Economics and Environment Quiz
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Questions and Answers

Which of the following is NOT assumed in the rationality intervention model?

  • Goals are known
  • Alternatives are unknown (correct)
  • Values are known
  • Information to assess alternatives is known

Public organizations face fewer challenges in ensuring accountability and transparency than private organizations.

False (B)

What is the primary advantage of incremental decision-making models in government?

Creates political support

According to Simon, rationality is __________ due to cognitive and information limits.

<p>bounded</p> Signup and view all the answers

Match the critique of the rational model with its dimension:

<p>Humans cannot always be rational = View of human reason Information is often limited = Understanding of knowledge acquisition Theory and practice are not always aligned = Connection between theory and practice</p> Signup and view all the answers

Which of the following is NOT an economic function of the environment?

<p>Creates economic inequality (A)</p> Signup and view all the answers

Environmental externalities are reflected in market prices.

<p>False (B)</p> Signup and view all the answers

What are the two primary factors driving consumption?

<p>Population and per capita consumption</p> Signup and view all the answers

The process of transforming waste into useful products is known as __________.

<p>recycling</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Exclusivity = Ability to exclude others from a good Rivalness in consumption = Consumption that decreases availability for others Marginal revenue = Additional revenue from selling one more unit Pollution tax = Tax levied to reduce pollution by businesses</p> Signup and view all the answers

Which of the following statements is true regarding private goods?

<p>They have both exclusivity and rivalry. (C)</p> Signup and view all the answers

Higher recycling efficiency is a strong argument for the infinite availability of natural resources.

<p>False (B)</p> Signup and view all the answers

What is the purpose of implementing a pollution tax?

<p>To reduce pollution by making it more costly for companies to pollute.</p> Signup and view all the answers

What is one of the objectives of circular economy (CE) policies?

<p>Support repairability (A)</p> Signup and view all the answers

Economic incentives and awareness campaigns are instruments used in the circular economy.

<p>True (A)</p> Signup and view all the answers

What skill area involves promoting sustainability values?

<p>Sustainability Values</p> Signup and view all the answers

In circular economy, policy instruments are considered _______ as they evolve between their original design and actual application.

<p>dynamic</p> Signup and view all the answers

Match the aspect of property with its description:

<p>Excludable = Can exclude individuals from use based on price or purchase Rivalrous = Means one person's purchase does not prevent another's purchase Ownership = Refers to who controls and holds the rights to a product Funding = Refers to the financial resources allocated for a public good</p> Signup and view all the answers

Which of the following is a key skill area identified in the GreenComp model?

<p>Complexity in Sustainability (A)</p> Signup and view all the answers

Governance intervention is not necessary if the market is functioning properly.

<p>True (A)</p> Signup and view all the answers

What are the three connected aspects that influence circular economy policies?

<p>Ownership, funding, and control</p> Signup and view all the answers

What is the first step in the policy cycle?

<p>Agenda setting (A)</p> Signup and view all the answers

Substantive instruments focus on processes and activities needed to coordinate policy actors.

<p>False (B)</p> Signup and view all the answers

What is a demand-pull instrument in the context of Circular Economy (CE)?

<p>Encouraging market adoption by creating demand for CE solutions.</p> Signup and view all the answers

Government needs to intervene when there are market __________.

<p>failures</p> Signup and view all the answers

Match the policy instruments with their type of coerciveness:

<p>Sermon = Low degree of coerciveness Carrot = Medium degree of coerciveness Stick = High degree of coerciveness Information-based = Low degree of coerciveness</p> Signup and view all the answers

Which of the following is not a push factor for Circular Economy?

<p>Public procurement policies favoring recycled materials (C)</p> Signup and view all the answers

Which type of goods is allocated efficiently in markets only to those who are willing and able to pay?

<p>Private goods (A)</p> Signup and view all the answers

Policies must create both push and pull factors for effective circular economy transition.

<p>True (A)</p> Signup and view all the answers

Renewable resources are those that can be used up completely if not managed properly.

<p>True (A)</p> Signup and view all the answers

What is the goal of aligning aims, objectives, and instruments in CE policies?

<p>To ensure coherence.</p> Signup and view all the answers

Which foundational thinker proposed that Public Policy should address the fundamental problems of man in society?

