What occurs when the market price of a product is set below the equilibrium price, leading to consumers demanding more than producers are willing to supply?

• Equilibrium

• Surplus

• Shortage

• Price elasticity

In environmental economics, what term refers to the costs or benefits that affect a party who did not choose to incur that cost or benefit, often not reflected in the market price of goods?

• Supply curve

• Demand curve

• Externalities

• Equilibrium price

Why is Gross Domestic Product (GDP) considered an incomplete measure of a country's wealth in the context of environmental economics?

• It only accounts for services, not goods.

• It does not consider the allocation of scarce resources.

• It fails to incorporate the costs of environmental degradation or resource depletion.

• It primarily focuses on consumption rather than production.

Which of the following is proposed as an alternative to Gross Domestic Product (GDP) to better account for environmental and social well-being?

• Supply/Demand Index (SDI)

• Genuine Progress Index (GPI)

• Environmental Valuation Metric (EVM)

• Resource Allocation Index (RAI)

What is a key difference between the Gross Domestic Product (GDP) and the Genuine Progress Indicator (GPI)?

• GDP measures only economic output, while GPI includes environmental and social factors.

• GDP accounts for resource depletion, while GPI does not.

• GPI focuses solely on financial transactions, while GDP considers overall well-being.

• GPI is a measure used only by developing nations, whereas GDP is global.

Which of the following best describes an "externality" in environmental economics?

• The direct cost of production paid by a company.

• A benefit received by a third party from an economic transaction.

• A cost or benefit affecting a party who did not choose to incur that cost or benefit.

• The profit generated from selling goods and services.

How does a "cap and trade" system aim to reduce pollution?

• By setting a maximum limit on pollution and allowing companies to buy and sell pollution permits.

• By imposing a fixed tax on all polluting industries.

• By completely banning all forms of industrial emissions.

• By providing subsidies to companies that increase their pollution output.

What does the Kuznets' Curve suggest about the relationship between economic development and environmental degradation?

• Environmental degradation continuously increases with economic development.

• Environmental degradation continuously decreases with economic development.

• Environmental degradation initially worsens with economic development but then improves after a certain income level.

• Economic development has no significant impact on environmental degradation.