Economy and Environment

Question 1

Three economic functions of the environment:

Answer 1

– resource supplier
– waste assimilator
– direct source of utility as aesthetic commodity

Question 2

First Law of Thermodynamics:

Answer 2

The amount of waste in any period is equal to the amount of natural resources
used up.

Question 3

Property rights:

Answer 3

relates to the right to use a resource
refers to a bundle of entitlements defining the owner‘s rights, privileges,
and limitations for use of the resource

Question 4

Property rights can be:

Answer 4

• private
• communal (use of property is shared with others)
• common property (state property).

Question 5

Efficient Property Right Structures:

Answer 5

1. Exclusivity: all benefits and costs accrued as a result of owning and using the resources should accrue to the owner, and only to the owner, either directly or indirectly by sale to others.
2. Transferability: all property rights should be transferable from one owner to another in a voluntary exchange.
3. Enforceability: Property rights should be secure from involuntary seizure or encroachment by others.

Question 6

externality:

Answer 6

A cost or benefit to an agent who is not involved in the original transaction (affected by the action/s of other
agent/s)
• If it brings cost – a negative externality (uncompensated)
• If it brings benefit – a positive externality (unrewarded)