<p>Harold Lasswell</p> Signup and view all the answers

Public Policy involves not just governments but also various __________ and institutions.

<p>actors</p> Signup and view all the answers

Match the following terms related to Public Policy with their definitions:

<p>Outputs = Results of government actions Outcomes = Impacts on society Problem-centered approach = Focus on deep-seated issues Turbulent context = Dynamic environment of decision-making</p> Signup and view all the answers

What is a characteristic of public goods, as opposed to private goods?

<p>They are non-excludable and non-rivalrous (C)</p> Signup and view all the answers

Dye defined Public Policy as 'whatever governments choose to do or not to do.'

<p>True (A)</p> Signup and view all the answers

What does Public Policy evaluate regarding government programs?

<p>Outputs and outcomes</p> Signup and view all the answers

Flashcards

Environmental Externalities

The environmental impacts of economic activities that are not reflected in market prices. These can be positive (e.g., clean air) or negative (e.g., pollution).

Extraction

The value of resources extracted from the environment (e.g., timber, minerals).

Basic Processing & Modification

The process of transforming extracted resources into usable materials (e.g., processing lumber, refining oil).

Fabrication

The creation of final products from processed materials (e.g., building furniture from lumber, manufacturing cars from steel).

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Consumption

The consumption of goods and services produced by the economy.

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Non-product Outputs (Residuals)

The waste generated by the production and consumption processes. Some can be recycled, others cause harm to the environment.

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Resource Productivity

The ability to use resources efficiently and generate more goods or services with less input.

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Pollution Tax

A tax placed on companies based on the amount of pollution they generate. This incentivizes companies to reduce their emissions.

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Renewable Resources

Resources that can be replenished over time, like solar energy or fish populations.

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Non-Renewable Resources

Resources that are finite and cannot be replenished at a rate comparable to their consumption, such as fossil fuels or minerals.

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Private Goods

A type of good that is excludable, meaning that people who do not pay for it cannot access it, and rivalrous, meaning that one person's consumption of the good prevents others from consuming it.

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Public Goods

A type of good that is non-excludable, meaning that people can consume it even if they don't pay, and non-rivalrous, meaning that one person's consumption does not prevent others from consuming it.

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Public Policy Evaluation

The analysis of the effectiveness of government programs in achieving their intended goals.

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Problem-Centered Approach

A framework for analyzing and addressing systemic problems that affect human well-being.

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Public Policy

The process by which governments make decisions and take action to address societal issues.

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Modern Public Policy

The idea that Public Policy making involves a dynamic environment with multiple actors, institutions, and decision-making processes.

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Sustainability Values

The ability to understand and promote the importance of environmental ethics, and its connection to sustainability.

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Complexity in Sustainability

The ability to analyze and understand the complex interconnectedness of environmental, social, and economic systems in relation to sustainability.

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Envisioning Sustainable Futures

The skill to imagine and plan for sustainable solutions, using creativity and foresight.

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Acting for Sustainability

The practical skills to implement sustainable policies and drive behavioral or systemic change.

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Policy Mixes

The use of a combination of policies and instruments to achieve sustainable outcomes.

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Government Intervention

The process of government intervention when market or governance systems fail, utilizing a mix of policy instruments.

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Policy Instrument Dynamics

The way policy instruments evolve in practice, changing from their initial design to their real-world application.

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Rivalrous

A good or service where consumption by one person prevents consumption by another.

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Policy Cycle

The process that governments use to develop, assess, and implement policy options, involving stages such as agenda setting, policy formulation, decision making, implementation, and evaluation.

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Policy Instruments

Methods used by governments to influence behavior and achieve policy objectives. They include the provision of financial incentives, regulations, or information.

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Technology-push instruments

Policy instruments that focus on promoting and encouraging innovation, research, and development of sustainable technologies.

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Demand-pull instruments

Policy instruments that aim to stimulate market demand for sustainable products and services, encouraging adoption by consumers and businesses.

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Sermon approach

Policy instruments that are based on the use of information and education to encourage voluntary behavioral change.

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Carrot approach

Policy instruments that use financial incentives or disincentives, such as subsidies, taxes, or rebates, to influence behavior.

