ENVIRONMENTAL ECONOMICS ACTUAL
EXAM PAPER 2026 QUESTIONS WITH
SOLUTIONS GRADED A+
●● Preoccupation of Economics. Answer: The study of scarcity, choice,
and the efficient allocation of resources.
●● Environmental Economics. Answer: A sub field of economics
concerned with the efficient allocation of environmental resources and
the impact of economic policies on the environment.
●● Pressing environmental issues. Answer: Climate change, biodiversity
loss, water scarcity, pollution, and deforestation.
●● Sustainable development. Answer: Development that meets the
needs of the present without compromising the ability of future
generations to meet their own needs.
●● Normative Decision making. Answer: Decisions based on value
judgments and what ought to be rather than purely objective facts.
●● Ecological versus Environmental Economics. Answer:
Environmental economics views the environment as a subset of the
, economy; Ecological economics views the economy as a subsystem of
the ecosystem.
●● Mainstream Flow Chart. Answer: A circular flow model focusing on
the exchange of goods, services, and money between households and
firms.
●● Ecological Flow Chart. Answer: A model that includes the
environment as the source of raw materials and the sink for waste
products produced by the economic system.
●● Human impact on ecology. Answer: The alteration of ecosystems
through resource extraction, waste generation, and habitat destruction.
●● Capitalism. Answer: An economic system characterized by private
ownership, market determined prices, and profit incentives.
●● Socialism. Answer: An economic system characterized by collective
or government ownership of resources and central planning to meet
social needs.
●● Allocative efficiency. Answer: A state where resources are distributed
to their highest valued uses, occurring when Price equals Marginal Cost.
EXAM PAPER 2026 QUESTIONS WITH
SOLUTIONS GRADED A+
●● Preoccupation of Economics. Answer: The study of scarcity, choice,
and the efficient allocation of resources.
●● Environmental Economics. Answer: A sub field of economics
concerned with the efficient allocation of environmental resources and
the impact of economic policies on the environment.
●● Pressing environmental issues. Answer: Climate change, biodiversity
loss, water scarcity, pollution, and deforestation.
●● Sustainable development. Answer: Development that meets the
needs of the present without compromising the ability of future
generations to meet their own needs.
●● Normative Decision making. Answer: Decisions based on value
judgments and what ought to be rather than purely objective facts.
●● Ecological versus Environmental Economics. Answer:
Environmental economics views the environment as a subset of the
, economy; Ecological economics views the economy as a subsystem of
the ecosystem.
●● Mainstream Flow Chart. Answer: A circular flow model focusing on
the exchange of goods, services, and money between households and
firms.
●● Ecological Flow Chart. Answer: A model that includes the
environment as the source of raw materials and the sink for waste
products produced by the economic system.
●● Human impact on ecology. Answer: The alteration of ecosystems
through resource extraction, waste generation, and habitat destruction.
●● Capitalism. Answer: An economic system characterized by private
ownership, market determined prices, and profit incentives.
●● Socialism. Answer: An economic system characterized by collective
or government ownership of resources and central planning to meet
social needs.
●● Allocative efficiency. Answer: A state where resources are distributed
to their highest valued uses, occurring when Price equals Marginal Cost.
