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Environmental Economics I Pt I
AGEC6090
35
Economics
Graduate
12/09/2014

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Term
Environmental economics generally views the economy as a(n) ______ system.
Definition
Open
Term
T or F: The standard circular flow model of an economy shows the flow of pollution from firms to households.
Definition
False
Term
History shows that, when faced with scarcity, societies ____________ to solve the problem of resource scarcity.
Definition
can correctly adapt
Term
Thomas Malthus suggested that population growth would eventually lead to _________.
Definition
starvation and death
Term
Marginal willingness to pay is how much you are willing to pay for _________ of a good.
Definition
one more unit
Term
Consumer Surplus can be described as the area below the ______ and above the ______ for some given quantity.
Definition
demand curve / price line
Term
Marginal Cost is the cost associated with producing ____________.
Definition
one more unit of a good
Term
T or F: Marginal costs usually increase in output because land depreciates in value.
Definition
False
Term
A firm that is currently making profits should produce more output if the price is _____ than marginal cost.
Definition
greater
Term
Producer Surplus is equal to ________ minus ________.
Definition
gross revenues / total variable costs
Term
Total surplus can be described by the area below the ______ and above the ______ for some given quantity.
Definition
demand curve / marginal cost
Term
Scarcity rent is a return to scarce inputs owned by the producer in the ______ run.
Definition
long
Term
The standard economic technique used to compare present and future benefits and costs is ______.
Definition
discounting
Term
In making environmental decisions, private and social discount rates may differ because ____________.
Definition
social and private risk premiums differ
Term
Weighing the costs and benefits of pollution reduction is considered the ____________.
Definition
standard economic approach to pollution control
Term
T or F: "Increased costs of mining iron ore driving up the price of steel" is an example of an environmental externality.
Definition
False
Term
If producing a good generates pollution and nothing is being done about it, the price will be ______ and the quantity produced will be ______.
Definition
too low / too high
Term
If a business generating pollution is charged a tax per unit of pollution and the demand stays the same, the business will have to ______ its prices and produce ______ of the good.
Definition
raise / less
Term
In a Supply & Demand graph, the socially efficient outcome occurs where the ________ equal the ______.
Definition
social marginal benefits / social marginal costs
Term
To incorporate a negative externality into a market graph you would ______ the externality to/from the ________ curve.
Definition
add / market supply
Term
T or F: Subsidizing steel production is a way to internalize a negative production externality.
Definition
False
Term
IF steel producers had to pay a tax on production, the likely impacts would be that Consumer Surplus ______ and Producer Surplus ______.
Definition
declines / declines
Term
The Coase Theorem states that as long as property rights are well defined and no transaction costs exist, ________ will result.
Definition
an efficient allocation
Term
Assuming the Coase Theorem applies, the efficient allocation of a resource will result ____________.
Definition
through negotiations between the parties involved
Term
The costs of conducting a negotiation are called ______ costs.
Definition
transactions
Term
A free market allocation of an open access resource leads to ________ of the resource.
Definition
over-exploitation
Term
As production effort in harvesting an open access resource increases, _______ is likely to decrease.
Definition
marginal revenue
Term
The total profits from an open access resource are maximized when ______ equals ______.
Definition
marginal revenue / marginal cost
Term
Open access equilibrium for an open access resource occurs where ______ equals ______.
Definition
total revenue / total cost
Term
Open access equilibrium is usually economically ______ and ecologically ______.
Definition
inefficient / unsustainable
Term
Public goods are mainly characterized by ______ in consumption and ______.
Definition
non-rivalry / non-excludability
Term
T or F: National defense is considered a public good.
Definition
True
Term
A good that is used by one person and does not reduce its availability to others is characterized as ______.
Definition
non-rival
Term
A home owner that does not participate in a neighborhood cleanup, but his/her property value increases as a result is an example of ________.
Definition
free riding
Term
The socially optimal quantity of a public good can be obtained by ____________.
Definition
vertically adding the demand curves
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