Chapter 21 ELSA

Aesthic benefits from pollution reduction can be priced, and yet they arent not as important as others? True or False?

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The tradable pollution permits can allow companies to increase:

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Define cost-benefit analysis.

A cost-benefit analysis provides an estimate of the most economically efficient level of pollution reduction that is practical. A cost-benefit analysis looks at the social benefits (e.g., health and environmental benefits) that can be derived from pollution reduction versus the cost of achieving that reduction.

An increase in the price and supply of the product is the result of :

A pollution tax or a tax (:

What does social cost of production include and which is the result of it?

A pollution tax would require that polluting firms pay a tax based on the air, water and land pollution that they generate. This tax would raise the private production cost of a company to include to the social cost of production.

Explain how pollution taxes require, what would they rise, and which is the main drawback of applying them?

A pollution tax would require that polluting firms pay a tax based on the air, water and land pollution that they generate. This tax would raise the private production cost of a company to include to the social cost of production. In addition, the generated tax revenues could be used by the government to help mitigate the effects of pollution. The main drawback of such a tax is that it would discourage economic activity by increasing costs to the companies.

Explain the principle of supply and demand.

Buyers and sellers make economic decisions. Sellers supply goods and buyers create demand for goods.These two roles are often in conflict: buyers want to buy goods at low prices and sellers want to sell goods at high prices.

What is pure market economy?

Capitalists countries such as the U.S have a system that is largely based in this system.

In which way does economic activity affects the environment, in a negative or in a positive way?

Economic activity generally affects the environment, usually negatively.

Population growth stimulates....??

Economic growth.

How do we define "harmful environmental cost/ or environmental effects caused by the production or consumption of economic goods?

External Costs

Why do firms like to use private goods?

Firms have an incentive to use public goods in the production process because doing so does not cost anything.

Explain what are the GDP and the GNP?

GNP:which represents the total market value of final goods and services produced by a country during a given period (usually one year).Unfortunately, GNP does not take into account the global nature of many companies. If a company produces goods in a foreign country, then the "home" country does not really benefit from that production. Thus, if Pepsi bottles and sells soda in Japan, those revenues should not be included in the GNP of the United States. GDP: provides a better indicator of the health of a country's economy. This measure refers to the value of the goods and services produced within the boundaries of an economy during a given period of time. Both the GNP and Gross Domestic Product (GDP) are economic measures and indicate nothing about social or environmental conditions within a country. They are not measures of the quality of life. In fact, severe environmental problems can actually raise the GNP and GDP, because the funds used to clean up environmental messes (such as hazardous waste sites) help to create new jobs and increase the consumption of natural resources.

GDP stands for:

Gross Domestic Product.

GNP stands for:

Gross National product.

Give at least 3 examples of how is the environment negatively affected by the economic activity.

Natural resources are used, and large amounts of waste are produced. These side effects can be seen as ways in which the actions of a producer impact the well being of a bystander. The market fails to allocate adequate resources to address such external costs because it is only concerned with buyers and sellers, not with the well being of the environment. Only direct (or internal) costs are considered relevant. External costs are harmful social or environmental effects caused by the production or consumption of economic goods. Governments may take action to help alleviate the effects of economic activity

Which is one of the problems with using cost-benefit analyses for determining the optimum level of pollution reduction?

One problem with using cost-benefit analyses for determining the optimum level of pollution reduction is that it assumes all benefits can be labeled with a price tag. However, aesthetic benefits from pollution reduction cannot be priced, and yet they are just as important as others.

Which is one way to "internalize" some of the external costs of pollution?

One way to "internalize" some of the external costs of pollution is for the government to tax pollution.

The US is a capitalist country based in which type of system?

Pure market economy

What did the 3M corporation raised by having better management and design of manufacturing processes?

The eco-efficiency program at the 3M Corporation is an example of how the optimum level of pollution reduction can be raised through better management and design of manufacturing processes. Over the time period 1990 to 2000, the company reduced its air pollution by 88 percent, water pollution by 82 percent and waste generation by 35 percent.

What is a pure command economy?

The government controls all steps in the economic process.

The optimum level of pollution is static, and cant change over time? Trure or False?

The optimum level is not static, but can change as circumstances change.FALSE.!!

Define economics

The process by which humans manage their environment and its resources.

The economic process is made of which 3 things?

The process is made up of a system of production, distribution, and consumption of goods and services.

Define market equilibrium price.

The two sides eventually compromise on a price at which buyers can find sellers willing to sell and sellers can find buyers willing to buy.The equilibrium price can be considered as the intersection of the supply and demand curves.

TPP'S stand for what and explain what it is?

Tradable Pollution Permits (TPPs) are an alternative to pollution taxes.Companies were allocated TPPs based on their historical level of sulfur dioxide emissions. The program allows TPPs to be bought and sold among the companies. Therefore, a company can invest in scrubbers or use more expensive low sulfur coal to reduce its sulfur dioxide emissions and then sell its excess permits, offsetting part of the cost of reducing the pollution.

The proper balance between costs and benefits represents the optimum economic level of pollution reduction? True or False?

True

Explain the Human Developed Index and which are its 3 indicators?

is an estimate the of quality of life in a country based on three indicators: life expectancy, literacy rate and per capita GNP.

Describe the traditional economy.

people are self-sufficient (i.e., they produce their own goods), but in a pure command economy the government controls all steps in the economic process.

Pollution can result from the production process??

pollution results from the production process because no property rights are involved.