ENEC 201 Midterm (Revised) Questions and Answers | Latest Version | 2024/2025 | 100% Pass
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Module
ENEC 201
Institution
ENEC 201
ENEC 201 Midterm (Revised) Questions
and Answers | Latest Version | 2024/2025
| 100% Pass
What is the concept of "externality" in economics?
An externality is an impact on a third party that is not directly involved in an economic
transaction, like pollution affecting the public.
How ca...
ENEC 201 Midterm (Revised) Questions
and Answers | Latest Version | 2024/2025
| 100% Pass
What is the concept of "externality" in economics?
✔✔An externality is an impact on a third party that is not directly involved in an economic
transaction, like pollution affecting the public.
How can a carbon tax help reduce emissions?
✔✔A carbon tax increases the cost of emitting greenhouse gases, incentivizing businesses and
individuals to reduce their emissions.
What does "sustainable development" aim to achieve?
✔✔Sustainable development aims to meet current needs without compromising the ability of
future generations to meet their own needs.
Why is cost-benefit analysis important in environmental policy?
✔✔It helps policymakers weigh the economic benefits of an action against its environmental and
social costs.
1
,What is the purpose of a cap-and-trade system?
✔✔Cap-and-trade limits total emissions by allowing companies to buy or sell allowances,
encouraging reductions.
What does "tragedy of the commons" refer to?
✔✔It describes how individuals, acting in their self-interest, can deplete shared resources,
harming everyone in the long run.
How does an emissions trading system work?
✔✔It sets a cap on emissions and allows companies to trade emission permits, creating a
financial incentive to reduce emissions.
What role does marginal cost play in pollution control?
✔✔Marginal cost is the cost of reducing one additional unit of pollution, helping to find the most
cost-effective level of reduction.
Why might governments subsidize renewable energy?
✔✔To encourage the use of cleaner energy sources and reduce reliance on fossil fuels.
2
, What is "natural capital"?
✔✔Natural capital includes resources like forests, water, and minerals that provide valuable
services to the economy and environment.
How does discounting affect environmental policy decisions?
✔✔Discounting values future costs and benefits less than current ones, influencing long-term
policy decisions.
What does "ecosystem service valuation" mean?
✔✔It involves assigning a monetary value to the benefits provided by ecosystems, like clean air
and water.
What is meant by "non-market valuation" in environmental economics?
✔✔Non-market valuation estimates the economic value of environmental goods that aren't
traded in markets, like scenic views.
How does the Coase theorem relate to pollution control?
✔✔The Coase theorem suggests that if property rights are well-defined, private parties can
negotiate solutions to pollution without government intervention.
3
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