2.85-Example of market failure-environment Flashcards
What is market failure?
Market failure occurs when the allocation of goods and services by a free market is not efficient.
What is an example of environmental market failure?
Pollution is a common example of environmental market failure.
True or False: Market failure can result from externalities.
True
Fill in the blank: A negative externality occurs when a third party is __________ affected by a transaction.
negatively
What is a positive externality?
A positive externality occurs when a third party benefits from a transaction they are not involved in.
Which of the following is a consequence of environmental market failure? A) Efficient resource allocation B) Increased pollution C) Lower production costs
B) Increased pollution
What role do government interventions play in correcting market failure?
Government interventions aim to correct market failure by implementing regulations, taxes, or subsidies.
What is the ‘tragedy of the commons’?
The tragedy of the commons refers to the overuse of a shared resource, leading to its depletion.
True or False: Property rights can help mitigate environmental market failure.
True
What is an externality?
An externality is a cost or benefit incurred by a third party who did not choose to incur that cost or benefit.
Fill in the blank: The __________ effect refers to the impact of pollution on public health.
health
What is carbon pricing?
Carbon pricing is a method for reducing global warming emissions by assigning a cost to carbon emissions.
How can subsidies help address market failure in the environment?
Subsidies can encourage the production of clean energy and reduce reliance on fossil fuels.
What is the purpose of environmental regulations?
Environmental regulations aim to protect the environment and public health by limiting harmful activities.
Which of the following is NOT a type of market failure? A) Public goods B) Information asymmetry C) Perfect competition
C) Perfect competition
True or False: Market failure only occurs in the environmental sector.
False
What is a public good?
A public good is a good that is non-excludable and non-rivalrous, meaning it can be consumed by many without depletion.
Fill in the blank: The __________ approach involves using market mechanisms to address environmental issues.
market-based
What is the role of the Coase theorem in environmental economics?
The Coase theorem suggests that private parties can negotiate solutions to externalities without government intervention if property rights are well-defined.
What is the difference between renewable and non-renewable resources?
Renewable resources can be replenished naturally, while non-renewable resources exist in finite amounts and cannot be replaced.
True or False: Sustainable development seeks to balance economic growth with environmental protection.
True
What is the significance of the Paris Agreement?
The Paris Agreement is an international treaty aimed at reducing carbon emissions and limiting global warming.
Fill in the blank: __________ are financial instruments that allow companies to buy and sell emissions allowances.
Cap-and-trade systems
What is environmental sustainability?
Environmental sustainability is the responsible management of resources to ensure that future generations can meet their needs.
