ENEC 201 Final Exam Study Guide Questions and Answers | Latest Version | 2024/2025 | Rated A+
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Course
ENEC 201
Institution
ENEC 201
ENEC 201 Final Exam Study Guide
Questions and Answers | Latest Version
| 2024/2025 | Rated A+
What is the main goal of environmental economics?
To understand how economic activity impacts the environment and to develop policies that
address these effects.
How do externalities relate to ...
ENEC 201 Final Exam Study Guide
Questions and Answers | Latest Version
| 2024/2025 | Rated A+
What is the main goal of environmental economics?
✔✔To understand how economic activity impacts the environment and to develop policies that
address these effects.
How do externalities relate to environmental issues?
✔✔Externalities are unintended costs or benefits of economic activities on third parties, often
seen in pollution or resource depletion.
Why is the concept of "sustainability" important in environmental economics?
✔✔Sustainability ensures that economic development meets the needs of the present without
compromising future generations' ability to meet their own needs.
What is a "carbon tax," and what is its purpose?
✔✔A carbon tax is a fee imposed on the carbon content of fuels, aimed at reducing greenhouse
gas emissions by making fossil fuel consumption more costly.
1
,What does the term "market failure" mean in the context of environmental economics?
✔✔Market failure occurs when markets do not allocate resources efficiently on their own, often
leading to environmental degradation.
How does "cap-and-trade" work as an environmental policy tool?
✔✔Cap-and-trade sets a maximum limit on emissions and allows companies to buy or sell
allowances, creating financial incentives to reduce pollution.
Why are "renewable resources" essential for sustainable development?
✔✔Renewable resources, such as solar or wind energy, can be replenished naturally and reduce
reliance on finite resources.
What role does cost-benefit analysis play in environmental policy?
✔✔Cost-benefit analysis evaluates the economic pros and cons of environmental policies,
helping determine if the benefits justify the costs.
How does the "tragedy of the commons" explain resource depletion?
✔✔The tragedy of the commons describes how individuals, acting in their own self-interest,
overuse and deplete shared resources.
2
,What is an "ecosystem service"?
✔✔Ecosystem services are benefits that ecosystems provide to humans, like clean water, air, and
pollination.
Why is "biodiversity" valuable in economic terms?
✔✔Biodiversity supports ecosystem resilience, providing resources for medicine, agriculture,
and maintaining ecological balance.
What is the difference between "private goods" and "public goods" in environmental economics?
✔✔Private goods are exclusive and rivalrous, while public goods, like clean air, are non-
exclusive and non-rivalrous, benefiting all.
What does "polluter pays principle" mean?
✔✔It’s the idea that those who produce pollution should bear the costs of managing it, reducing
environmental harm.
How does discounting impact environmental decision-making?
3
, ✔✔Discounting values future benefits and costs less than present ones, influencing long-term
environmental policy decisions.
What is meant by "natural capital"?
✔✔Natural capital includes natural resources and ecosystems that provide economic value and
contribute to human welfare.
What is the main objective of "environmental regulation"?
✔✔Environmental regulation aims to protect human health and the environment through laws
that limit pollution and resource use.
What is a "negative externality," and can you give an example?
✔✔A negative externality is an adverse effect on third parties, such as pollution from factories
impacting local communities.
How does "economic valuation" apply to environmental goods?
✔✔Economic valuation assigns monetary value to environmental goods and services, aiding in
decision-making for preservation efforts.
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