Environmental Economics Flashcard

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What is market failure?

Back

Market failure occurs when the allocation of goods and services by a free market is not efficient, often leading to negative outcomes such as resource depletion.

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What is the Tragedy of the Commons?

Back

The Tragedy of the Commons is an economic theory that describes how individuals, acting in their own self-interest, can ultimately deplete shared resources, leading to resource depletion.

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What does 'government intervention' mean in a free market economy?

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Government intervention refers to the actions taken by government to affect the economy, such as regulations, subsidies, and taxes, which are often absent in a pure free market.

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What happens to prices when demand is high and supply is low?

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When demand is high and supply is low, the price of the product will increase.

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What is resource depletion?

Back

Resource depletion is the consumption of a resource faster than it can be replenished, often resulting from overuse or mismanagement.

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What is the relationship between competition and market efficiency?

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Competition in a market typically leads to greater efficiency as businesses strive to improve products and reduce prices.

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Define 'externalities' in environmental economics.

Back

Externalities are costs or benefits incurred by third parties who did not choose to incur those costs or benefits, often leading to market failure.

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What is the role of supply and demand in determining market prices?

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Supply and demand interact to determine the market price; when demand exceeds supply, prices rise, and when supply exceeds demand, prices fall.

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What is a public good?

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A public good is a product that one individual can consume without reducing its availability to others, and from which no one is excluded, such as clean air.

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What is the concept of 'sustainable development'?

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Sustainable development is the practice of meeting current needs without compromising the ability of future generations to meet their own needs.