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Environmental and Natural Resource Economics
Examination 1

These questions are from the test bank. An "A" answer requires at least three or four intelligent sentences. Some questions may require more sentences if they have multiple parts.

I will randomly choose 15 questions and you are required to answer 12 of them.

Lecture 1 - Introduction to Environmental and Natural Resource Economics


1. What is the difference between positive and normative economics?

Why is this important for environmental policies?

2. Why do pessimistic predictions get more attention?


Lecture 2 - Growing Population and Economic Growth


3. What is the Environmental Kuznet's Curve?

What is the criticism of the Kuznet's Curve?

4.Why is the world's population growth rate such a problem?:

Why do Malthusian ideas keep coming back?

What happens to market price and quantities when population is growing?
(Be careful, there is short-run and long-run effects on the market and its price)

5.Using growth theory, explain what happens to GDP when government passes environmental laws or restricts use of natural resources.

Each government policy has negative and positive effects.

6.Why is the developing world such a problem?

What are leakages?

7.How does the Laws of Thermodynamics apply to Environment and Natural Resource Economics

Please draw a diagram, showing the dynamics of an economy and its environment.


Lecture 3 - Property Rights and Market Failure


8. What are public goods?

Give some examples.

What two conditions are required for a public good?

How can government correct this market failure?

9. What is asymmetric information?

Give some examples.

What are some ways government can correct this market failure?

What are some ways private markets have corrected this market failure?

10. What is a positive externality?

Give some examples.

How can government correct this market failure?

11. What is an open access resource?

Give some examples.

How can government fix this problem?

12. What is a negative externality?

Give some examples

13. What is the Coase Theorem?

Give an example how it works

What are some of the problems and assumptions for this to work?

14. What are Command and Control regulations?

Give an example.

Why do many governments such as the United States prefer this method?

What are advantages and disadvantage of these regulations?

15. What is grandfathering in Command and Control regulations?

What problems does grandfathering have?

16. What is a Pigouvian tax?

What are benefits of this tax?

What are some problems of this tax?

17. What are marketable pollution permits?

What characteristics do the permits need to facilitate trade?

How are permits distributed?

What are the benefits?

What are the problems?

What is an environmental hotspot?

18. What are the problems in using lawsuits to correct market failure?

19. How can government use subsidies to correct a market failure?

What are the problems?


Lecture 4 - Pollution


20. What is the difference between point source and nonpoint source pollution?

Do economic policies work equally for them?

21. What is the Porter Hypothesis?

Give an example

What are some criticisms of this hypothesis?

22. What is transboundary pollution?

Give an example

How have governments tried to correct this problem?

23. What is the Precautionary Principle?

Does this principle violate any economic ideas?

24. What is the Montreal Protocol?

Why was it successful?

25. What is ground level ozone (O3)?

What are some methods how government fixed this problem?

26. What is sulfur dioxide (SO2)?

Where does it come from?

What are some methods how government fixed this problem?

27. Please use the Prisoners Dilemma (i.e. game theory) to show why countries would choose a weak level of environmental laws?

28. How can free trade worsen or lessen the impact of pollution?

Using a supply and demand function for a product, show the gains and losses for a product that is imported and causes pollution on both sides of the market.


Lecture 5 - Global Warming


29. What is the Global Warming Potential (GWP)?

How does the GWP relate to a permit system for greenhouse gases?

30. What are the common greenhouse gases?

What are the major sources for greenhouse gases?

31. What is the Kyoto Protocol?

Which countries signed but did not ratify the Kyoto Protocol?

Is there a problem that several countries did not sign the Kyoto Protocol?

32. What is the European Union Emissions Trading Scheme?

Is the program effective in reducing CO2 emissions?

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