Environmental Economics Study
Guide Correctly Verified
Economic Efficiency - Answer is about using resources wisely. An outcome is said to be ..... if all
resources are put to their highest value use, or equivalently, the economy reaches a desired outcome
using the fewest resources.
Equity - Answer Concern about public policy or other economic decision affects people with different
levels of income or other distinguishing characteristics (e.g. geographic location, household size):
examining who gets the benefits and who pays the costs.
Economic Efficiency - Answer Occurs when the economy's recourses are allocated to their best use; an
equilibrium is reached in which the marginal benefits or an activity equal the marginal costs (e.g. supply
and demand, or the marginal benefits equal marginal damages)
Trade- offs - Answer The alternatives individuals, firms, and society face; for example, whether to chose
one good or input or another, whether to visit a park or got to a movie.
scarcity - Answer Not having enough of something relative to one's wants; the limits to what the natural
environment can provide
Opportunity Cost - Answer A fundamental concept in economics. The opportunity cost of using
resources (land, labour, capital, natural resources) in a particular way is the highest valued alternative
use to which those resources might have been put and thus which society forgoes by using the
resources in the specified way.
Marginal Benefits - Answer The incremental benefits (in dollar terms) of increasing some good or service
by one unit. They are also the derivative of a total benefit function.
Marginal Costs - Answer The incremental cost (in dollar terms) of increasing the output of a good or
service by one unit. They are also the derivative of a total cost function.
, Efficiency - Answer Achieving the maximum output per unit input or for a given level of output,
minimizing the costs of attaining it.
Incentive - Answer Something that attracts or repels people and leads them to modify their behaviour in
some way. An economic incentive is something in the economic world that leads people to channel their
efforts at economic production and consumption in certain directions
Externalities/external effects - Answer an extremely (or external effect) exists when markets fail to
incorporate the social costs or benefits a person or firm's actions have on others. Externalities arise
because of open access to environmental resources and the characteristics of joint consumption.
Socially efficient level of pollution - Answer The level of pollution where the marginal damages from
another unit of pollution released into the environment equal the marginal costs of reducing a unit of
pollution (the marginal abatement costs). Social efficiency requires the buyers to and sellers of goods
and services to take into account the impact of their actions on the environment - it means assigning
prices, generally through government policy, to ecosystem goods and services and the waste products
(pollutants)
open access - Answer The lack of property rights; no one has exclusive right to the natural resource and
no one can be excluded from using that resource. An example is the atmosphere.
Property Rights - Answer Rights that give the holder the right to do certain things with a tangible asset.
In environmental economics, the asset is typically a type of natural resource - land, water, or the
atmosphere. Characteristics of property rights include whether or not they are exclusive, transferable,
divisible, and protected by law. Rights are defined as private or common property or open access
depending on which of these characteristics they have.
private property rights - Answer A right that is exclusive ( i.e. " i own this and you do not") and typically
transferable (to others). An example of a private property right is one's title to land
Common property rights - Answer The rights a group of individuals collectively has to exclusive use of a
natural resource. an example is a pasture or fishery that is managed by a distinct community
Guide Correctly Verified
Economic Efficiency - Answer is about using resources wisely. An outcome is said to be ..... if all
resources are put to their highest value use, or equivalently, the economy reaches a desired outcome
using the fewest resources.
Equity - Answer Concern about public policy or other economic decision affects people with different
levels of income or other distinguishing characteristics (e.g. geographic location, household size):
examining who gets the benefits and who pays the costs.
Economic Efficiency - Answer Occurs when the economy's recourses are allocated to their best use; an
equilibrium is reached in which the marginal benefits or an activity equal the marginal costs (e.g. supply
and demand, or the marginal benefits equal marginal damages)
Trade- offs - Answer The alternatives individuals, firms, and society face; for example, whether to chose
one good or input or another, whether to visit a park or got to a movie.
scarcity - Answer Not having enough of something relative to one's wants; the limits to what the natural
environment can provide
Opportunity Cost - Answer A fundamental concept in economics. The opportunity cost of using
resources (land, labour, capital, natural resources) in a particular way is the highest valued alternative
use to which those resources might have been put and thus which society forgoes by using the
resources in the specified way.
Marginal Benefits - Answer The incremental benefits (in dollar terms) of increasing some good or service
by one unit. They are also the derivative of a total benefit function.
Marginal Costs - Answer The incremental cost (in dollar terms) of increasing the output of a good or
service by one unit. They are also the derivative of a total cost function.
, Efficiency - Answer Achieving the maximum output per unit input or for a given level of output,
minimizing the costs of attaining it.
Incentive - Answer Something that attracts or repels people and leads them to modify their behaviour in
some way. An economic incentive is something in the economic world that leads people to channel their
efforts at economic production and consumption in certain directions
Externalities/external effects - Answer an extremely (or external effect) exists when markets fail to
incorporate the social costs or benefits a person or firm's actions have on others. Externalities arise
because of open access to environmental resources and the characteristics of joint consumption.
Socially efficient level of pollution - Answer The level of pollution where the marginal damages from
another unit of pollution released into the environment equal the marginal costs of reducing a unit of
pollution (the marginal abatement costs). Social efficiency requires the buyers to and sellers of goods
and services to take into account the impact of their actions on the environment - it means assigning
prices, generally through government policy, to ecosystem goods and services and the waste products
(pollutants)
open access - Answer The lack of property rights; no one has exclusive right to the natural resource and
no one can be excluded from using that resource. An example is the atmosphere.
Property Rights - Answer Rights that give the holder the right to do certain things with a tangible asset.
In environmental economics, the asset is typically a type of natural resource - land, water, or the
atmosphere. Characteristics of property rights include whether or not they are exclusive, transferable,
divisible, and protected by law. Rights are defined as private or common property or open access
depending on which of these characteristics they have.
private property rights - Answer A right that is exclusive ( i.e. " i own this and you do not") and typically
transferable (to others). An example of a private property right is one's title to land
Common property rights - Answer The rights a group of individuals collectively has to exclusive use of a
natural resource. an example is a pasture or fishery that is managed by a distinct community
