Chapter 12 Flashcards
What is pollution considered?
Negative externality
What occurs when there is market failure?
Inefficient output
What are market-oriented environmental policies?
Create incentives for firms to reduce pollution.
What do permits allow firms to do regarding pollution?
Emit half as much pollution
When are marginal benefits of reducing pollution high?
Pollution is extensive
What agreement resulted from the Durban climate conference negotiations?
Paris Climate Agreement
What is included in social costs of production?
Private costs + external costs
What happens when social costs exceed social benefits?
Too much product produced
What are the three main categories of market-oriented approaches to pollution control?
Pollution charges, marketable permits, property rights
How is it difficult to assign a monetary value to environmental benefits?
Difficult to assign value to subjective or non-personal benefits
What does admitting to having an endangered species lead to?
Prohibits land use
What do command-and-control regulations require companies to install?
Anti-pollution equipment
What year was the Environmental Protection Agency (EPA) created?
1970
What is a common charge related to cars?
Gasoline taxes
Advantage of market-oriented environmental tools?
Lower cost for pollution reduction
How does forcing the firm to pay external costs affect production?
Increases costs, shifts supply up
What is a major drawback of command-and-control regulation?
No incentive for improvement
What approach offers greater promise than command-and-control?
Incentives and flexibility
Why can’t nations solve environmental problems alone?
Global cooperation required
What can you evaluate using the production possibility frontier?
Tradeoff between output and environment
What are externalities?
Effects on third parties
What is a characteristic of command-and-control regulation?
Inflexible standards
What do governments in ecotourism regions do to encourage conservation?
Share revenues with local communities
What is the opportunity cost of increased environmental protection?
Less economic output
How do externalities affect the supply curve?
Does not represent all social costs
What would happen if firms paid social costs of pollution?
Less pollution, higher prices
What will firms seek with a pollution tax?
Least expensive technologies
