Question 1

Exhibit 17-4  
-In Exhibit 17-4, as demand increases,

Accepted Answer

A)  pollution increases 
B)  the economic damage done by pollution increases 
C)  the pollution level is the same, but the price of the right to pollute increases 
D)  the pollution level is the same, but the benefit of cleaning up the pollution increases 
E)  the cost of cleaning up the rivers increases 
A)  pollution increases 
B)  the economic damage done by pollution increases 
C)  the pollution level is the same, but the price of the right to pollute increases 
D)  the pollution level is the same, but the benefit of cleaning up the pollution increases 
E)  the cost of cleaning up the rivers increases

Question 2

Some companies and celebrities are using a variant of pollution rights to become "carbon neutral."

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 17-6  
-In Exhibit 17-6, a per-unit subsidy of __________ would result in production of the socially optimal quantity.

Accepted Answer

A)  $4 
B)  $6 
C)  $2 
D)  $1.50 
E)  $3.00 
A)  $4 
B)  $6 
C)  $2 
D)  $1.50 
E)  $3.00

Question 4

The marginal social benefit of air quality

Accepted Answer

A)  declines as air quality increases 
B)  rises as air quality increases 
C)  remains constant as air quality increases 
D)  first falls then rises as air quality increases 
E)  is always negative 
A)  declines as air quality increases 
B)  rises as air quality increases 
C)  remains constant as air quality increases 
D)  first falls then rises as air quality increases 
E)  is always negative

Question 5

Dumping raw sewage into Boston Harbor is an example of

Accepted Answer

A)  a negative externality 
B)  a positive externality 
C)  a private cost 
D)  a sunk cost 
E)  an inverse cost 
A)  a negative externality 
B)  a positive externality 
C)  a private cost 
D)  a sunk cost 
E)  an inverse cost

Question 6

Government restrictions on the use of an open-access resource

Accepted Answer

A)  may improve efficiency 
B)  will decrease efficiency 
C)  are unnecessary 
D)  contribute to pollution of the resource 
E)  contribute to depletion of the resource 
A)  may improve efficiency 
B)  will decrease efficiency 
C)  are unnecessary 
D)  contribute to pollution of the resource 
E)  contribute to depletion of the resource

Question 7

The United States recycles a greater portion of its garbage than Japan does.

Accepted Answer

A) True 
 B)False

Question 8

If the marginal social cost of producing a product exceeds the marginal social benefit, producers will produce less of it.

Accepted Answer

A) True 
 B)False

Question 9

Private property rights are easily assigned to open-access resources.

Accepted Answer

A) True 
 B)False

Question 10

The Superfund was designed to clean up

Accepted Answer

A)  the acid rain problem 
B)  air pollution from automobiles, buses, and trucks 
C)  water pollution from agricultural sources (i.e., pesticides) 
D)  water pollution from dumping raw sewage 
E)  toxic waste dumps 
A)  the acid rain problem 
B)  air pollution from automobiles, buses, and trucks 
C)  water pollution from agricultural sources (i.e., pesticides) 
D)  water pollution from dumping raw sewage 
E)  toxic waste dumps

Question 11

Which state manufactures the most toxic chemicals and has the worst toxic waste burden?

Accepted Answer

A)  California 
B)  Louisiana 
C)  New York 
D)  New Jersey 
E)  West Virginia 
A)  California 
B)  Louisiana 
C)  New York 
D)  New Jersey 
E)  West Virginia

Question 12

By current U.S. law, anyone generating, storing, or transporting hazardous waste must pay to clean it up if it leaks or is otherwise discharged into the environment. This law has been in effect

Accepted Answer

A)  since World War II 
B)  since 1960 
C)  since 1970 
D)  since 1980 
E)  only since 1990 
A)  since World War II 
B)  since 1960 
C)  since 1970 
D)  since 1980 
E)  only since 1990

Question 13

Puerta Vallarta International Airport is near the coast. At night planes take off and land from the west, over the water. During the day planes approach and leave from the east, over Puerta Vallarta neighborhoods. Night flights into and out of Puerta Vallarta are more dangerous than day flights. Which rights are in conflict in this situation?

Accepted Answer

A)  residents' right to enjoy the ocean and their right to peace and quiet 
B)  residents' right to enjoy the ocean and air passengers' right to enjoy the ocean 
C)  residents' right to peace and quiet and air passengers' right to safety 
D)  residents' right to peace and quiet and safety 
E)  air passengers' right to safety and convenience 
A)  residents' right to enjoy the ocean and their right to peace and quiet 
B)  residents' right to enjoy the ocean and air passengers' right to enjoy the ocean 
C)  residents' right to peace and quiet and air passengers' right to safety 
D)  residents' right to peace and quiet and safety 
E)  air passengers' right to safety and convenience

Question 14

Which of the following is an example of an open-access resource?

