4_Environmental_Economics_ch2

Economics

The science used to understand and explain the production, distribution, and consumption of goods and services.

Microeconomics

Concerned with the economic behavior of individuals, households, and businesses; focuses on how decisions and behavior affect supply and demand.

Macroeconomics

The study of the performance, structure, and behavior of national or regional economies; looks at growth, inflation, unemployment, and taxation.

Market economy

An economic system where production and consumption take place in markets guided by prices without government influence.

Supply and demand

Economic model where price increases when supply is low and decreases when supply is high, affecting producer profits.

Neoclassical economic theory

A theory that suggests prices and production are set through the interactions of supply and demand.

Opportunity cost

The cost of forgoing the next best alternative when making a decision.

Externalities

Costs or benefits that affect a party who did not choose to incur that cost or benefit.

Ecological Economics

The field that considers the economy as a subsystem of the Earth's larger ecosystem, focusing on sustainability and the preservation of natural capital.

Ecosystem services

The conditions and processes through which natural ecosystems, and the species that make them up, sustain and fulfill human life.

Genuine Progress Indicator (GPI)

An alternative measure of economic progress that considers the economic value of environmental degradation and enhancement.

Natural capital

Earth's resources, including forests, fisheries, and farmlands, on which humans depend.

Marginal value

Willingness to pay for a good or service compared to alternatives.

Contingent valuation

A method to assess the value of an ecosystem based on what people are willing to pay for its services.

Doughnut Economics

An economic model aiming to meet the needs of all within the means of the planet, ensuring sustainability and well-being.

Economic Data

Statistics and information that reflect the economic performance of a country or region, used for economic analysis.

Gross Domestic Product (GDP)

The total monetary value of all goods and services produced within a country's borders in a specific time period.

Inflation Rate

The percentage increase in the price level of goods and services over a period, indicating the decrease in purchasing power.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment.

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of consumer goods and services, used as an indicator of inflation.

Balance of Trade

The difference between the value of a country's exports and imports of goods and services.

Interest Rates

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal.

Fiscal Policy

Government spending and tax policies used to influence economic conditions.

Monetary Policy

The process by which a central bank manages the money supply and interest rates to control inflation and stabilize currency.

Consumer Confidence Index (CCI)

A measure of how optimistic or pessimistic consumers are regarding their expected financial situation.

What is an example of an ecosystem service

• photosynthesis

• Water

• Food

• Medicine

• Habitat

• Biodiversity