Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Environmental Economics > Préparation examen 2 > Flashcards

Préparation examen 2 Flashcards

1
Q

Environmental economics

A

Economics is how we organise scare resources in the most effective way, in a limited world. Environmental economics is economics applied to environmental issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Price

A

Monetary value or quantity, a customer has to give up to get the product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Cost

A

What you have to give up for factory inputs in a production process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Perfect competition

A

Free entry and exit - Homogeneity - Many buyers and sellers - No transaction cost - Perfect information - Property rights - Rationality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Movement

A

On the same curve, higher price = higher quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Shift

A

For the same price level, the quantity will be higher or lower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Demand

A

The negative link between quantity demanded and price : when P increases, Q decreases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Income effect

A

Decrease of income = increase of D for inferior goods + decrease of D for normal goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Substitution effect

A

Price increase of good A = consumption increase of good B

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Things influencing the consumption of the same good

A

Price expectation - Price of related goods (substutes and complements) - Size and structure of the population - Taste

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Equilibrium

A

When quantity supplied matches the quantity demanded (E : P when Qs = Qd = Q)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Surplus (excess supply)

A

A situation in which quantity supplied is greater than quantity demanded : price decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Shortage (excess demand)

A

A situation in which quantity demanded is greater than quantity supplied : price increase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Market failure

A

Inability of the market to allocate resources efficiently caused by :
- Market power from few players
- Imperfect info
- Existence of transaction costs
- Existence of external costs or benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Externality

A

Cost or benefit of a good or service that is uncompensated and that will impact on a third party due to external cost or benefit. It can be negative (Private costs > social costs = external costs > 0) or positive (Social benefits > private benefits = external benefits > 0)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Welfare economics

A

The study of how the allocation of resources affects economic well-being :
- Maximum price a buyer is willing to pay to get 1 unit of the good. The more he will buy the good, the less he is willing to pay for the extra unit.
- Minimum price a seller agrees to produce a product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Consumer surplus

A

The difference between the maximum price a consumer is ready to pay for a good or service and the actual price he pays

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Producer surplus

A

The difference between the minimum price a firm is ready to produce a good or service and the actual price it takes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Market surplus

A

Consumer surplus + producer surplus : the sum up of all the individual surplus

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Dead weight loss

A

Consumer surplus + producer surplus : the sum up of all the individual surplus

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Sink function

A

The ability of the natural environment to absorb wastes and pollution (self-sustained system). We are overwhelming it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Market-based instruments to get the optimum price

A

Rely on economic forces to achieve environmental protection.

Act on price set up :
- Tax / subsidies
- Property rights

Act on quantity control = command-and-control of regulation :
- Regulations
- Standards

Act on both :
- Pollution tradable permits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Elasticity

A

How sensitive one variable would be to another variable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Determinants of Price Elasticity of Supply

A
  • Inputs availability
  • Ease of storing
  • Productive capacity
  • Size of the sector, firm or market
  • Time adjustment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Perfectly inelastic PES (PED)

A

PES (PED) = 0
No response to change in price in quantity supplied

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Inelastic PES (PED)

A

0 < PES (PED) < 1
% change in price > % change in quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Unitary elastic PES (PED)

A

PES (PED) = 1
% change in price = % change in quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Elastic PES (PED)

A

PES (PED) > 1
% change in price < % change in quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Perfectly elastic PES (PED)

A

PES (PED) = infinity

30
Q

Price elasticity of supply (demand)

A

How the Q supplied (demanded) is impacted by a change in price. It takes into account the total revenue (expense)
TR (TE) = P x Qs (Qd)

31
Q

Determinants of Price Elasticity of Demand

A
  • Adjustment time
  • Degree of necessity
  • Share of income dedicated
  • Scope of the market
  • Substitutability
  • Type of good (inferior or normal)
32
Q

Market analysis

A
  • How an event has impact the S, D or both
  • The direction of the change
    (- Evolution of the price)
  • How it will affect the equilibrium
33
Q

Income elasticity of demand (IED)