Accepted Answer

A)  a city subway system 
B)  a college education 
C)  an elementary school education 
D)  whales in the ocean 
E)  pandas in the zoo 
A)  a city subway system 
B)  a college education 
C)  an elementary school education 
D)  whales in the ocean 
E)  pandas in the zoo

Question 15

Pollution arises because

Accepted Answer

A)  the atmosphere is a nonrenewable resource 
B)  the atmosphere is a renewable resource 
C)  of enforceable property rights 
D)  the atmosphere is an open-access resource 
E)  there is no supply of pollution curve 
A)  the atmosphere is a nonrenewable resource 
B)  the atmosphere is a renewable resource 
C)  of enforceable property rights 
D)  the atmosphere is an open-access resource 
E)  there is no supply of pollution curve

Question 16

Cutting down tropical rainforests

Accepted Answer

A)  provides long-term benefits to loggers 
B)  may mean that possible cures for cancer are lost 
C)  diminishes potential oil reserves 
D)  means a reduction of carbon dioxide in the atmosphere 
E)  means less erosion 
A)  provides long-term benefits to loggers 
B)  may mean that possible cures for cancer are lost 
C)  diminishes potential oil reserves 
D)  means a reduction of carbon dioxide in the atmosphere 
E)  means less erosion

Question 17

Which of the following did not help account for the recent decline in the growth of trash-to-energy plants?

Accepted Answer

A)  a decline in energy prices 
B)  less favorable tax treatment 
C)  a decline in the amount of garbage per capita 
D)  the 1986 tax reform act 
E)  environmental concerns over sites for the plants 
A)  a decline in energy prices 
B)  less favorable tax treatment 
C)  a decline in the amount of garbage per capita 
D)  the 1986 tax reform act 
E)  environmental concerns over sites for the plants

Question 18

Society's total cost of producing a good

Accepted Answer

A)  includes only the cost to the firm 
B)  includes only the external cost 
C)  includes all private and external costs 
D)  equals the value of the output level that maximizes the firm's profit 
E)  equals the value of the output level that minimizes the firm's loss 
A)  includes only the cost to the firm 
B)  includes only the external cost 
C)  includes all private and external costs 
D)  equals the value of the output level that maximizes the firm's profit 
E)  equals the value of the output level that minimizes the firm's loss

Question 19

One quarter of the prescription drugs used in the United States are derived from plants found in tropical rainforests.

Accepted Answer

A) True 
 B)False

Question 20

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper. On a graph of the optimal level of air quality, the use of the new technology would be represented by

Accepted Answer

A)  a leftward shift of the marginal social cost curve 
B)  a rightward shift of the marginal social cost curve 
C)  movement to the right along the marginal social cost curve 
D)  movement to the left along the marginal social cost curve 
E)  a downward shift of the marginal net benefit curve 
A)  a leftward shift of the marginal social cost curve 
B)  a rightward shift of the marginal social cost curve 
C)  movement to the right along the marginal social cost curve 
D)  movement to the left along the marginal social cost curve 
E)  a downward shift of the marginal net benefit curve

Exam 17: Externalities and the Environment

Exhibit 17-4 -In Exhibit 17-4, as demand increases,

Some companies and celebrities are using a variant of pollution rights to become "carbon neutral."

Exhibit 17-6 -In Exhibit 17-6, a per-unit subsidy of __________ would result in production of the socially optimal quantity.

The marginal social benefit of air quality

Dumping raw sewage into Boston Harbor is an example of

Government restrictions on the use of an open-access resource

The United States recycles a greater portion of its garbage than Japan does.

If the marginal social cost of producing a product exceeds the marginal social benefit, producers will produce less of it.

Private property rights are easily assigned to open-access resources.

The Superfund was designed to clean up

Which state manufactures the most toxic chemicals and has the worst toxic waste burden?

By current U.S. law, anyone generating, storing, or transporting hazardous waste must pay to clean it up if it leaks or is otherwise discharged into the environment. This law has been in effect

Which of the following is an example of an open-access resource?

Pollution arises because

Cutting down tropical rainforests

Which of the following did not help account for the recent decline in the growth of trash-to-energy plants?

Society's total cost of producing a good

One quarter of the prescription drugs used in the United States are derived from plants found in tropical rainforests.

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper. On a graph of the optimal level of air quality, the use of the new technology would be represented by

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix: price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix: Indifference Curves and Utility Maximization

Production and Cost in the Firm

Appendix: a Closer Look at Production and Cost

A: perfect Competition

B: perfect Competition

A: monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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