First Midterm

Question 1

What is neoclassical economics?

Answer 1

Aims to be descriptive
Not normative (doesn’t give guidance on what should be done)
Supply, demand, eqb

Question 2

What is welfare economics?

Answer 2

Normative (prescriptive)

Concerned with well being and distribution (equity)

Question 3

What is ecological economics?

Answer 3

Strong sustainability
Limits to growth
Human behaviour
Equity
Interdisciplinary

Question 4

Define Strong sustainability

Answer 4

Natural and human capital are complimentary to eachother but not substitute able

Question 5

Threats to environmental sustainability

Answer 5

1) resource depletion
2) waste impact accumulation
3) loss of ecosystem resilience

Question 6

4 classifications of pollutants

Answer 6

1) absorptive capacity
- cumulative (stock) vs non cumulative (flow)
2) spacial scale
- local vs global
3) origin
- point source vs non point source
4) occurence
- continual or episodic

Question 7

What is environmental Kuznets curve?

Answer 7

Inverted U shape curve that shows as GDP rises localized environmental quality improves

Question 8

2 laws of thermodynamics

Answer 8

1) Conservation
Energy is converted from one form. To another

2) Entropy
Never 100% efficiency, there are always losses
Through economics energy degrades from available to unavailable state

Example- fossil fuels are high quality/availability (low entropy) but combusting them for heat makes them low quality (high entropy)

Question 9

Growth paradigm

Answer 9

Idea that growth of GDP is good, and infinite despite having a limited biosphere with limited resources

Limited by biological capacity, waste absorption, stock of high availability resources

Question 10

Steady state principles (Daly)

Answer 10

1) renewable resources
Harvest at maximum a sustainable yeild
2) non renewable resources
invest in equal renewable replacements
3) emissions/wastes don’t exceed assimilative capacity
4) limit scale of human activity **controversial

Question 11

GDP alternatives

Answer 11

Genuine progress indicator
Measures resource depletion, damages of GHGs loss of habitat, crime, education, household inequality

Measuring happiness
Surveys, qualitative, issues

Question 12

Assumptions of neoclassical economics (supply)

Answer 12

Firms act to maximise profits
Perfect competition among sellers
No transaction costs

Question 13

Assumptions of neoclassical economics (demand)

Answer 13

Individuals maximise utility/welfare
People are rational
Perfect information
All costs/benefits are represented (no externalities)

Question 14

WTP - uses and critique

Answer 14

Uses-
Measure of consumer bennefit/utility
Easily quantified

Critiques-
Income based
Issues of monotizing
Preferences can change

Question 15

Why do demand curves shift?

Answer 15

of buyers
Preferences/tastes
Incomes
Price of goods

Question 16

What is coas theorum?

Answer 16

Voluntary bargaining will lead to efficient outcomes

Key assumptions-
   Clear enforced property rights
   Low to zero transaction costs
   No income effects
   Transparent information

Question 17

Policy for common property

Answer 17

Pigouvian tax
Coaslike property rights
Coersive laws
Self governance

Question 18

Total economic value (tev)

Answer 18

1) Direct use value
- extractive or non extractive

2) indirect use value
- like water sources and soil retention

3) non use values
Existence value, option value and bequest

Question 19

Revealed preferences

Answer 19

They are real world and dependable

Production function, market price, avoided cost