Business and the environment Edexcel International GCSE Economics revision
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In plain words
Making and moving things leaves a mark: smoke in the air, waste in the river, noise, litter, ugly buildings. The firm causing it usually does not pay for the damage. Other people do, with their health and their surroundings.
Because the market will not fix this by itself, governments step in.
4 things to know
- Ways business activity damages the environment: air pollution (fumes from factories and vehicles), water pollution (waste put into rivers and the sea), noise pollution, and visual pollution, including litter.
- These are external costs: they fall on third parties, not on the firm.
- Government intervention: taxes on polluting products or on emissions, subsidies for cleaner alternatives, regulation (limits and bans), fines for breaking the rules, pollution permits, and providing parks and green spaces.
- Taxes make the polluter pay and raise revenue, but firms may pass the cost on to consumers. Regulation is direct, but needs inspectors and enforcement.
Tips and tricks
- Name the type of pollution and who suffers from it. "It harms the environment" is too vague to earn a mark.
- Each kind of intervention has a drawback. For a subsidy it is the cost to the government. For regulation and fines it is the cost of checking.
It lands in your notebook with its questions as flashcards.
Business and the environment: 5 questions and answers
These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.
Smoke from a factory chimney is an example of
It puts harmful gases and particles into the air.
Why is pollution an external cost?
Third parties bear the cost.
Which policy rewards firms for cutting their pollution?
A firm that pollutes less can sell the permits it does not need.
A government pays part of the cost of installing solar panels. This is
It lowers the cost of the cleaner alternative, so more people choose it.
Which is a disadvantage of taxing firms that pollute?
Consumers may end up paying, and if demand is inelastic, output and pollution fall only a little.
Quiz
5 questions
Tap an answer and you’ll see straight away whether it’s right, and why.
Worksheet
3 questions, 8 marks. Write your answers on paper, then check them.
Business and the environment
Edexcel International GCSE Economics 4EC1 · 8 marks · papermunch.org
Name ______________________________ Date ______________
State two ways in which a factory may damage the environment.[2]
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Any two of: air pollution from its chimneys, water pollution from waste put into rivers, noise pollution, visual pollution.
Explain how a tax on plastic bags could help the environment.[3]
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The tax raises the price of each bag, so shoppers use fewer and reuse the ones they have. Less plastic is thrown away, so there is less litter and less harm to wildlife.
Explain one advantage and one disadvantage of using regulation to limit factory emissions.[3]
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Advantage: a legal limit applies to every firm and sets a clear maximum for pollution. Disadvantage: inspectors are needed to check that firms obey it, which is costly.
Answers: Business and the environment
- 1. Any two of: air pollution from its chimneys, water pollution from waste put into rivers, noise pollution, visual pollution.
- 2. The tax raises the price of each bag, so shoppers use fewer and reuse the ones they have. Less plastic is thrown away, so there is less litter and less harm to wildlife.
- 3. Advantage: a legal limit applies to every firm and sets a clear maximum for pollution. Disadvantage: inspectors are needed to check that firms obey it, which is costly.