A

How the Q demanded is impacted by a change in income

34
Q

IED inferior goods

A

IED < 0
Subjective, when R increases, D decreases

35
Q

IED necessity goods

A

0 < IED < 1

36
Q

IED luxury goods

A

IED > 1

37
Q

Giffen goods

A

When P increases, D increases for inferior goods

38
Q

Veblen effect

A

When P increases, D increases for luxury goods

39
Q

Prebish-Singer effect

A

In the long run, P of primary goods decreases in proportion to P of manufactured goods

40
Q

Cross-price elasticity of demand

A

In the long run, P of primary goods decreases in proportion to P of manufactured goods

41
Q

CPED subsitutes

A

CPED > 0
When Pb increases, Da increases

42
Q

CPED complements

A

CPED < 0
When Pb increases, Da decreases

43
Q

CPED no relationship

A

CPED < 0
When Pb increases, Da decreases

44
Q

CPED perfectly competitive

A

CPED = infinity

45
Q

Opportunity cost

A

Whatever must be given up to obtain something

46
Q

Tax

A

Market-based instrument to control pollution :
- Indirect : on consumption
- Direct : on revenue/wealth

47
Q

Tax avoidance

A

Use of legal rules to minimise the tax

48
Q

Tax evasion

A

Use of illegal actions to minimise the tax

49
Q

Tax incidence

A

The way the burden of a tax is shared between D and S. The inelastic one handles the most

50
Q

Pigouvian Tax

A

Tax imposed on an activity that creates a negative externality.
It follows the ‘pollutive pays principle’ and works upstream : we tax at the beginning the total damage that can be at the end of the product value chain

51
Q

Welfare loss

A

The excess of social costs over social benefits for a given output.
A situation where MSB is ≠ to MSC and society does not achieve maximum utility.

52
Q

Why we face externalities in a competitive market?

A

Because the private costs or benefits don’t reflect the social costs or benefits of a transaction

53
Q

Coase Theorem

A

Private economic agents set property rights, make them tradable and remove transaction costs. They can solve the externalities problem on their own and reach the optimum equilibrium

54
Q

Coase Bargaining

A

When people solve an externality through private negotiation rather than government regulation (free-market environmentalism). For that to work, you ned a complete system of property rights, tradable.

55
Q

Transaction costs

A

Administrative and legal elements we have to carry to make a transaction happen

56
Q

Limits of Coasian theorem

A
  • (Too) high transaction costs
  • Bargaining unfeasibility due to speculation
  • Large number of individual players : holdout effect, free rider problem, public goods
57
Q

Holdout effect

A

If in a negotiation, you need to get an agreement from all players without distinction, one player can hold out all the negotiation

58
Q

Free rider problem

A

Ability of someone to benefit from trade without paying the cost for that

59
Q

Public goods

A

Non-rival (no competition to get the good) and non-excludable (you can’t prevent someone from using it)

60
Q

Common goods

A

Non-excludable but rival (like fishing)

61
Q

Private goods

A

Rival and excludable (we have private benefits and costs from them)

62
Q

Pollution Haven Effect

A

Higher pollution effect because of weaker laws and less demand of environmental laws protection as people are poor

63
Q

Environmental justice

A

Fair treatent for people regardless of race, colour, origin, income, etc. when it comes to environmental law

64
Q

Rebound effect

A

The tendency in which by improving an input, you encourage the use of related outputs

65
Q

Jevon’s Paradox

A

The technologicial improvement driven by P increase, leads to effciency gains of an input, cost decrease and rise of consumption

66
Q

Cap-and-Trade System

A

An Emission Trade System (ETS) for managing pollution in which permits on a given amount of pollution emission are allocated, used and/or traded by firms (application of Coase Theorem)

67
Q

Efficiency

A

Balancing external costs and external benefits

68
Q

Pigouvian tax vs. Cap-and-Trade

A

Pigouvian tax sets a price to bring within economical agents’ costs the environmental external costs (= you can pollute as long as long as you pay)

Cap-and-Trade caps total pollution quantity with permits. Firms can choose to use, sell or purchase the permits. P is determined by S & D

69
Q

Non-market based instruments

A

Regulations called “command-and-control” instruments : standards + technology-based regulations. They don’t internalise externality

70
Q

Advantages of non-market based instruments

A
  • Simple
  • Possibility to specify the outcome targeted
  • Lower distributional issues
71
Q

Disadvantage of non market-based instruments

A
  • Not flexible
  • Less cost effective

Environmental Economics (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions