Economics and the Environment Quiz

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Questions and Answers

What is the main reason democratic governments have been hesitant to implement environmental policies that restrict individual choices or reduce company profits?

  • Lack of awareness about the environmental impact of such choices.
  • Prioritization of economic growth over environmental protection. (correct)
  • Insufficient scientific evidence to support the need for such policies.
  • Fear of public backlash and political unpopularity. (correct)

What is the CORE Econ definition of economics?

  • The study of business and profitability.
  • The study of how individuals make choices in the presence of scarcity.
  • The study of financial markets and their global impact.
  • The study of how people interact with each other and their environment in producing their livelihoods. (correct)

What does the biosphere primarily provide for human life?

  • Raw materials for production of goods.
  • Processed materials for manufacturing.
  • Financial resources for investment.
  • Essentials such as air, water, and food. (correct)

In the context of the economy, what is the primary difference in household production compared with firms?

<p>Households do not sell their output in the market. (C)</p> Signup and view all the answers

What is a key function of households, in addition to producing other goods and services?

<p>Producing people for the future labour force. (D)</p> Signup and view all the answers

How do firms and households interact with each other?

<p>Firms produce goods and services that are used by households. (C)</p> Signup and view all the answers

What is the relationship between the environment, society, and the economy?

<p>The economy is part of a larger social system which is itself part of the biosphere. (B)</p> Signup and view all the answers

What is the dependence of economic activity according to the text?

<p>Economic activity is dependent on environmental resources. (B)</p> Signup and view all the answers

According to the Living Planet Report 2020, what percentage decrease in population sizes of various animals was observed between 1970 and 2016?

<p>68% (A)</p> Signup and view all the answers

What is a primary cause of the environmentally destructive pattern of technological change and resource use?

<p>The excessively low prices of goods and resources that deplete the environment. (D)</p> Signup and view all the answers

What happened to the Grand Banks cod fishery off the east coast of Newfoundland?

<p>It collapsed after decades of large-scale commercial fishing and was closed. (C)</p> Signup and view all the answers

Why do fishing firms typically have little incentive to maintain the cod population in an open access fishery?

<p>They risk reduced profits if competitors do not follow their conservation methods. (C)</p> Signup and view all the answers

How do government-issued permits for CO2 emissions help protect the environment?

<p>They put a price on CO2 emissions and limit the total amount of emissions. (B)</p> Signup and view all the answers

What is one way that technological progress can mitigate climate change?

<p>By reducing the cost of environmentally sustainable goods and services. (B)</p> Signup and view all the answers

What does the continuous depletion of natural resources affect?

<p>Future human living standards and wellbeing. (B)</p> Signup and view all the answers

What is required to address environmental problems and enable low-income countries to rise out of poverty and sustain standards in rich ones?

<p>Governmental and other collective solutions globally. (D)</p> Signup and view all the answers

What is the result of governments failing to take action on environmental protection?

<p>Increased environmental issues. (B)</p> Signup and view all the answers

What is the concept of 'biocapacity' as used in the text?

<p>The Earth's rate of regeneration. (B)</p> Signup and view all the answers

Based on the information provided, what is the relationship between the expansion of the economy and environmental degradation?

<p>The expansion of the economy, and the way it is organized, leads to environmental degradation. (C)</p> Signup and view all the answers

How does the text contrast a fishing firm owner with a tour bus operator?

<p>The tour bus operator has more incentive to maintain their buses in good condition as they are costly to replace. (D)</p> Signup and view all the answers

What does the text suggest is a likely outcome when natural resources are treated as free goods?

<p>Over-utilisation and depletion of natural resources. (C)</p> Signup and view all the answers

In the context of the text, what is meant by 'artificial cheapness' of some goods?

<p>The sale price doesn't reflect the cost to the environment. (B)</p> Signup and view all the answers

Which of the following is an example of a governmental or collective solution to environmental problems given in the text?

<p>Local communities organizing recycling schemes. (A)</p> Signup and view all the answers

Flashcards

Economics

The study of how people interact with each other and their natural environment in producing and obtaining their livelihoods, considering how this changes over time and across different societies.

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Biosphere

The collection of all living organisms on Earth, including plants and animals.

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Household production

Goods and services produced for use within households, like cooking meals or taking care of family members, which are not usually sold in markets.

