a motor-car needs petrol and mobiles oil before it starts working; shoes need laces, and so on. Thus wants are complementary.
Wants are Competitive:
Not only are our wants complementary, they are also competitive. One commodity competes with another for our choice. We all have a limited amount of money at our disposal, whereas we want so many things at the same time. We cannot buy them all. We must, therefore, choose between them by accepting some and rejecting others. Thus, there is competition between the various things that we could buy.
Some Wants are Both Complementary and Competitive:
Machinery competes with labour. A manufacturer can, to some extent, substitute one for the other. But they also go together. Both of them are used in factories. Thus, human wants not only compete, they also complement each other.
Wants are Alternative:
There are several ways of satisfying a particular want. If we feel thirsty, we can have soda, ‘sharbat’ or ‘lassi’ in summer, and tea, coffee or hot milk in winter. There are different alternatives open to us. The final choice depends on their relative prices and the money at our disposal.
Wants are three type :-
Necessity :-
All wants which are very necessary to live in this earth , that wants are called Necessities . In necessities we can include air , water , food , cloths and house . We need water and food for drinking and eating , we need cloths to wear , we need house to live . If we do not get or receive all these things , we can not live in this earth . Human beings necessities are more than other creatures of God , they live in the nature of God without any house or any clothes . But human being can not live without cloths or without house . If a person does not do any work but , that person also needs all above basic necessities for living his life .
Comforts
Comforts are also the want of human being . But without this we can live the life . But if we get comforts , we can live better life . Cooler , fans , Scooter and computer are all our main comforts . Because with these comforts , person becomes more efficient .
Luxuries
In economics , luxuries are those wants which crops up when a man or woman become richest in this world . After this he or she dreams of AC rooms , eating only in five or seven star hotels . He or she baths only high paid bathing pools . He or she wants to travel only in top costly ac cars . He or she wants to live only in high cost building . These all desires and wants are called luxuries . It decreases human efficiency .
Banking
A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services, such as wealth management, currency exchange and safe deposit boxes. There are two types of banks: commercial/retail banks and investment banks. In most countries, banks are regulated by the national government or central bank.
Commercial banks are typically concerned with managing withdrawals and receiving deposits as well as supplying short-term loans to individuals and small businesses. Consumers primarily use these banks for basic checking and savings accounts, certificates of deposit
The functions of commercial banks are broadly classified into primary functions and secondary functions, which are shown in Figure-1:
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The functions of commercial banks are discussed as follows:
(a) Primary Functions:
Refer to the basic functions of commercial banks that include the following:
(i) Accepting Deposits:
Implies that commercial banks are mainly dependent on public deposits.
There are two types of deposits, which are discussed as follows:
(1) Demand Deposits:
Refer to kind of deposits that can be easily withdrawn by individuals without any prior notice to the bank. In other words, the owners of these deposits are allowed to withdraw money anytime by simply writing a check. These deposits are the part of money supply as they are used as a means for the payment of goods and services as well as debts. Receiving these deposits is the main function of commercial banks.
(2) Time Deposits:
Refer to deposits that are for certain period of time. Banks pay higher interest on rime deposits. These deposits can be withdrawn only after a specific time period is completed by providing a written notice to the bank.
(3) Advancing Loans:
Refers to one of the important functions of commercial banks. The public deposits are used by commercial banks for the purpose of granting loans to individuals and businesses. Commercial banks grant loans in the form of overdraft, cash credit, and discounting bills of exchange.
(b) Secondary Functions:
Refer to crucial functions of commercial banks. The secondary functions can be classified under three heads, namely, agency functions, general utility functions, and other functions.
These functions are explained as follows:
(1) Agency Functions:
Implies that commercial banks act as agents of customers by performing various functions, which are as follows:
(i) Collecting Checks:
Refer to one of the important functions of commercial banks. The banks collect checks and bills of exchange on the behalf of their customers through clearing house facilities provided by the central bank.
(ii) Collecting Income:
Constitute another major function of commercial banks. Commercial banks collect dividends, pension, salaries, rents, and interests on investments on behalf of their customers. A credit voucher is sent to customers for information when any income is collected by the bank.
(iii) Paying Expenses:
Implies that commercial banks make the payments of various obligations of customers, such as telephone bills, insurance premium, school fees, and rents. Similar to credit voucher, a debit voucher is sent to customers for information when expenses are paid by the bank.
(2) General Utility Functions:
Include the following functions:
(i) Providing Locker Facilities:
Implies that commercial banks provide locker facilities to its customers for safe keeping of jewellery, shares, debentures, and other valuable items. This minimizes the risk of loss due to theft at homes.
(ii) Issuing Traveler’s Checks:
Implies that banks issue traveler’s checks to individuals for traveling outside the country. Traveler’s checks are the safe and easy way to protect money while traveling.
(iii) Dealing in Foreign Exchange:
Implies that commercial banks help in providing foreign exchange to businessmen dealing in exports and imports. However, commercial banks need to take the permission of the central bank for dealing in foreign exchange.
(iv) Transferring Funds:
Refers to transferring of funds from one bank to another. Funds are transferred by means of draft, telephonic transfer, and electronic transfer.
Linear Programming
Linear programming (LP) (also called linear optimization) is a method to achieve the best outcome (such as maximum profit or minimum cost) in a mathematical model whose requirements are represented by linear relationships. Linear programming is a special case of mathematical programming (mathematical optimization).
More formally, linear programming is a technique for the optimization of a linear objective function, subject to linear equality and linear inequality constraints. Its feasible region is a convex polytope, which is a set defined as the intersection of finitely many half spaces, each of which is defined by a linear inequality. Its objective function is a real-valued affine (linear) function defined on this polyhedron.
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