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Stick approach

Policy instruments that rely on regulations, laws, and enforcements to mandate compliance and control behavior.

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Collective Action/Governance Failures

Situations where individuals or groups can't achieve a collective outcome effectively due to lack of coordination or incentives. This is a justification for government intervention.

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Rationality Intervention Assumption: Known Goals & Values

The idea that decision makers have a clear understanding of their goals, priorities, and the various options available to them.

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Rationality Intervention Assumption: Known Information

This assumption states that decision makers can access all the information needed to thoroughly assess the different options available to them.

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Public Organization Decision-Making

It assumes that public organizations operate similar to private ones but face additional hurdles due to complex environments and multiple stakeholders.

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Incremental Decision-Making Model

A model where decisions are made in small, incremental steps, allowing for adjustments along the way. This is often used in government due to its flexibility and political advantages.

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Bounded Rationality

The idea that people's rationality is limited by cognitive abilities, information access, and time constraints. This means we often settle for 'good enough' choices rather than maximizing outcomes.

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Study Notes

Relationship Between Economics and the Environment

  • Traditional economic models involve companies and households.
  • Companies use resources to produce goods and services.
  • Households provide human resources and consume goods.
  • The environment has economic functions:
    • Provides inputs for production.
    • Absorbs waste and transforms it into other products.
    • Is a source of utility.

Economic Functions of the Environment

  • Environmental externalities are costs or benefits affecting third parties not reflected in market prices.
    • Examples: pollution (air, water, soil), deforestation, climate change, noise pollution.
  • Consumption is driven by population and per capita consumption.
  • Resource productivity is increasing, allowing for the same output with less input.
  • Availability of resources affects resource prices, as do transition costs and time to adjust.
  • Population growth is slowing, but still increasing.

How Markets Work and Why They Fail

  • Marginal revenue and marginal cost are crucial for market efficiency.
  • Companies will produce less if there are negative externalities.
  • They might compensate consumers by increasing prices if there are pollution tax.
  • Private goods are excludable and rivalrous.

Renewable and Non-Renewable Resources

  • Renewable resources can regenerate (e.g., forests, fish).
  • Non-renewable resources cannot regenerate (e.g., fossil fuels).
  • Sustainable yield is the maximum harvestable amount of a resource without depleting the stock.

Sustainable Yield (MSY)

  • Stock growth increases with population, and harvest increases with effort.
  • Higher effort leads to diminishing returns for yield per unit effort.
  • Overfishing and stock depletion is possible above MSY effort levels.
  • Stock is balanced with effort at the MSY point.

Tragedy of the Commons

  • Individual actions can harm the overall well-being of society.
  • Lack of property rights incentivizes individuals to exploit common resources. Incentive to free-ride.

Economic Value of Natural Resources

  • Use value includes direct (money) and indirect (recreation).
  • Optional use value includes future personal recreation, and bequest value (future generations).
  • Existence value= biodiversity, and non-use value= preserving for non-use.

Policy Instruments

  • Governments set policies that translate into local-level actions.
  • Public policy evaluates government actions' effects on society.
  • Policy tools include regulations, incentives, to coordinate actions.
  • Policy instruments are categorized based on their coerciveness to encourage compliance.

Policy Cycle

  • Agenda setting is the process of identifying problems worthy of policy attention.
  • Policy formulation is the process of developing possible solutions or policies.
  • Policy decision making involves choosing the best policy solution.
  • Implementation is putting the chosen policy into action.
  • Evaluation assesses the effectiveness of the policy's impact.

Policy Mixes and Decision on Governance Transitions

  • Policy instruments have a hybrid nature, evolving in practice.
  • Governments intervene when markets or governance fail.
  • Interventions use a variety of instruments across various sectors.

Rationality Interventions

  • Rational models assume that governments’ goals, values, and alternatives are known and rational.
  • In Reality: Goals, values and alternatives for rational intervention are not always known or agreed upon.
  • Rational models do not always consider democratic values.

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Relationship Between Economics and Environment PDF

Description

This quiz explores the intricate relationship between economics and the environment. It covers concepts such as economic functions of the environment, externalities, and market failures. Test your knowledge on how economic activities impact environmental sustainability and vice versa.

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