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Economic Circular Flow

The flow of resources between firms and households within the economy, and between the economy and the environment. It shows how resources are used and transformed.

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Firm production

The process of combining labor, structures, and equipment to create goods and services that are sold in markets.

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Environmental resources

The natural resources that are essential for both human life and economic activity. They include air, water, land, and minerals.

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Earth Overshoot Day

The date when global demand for natural resources exceeds what Earth can regenerate in a year.

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Centrally planned economy

A type of economy where the government controls all aspects of production.

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Per capita mortality from air pollution

A measure of how much pollution affects a population's health.

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Reluctance to adopt restrictive environmental policies

Economic policies often prioritize individual choice and profits over strict environmental regulations.

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Carbon-based energy

The use of fossil fuels like oil and coal for energy production.

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Ecological Overshoot

The use of natural resources exceeds the Earth's ability to replenish them.

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Biodiversity Loss

The decrease in the variety of life forms on Earth, including plants, animals, fungi, and microorganisms.

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Climate Change

The rise in the average temperature of the Earth's atmosphere and oceans.

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Externalities of Environmental Damage

The value of natural resources is not reflected in market prices, leading to overexploitation.

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Resource Depletion

The depletion of natural resources due to their overuse.

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Earth's Biocapacity

The natural world's capacity to provide resources and absorb waste.

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Ecological Footprint

A combination of human activities that impact the environment, often resulting in negative outcomes

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Sustainable Production and Consumption

Human activities that prioritize sustainability and minimize environmental impact.

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Environmental Regulation

Policies aimed at reducing the negative environmental impacts of human activities.

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Artificially Cheap Environmental Damage

Economic activities that deplete natural resources are artificially cheap due to hidden costs.

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Absorptive Capacity of the Biosphere

The ability of nature to absorb and break down waste.

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Collective Solutions to Environmental Problems

The collective action of local communities, governments, and international bodies to address environmental issues.

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Market Failure in Environmental Costs

The cost of environmental damage is not factored into the price of goods and services.

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Technology for Environmental Sustainability

Technological advancements that reduce the cost of environmentally friendly products and services.

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Intergenerational Equity

The impact of our current actions on future generations' well-being and resource availability.

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Study Notes

Economics and the Environment

  • Economics studies how humans interact with each other and the environment to produce and acquire livelihoods, changing over time and across societies.
  • The environment provides essential resources for life (e.g., air, water, food) and raw materials (wood, metals, oil) for production.
  • The economy is part of a larger social system within the biosphere.
  • Firms combine labor, structures, and equipment to produce goods and services, while households produce the next generation of the labor force.
  • Households also produce goods & services, though not always sold in the market.

Environmental Degradation and Resource Depletion

  • Living Planet Report 2020: A significant 68% decrease in mammal, bird, amphibian, reptile, and fish populations from 1970 to 2016.
  • Humanity's ecological footprint exceeds the Earth's regeneration rate by at least 56%.
  • Technological advancements, while improving living standards, often deplete natural resources and harm the environment (e.g., cars, refrigerators, plastics, fertilizers).
  • Examples like the Grand Banks cod fishery highlight the consequences of unchecked resource exploitation. Cod stocks collapsed in 1992 due to overfishing.
  • Natural resources are often used up without considering their depletion or replacement cost. This is reflected in prices; no financial penalty is included for resource consumption unless specifically regulated.

Addressing Environmental Problems

  • Government regulations can address environmental problems by limiting emissions and placing a price on their use (e.g., limits on CO2 emissions).
  • Regulations make environmentally harmful products either illegal or costly.
  • Technological advancements in renewable energy (e.g., wind, solar) can mitigate climate change and biodiversity loss by reducing the cost of sustainable alternatives.
  • Addressing environmental concerns requires collective solutions at local, national, and international levels.
  • Local communities and governments can implement recycling programs, restrict harmful products, or subsidize sustainable alternatives.

Failures in Environmental Protection

  • Even democratic governments sometimes struggle with implementing environmentally protective policies due to conflicting interests (e.g., restricting car use, taxing carbon-based energy).
  • Centrally planned economies historically had poor environmental records, leading to significant pollution issues.
  • "Earth Overshoot Day," marking the date humanity's consumption surpasses Earth's regeneration capacity, was July 28th in 2022. Resource use varies by country.

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