Managerial Economics in MBA Essay Example | Topics and Well Written Essays - 1500 words

Managerial Economics in MBA - Essay Example Measuring marginal opportunity cost should reflect the intricate ecological and physical inter-linkages that exist within an ecosystem, allowing for the relationship between soil erosion, deforestation, sedimentation, and stream-flow. In turn, the marginal opportunity cost is comprised of direct costs from the use of resources, externalities that arise from inter-linkages of the ecosystem, and user component that comes from the use of resources in a non-sustainable way. 1. Most of Europe’s coal mines have closed down. There are still large reserves of coal available. Under what circumstances would you envisage businesses opening up coal mines and exploiting these resources? Europe still possesses plenty of coal resource reserves. In some cases, these are not easy to access although they can still be mined. The question that arises when considering the probability of their exploitation is their economic viability. The decline witnessed in the 80s regarding mining of coal, as well as the closure of mines, was done because extraction costs for coal became too high given the shifting focus of the global market (Ali & Jeffrey 21). The market began to move towards the use of gas to produce electricity, as well as the use of coal from countries where mining was extra economically viable. However, as Europe becomes a net exporter of gas and oil again as supplies start to run out, they will be forced to be more reliant on supplies of gas from unfriendly economies like Russia or price-hiking Sheikhs from the Middle East. As the price of gas continues to rise due to these factors, the development of technology will alter the relationship that exists between coalâ €™s marginal cost and its marginal revenue (Ali & Jeffrey 21). Another way that coal could become viable again is a new method of making it clean in order to offset its environmental destruction (Ali & Jeffrey 29). Coal causes major environmental destruction, and for its marginal revenue to be above its marginal costs, then it has to be cleaned. Several European countries have begun efforts towards this. One technology, which could see the environmental cost of coal go down, is carbon capture technology.