Introduction

Question 1

What are the free great economic transformations of the past century and the new transformation we are on the verge of?

Answer 1

• Industrialisation
• Technology revolution
• Globalisation
• Green economics

Question 2

What is economics the study of?

Answer 2

The study of how to make trade-offs, the science of the allocation of scarce resources

Question 3

We are currently experiencing losses of habitat and the collapse of many renewable resources including what?

Answer 3

• global fisheries
• tropical forests
• coral reefs
• wetlands
• grassland to desert

Question 4

In the circular flow model, what are the four key points and the four movements ‘clockwise’ round the inner circle?

Answer 4

Households have expenditure which fuels the
Outer Market which has revenue to
Firms which have costs to the
Factor Market which is paid as income to
Households

Question 5

What is the outer circular flow model ‘anti-clockwise’?

Answer 5

Households supply resources to the
Factor Market which demands resources from
Firms who supply goods and services to the
Output Market who demand Goods and Services from
Households

Question 6

In the circular flow model who are the economic entities?

Answer 6

The households and the firms

Question 7

What is a market and what are the two markets in the circular flow?

Answer 7

Institutional arena in which exchanges (buying and selling of final goods and services (Output Market) and the factors of production (Factor Market) occur.

Question 8

What are four resources?

Answer 8

Land, Labour, Capital, Entrepreneur

Question 9

What is the weakness of the circular model?

Answer 9

No consideration for the environment whom we are dependent on for raw material inputs and absorption of waste (outputs).

Question 10

What is the difference between the Materials Balance Model and the Circular Model?

Answer 10

It adds Nature in as a key component, siting above the output market, and providing resources from nature. Firms and households both contribute waste(residuals) to nature.

Question 11

What is the importance of the First Law of Thermodynamics and what is it?

Answer 11

Matter and energy can neither be created nor destroyed.

This means the sum of material from the environment entering the economy will be equal to the sum of material in the economy plus the residuals. As such the sustainability of the environment is threatened.

Question 12

What is the Second Law of Thermodynamics and what is it?

Answer 12

Nature’s capacity to convert matter and energy is not unlimited.

Some energy becomes waste - as natural resources are used up the natural environment will be depleted over time.

Question 13

What is the key concept from the Ecologically enlightened economic model?

Answer 13

Our economic system is bounded by a non-growing and finite ecological sphere. Nature therefore is a source of and a limiting factor for the human economy.

Question 14

What are the three conclusions of the pessimist view of the environmental economy?

Answer 14

1) Cert. par. within 100 years the market will run out of non-renewable resources causing economic collapse, death and pop decline
2) Piecemeal approaches will not help
3) Solution is to limit population and pollution and cease economy growth.

Question 15

What are two optimistic views of the environmental economy?

Answer 15

• Standard of living and population has always increased so should continue - Idea is based on the fact that humans will overcome the problems
• Data showing doom and gloom are exaggerated

Question 16

What are the current environmental concerns / pressures?

Answer 16

• Global warming
• Biodiversity loss
• Air pollution
• Population growth
• Water scarcity
• Tropical deforestation
• Natural resource depletion
• Protection of food supplies

Question 17

What is ‘natural resource economics’?

Answer 17

A field of study concerned with the flow of resources from nature to economic activity

Question 18

What is ‘environmental economics’?

Answer 18

A field of study concerned with the flow of residuals (by-products) from economic activity back to nature.

Question 19

What is pollution?

Answer 19

It is the presence of matter or energy whose nature, location or quantity has undesired effects on the environment and can include natural pollutants (pollen and ocean salt spray) and anthropogenic (chemical waste).

Question 20

What are the two sources of pollution grouped by mobility?

Answer 20

• Stationary sources - fixed - power station

* Mobile sources - moving - trucks

Question 21

What are the two sources of pollution grouped by identifiability?

Answer 21

• Point source - single identifiable source - factory smokestack
• Nonpoint source - cannot be accurately identified and degrades the environment in a diffuse way.

Question 22

What is ‘environmental quality’ generally considered to mean? and what is the problem with the definition?

Answer 22

Clean air, water and land.

How clean is clean? what is acceptable?

Question 23

What is biodiversity?

Answer 23

The variety of distinct species, their genetic variability and the variety of ecosystems they inhabit.

Question 24

What is the major threat to biodiversity?

Answer 24

Natural habitat destruction, primarily due to population growth, poverty and economic development.

Question 25

What is ‘sustainable development’?

Answer 25

The management of the Earth’s resources such that their long-term quality and abundance are ensured - it implies preservation of future opportunities so we need to broaden the way growth and success is defined.

Question 26

Decision making processes of business and government need to take into account the ‘Triple Bottom Line (TBL)’ in order to have sustainable development. What is the triple bottom line?

Answer 26

1) Economic / physical capital (traditional bottom line)
2) Human / social capital (learned skills which enhance society)
3) Natural capital (comprising renewable and non-renewable resources used)

Question 27

What is an ecological footprint?

Answer 27

is a resource accounting tool that measures how much land and water area a human population requires to produce the resources it consumes to absorb its wastes given prevailing technology.

Question 28

Why is Australia’s Ecological Footprint high?

Answer 28

Because we live in large cities, in relatively large houses, travel long distances and our energy needs are currently based on fossil fuels

Question 29

What is the EPA?

Answer 29

The Environmental Protection Agency in Victoria established under the Environmental Protection Act 1970 - works with government agencies, industry and the community to reduce pollution and ensure a sustainable future.

Question 30

What are the five main activities of the EPA Victoria?

Answer 30

• Research
• Educate and train
• Develop environmental policies
• Enforce where appropriate
• Recommend legislation and regulation

Question 31

What are the two decision making procedures under the risk analysis tool?

Answer 31

• Risk assessments

* Risk management options

Question 32

Policy evaluation criteria includes what three areas?

Answer 32

Economic criteria:
1) Allocative efficiency - resources appropriated such that additional benefits to society are equal to additional costs
2) Cost effectiveness - least resources to achieve the objective
Equity criteria:
3) Environmental justice - fairness of environmental risk burden across segments of society or region.

Question 33

The regulatory approach used by government to respond to environmental policy includes? (2)

Answer 33

• Command and control approach - regulate through use of rules and standards
• Market approach - incentive based

Question 34

The government will need to set a time horizon what are the options?

Answer 34

1) short term strategy - manages existing problem - an ameliorative intent; or
2) long term strategy - reduces residuals released - a preventative intent.