Question 1

Depletion of tropical rainforests is an example of

Accepted Answer

A)  a negative externality 
B)  the use of variable technology 
C)  adverse selection 
D)  the use of fixed technology 
E)  a clearly defined property right 
A)  a negative externality 
B)  the use of variable technology 
C)  adverse selection 
D)  the use of fixed technology 
E)  a clearly defined property right

Question 2

Some U.S. cities still dump raw sewage directly into rivers or oceans.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 17-6  
-In Exhibit 17-6, a subsidy of $3 per unit will lead to the socially optimal level of production.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 17-4  
-In Exhibit 17-4, the shift of the demand curve from D to D' indicates that

Accepted Answer

A)  producers want to discharge more pollution into the river 
B)  producers want to use more of the river in a nonpolluting way 
C)  consumers want producers to clean up the polluted river 
D)  consumers want to buy goods that use technology that does not pollute 
E)  consumers want to buy the river from the polluter 
A)  producers want to discharge more pollution into the river 
B)  producers want to use more of the river in a nonpolluting way 
C)  consumers want producers to clean up the polluted river 
D)  consumers want to buy goods that use technology that does not pollute 
E)  consumers want to buy the river from the polluter

Question 5

In the absence of government intervention, the marginal social cost of pollution abatement would equal its marginal social benefit.

Accepted Answer

A) True 
 B)False

Question 6

In Japan most garbage is

Accepted Answer

A)  either recycled or burned 
B)  recycled 
C)  burned 
D)  deposited in landfills 
E)  used for fuel 
A)  either recycled or burned 
B)  recycled 
C)  burned 
D)  deposited in landfills 
E)  used for fuel

Question 7

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

Accepted Answer

A) True 
 B)False

Question 8

If firms pollute when they produce,

Accepted Answer

A)  marginal social cost equals marginal private cost 
B)  marginal private cost exceeds marginal social cost 
C)  marginal social cost exceeds marginal private cost 
D)  marginal social cost equals marginal external cost 
E)  marginal social cost equals marginal private cost, which equals marginal external cost 
A)  marginal social cost equals marginal private cost 
B)  marginal private cost exceeds marginal social cost 
C)  marginal social cost exceeds marginal private cost 
D)  marginal social cost equals marginal external cost 
E)  marginal social cost equals marginal private cost, which equals marginal external cost

Question 9

Fish are

Accepted Answer

A)  always renewable resources 
B)  renewable resources whenever property rights are well defined 
C)  renewable resources if they are taken and replaced at rates that provide a steady supply 
D)  renewable resources only if they are replaced at a rate that exceeds the rate at which they are caught 
E)  renewable resources whenever property rights are well defined and can be easily enforced 
A)  always renewable resources 
B)  renewable resources whenever property rights are well defined 
C)  renewable resources if they are taken and replaced at rates that provide a steady supply 
D)  renewable resources only if they are replaced at a rate that exceeds the rate at which they are caught 
E)  renewable resources whenever property rights are well defined and can be easily enforced

Question 10

Which of the following helps explain why pesticides account for much of the water pollution in the United States?

Accepted Answer

A)  Pesticide regulations were repealed during the Reagan administration. 
B)  Pesticide regulations are often administered by state environmental protection agencies, not the federal Environmental Protection Agency. 
C)  Pesticide regulations are administered by the federal Environmental Protection Agency, not by state agencies. 
D)  Pesticide regulations are often administered by state agricultural departments rather than environmental protection agencies. 
E)  Pesticide regulations are often administered by state environmental protection agencies rather than agricultural departments. 
A)  Pesticide regulations were repealed during the Reagan administration. 
B)  Pesticide regulations are often administered by state environmental protection agencies, not the federal Environmental Protection Agency. 
C)  Pesticide regulations are administered by the federal Environmental Protection Agency, not by state agencies. 
D)  Pesticide regulations are often administered by state agricultural departments rather than environmental protection agencies. 
E)  Pesticide regulations are often administered by state environmental protection agencies rather than agricultural departments.

Question 11

The optimal level of air quality will increase if

Accepted Answer

A)  the cost of polluting increases 
B)  pollution is found to be self-absorbing 
C)  a new process allows pollution to be removed more cheaply 
D)  the marginal social cost of air quality increases 
E)  the marginal social benefit of air quality decreases 
A)  the cost of polluting increases 
B)  pollution is found to be self-absorbing 
C)  a new process allows pollution to be removed more cheaply 
D)  the marginal social cost of air quality increases 
E)  the marginal social benefit of air quality decreases

Question 12

The optimal level of water and air quality

Accepted Answer

A)  is zero, which is a pollution-free environment 
B)  occurs when the marginal private cost of air quality equals its marginal social cost 
C)  is greater if the marginal social cost curve of air quality shifts downward 
D)  occurs when all negative externalities are eliminated 
E)  eliminates the common pool problem 
A)  is zero, which is a pollution-free environment 
B)  occurs when the marginal private cost of air quality equals its marginal social cost 
C)  is greater if the marginal social cost curve of air quality shifts downward 
D)  occurs when all negative externalities are eliminated 
E)  eliminates the common pool problem

Question 13

Free markets produce too little output when

Accepted Answer

A)  negative externalities exist 
B)  positive externalities exist 
C)  production uses fixed-production technology 
D)  production uses variable technology 
E)  the resource is exhaustible 
A)  negative externalities exist 
B)  positive externalities exist 
C)  production uses fixed-production technology 
D)  production uses variable technology 
E)  the resource is exhaustible

Question 14

As an example of how interrelated the global economy has become, the increased demand for biofuels to replace fossil fuels is a major driver of

Accepted Answer

A)  oil exploration 
B)  increased gasoline refinery capacity 
C)  deforestation 
D)  tariffs 
E)  increased rainforest acreage 
A)  oil exploration 
B)  increased gasoline refinery capacity 
C)  deforestation 
D)  tariffs 
E)  increased rainforest acreage

Question 15

Exhibit 17-6  
-In Exhibit 17-6, the socially efficient production level is

Accepted Answer

A)  0 units 
B)  10 units 
C)  20 units 
D)  40 units 
E)  50 units 
A)  0 units 
B)  10 units 
C)  20 units 
D)  40 units 
E)  50 units

Question 16

If periodic use of a resource can be continued indefinitely, that resource is said to be

Accepted Answer

A)  removable 
B)  renewable 
C)  cyclical 
D)  recyclable 
E)  part of a common pool 
A)  removable 
B)  renewable 
C)  cyclical 
D)  recyclable 
E)  part of a common pool

Question 17

Exhibit 17-2  
-In Exhibit 17-2, the total social gain from producing the socially efficient output rather than the private equilibrium output is

Accepted Answer

A)  $60 
B)  $30 
C)  $6 
D)  $480 
E)  $300 
A)  $60 
B)  $30 
C)  $6 
D)  $480 
E)  $300

Question 18

Most of the Superfund has been spent on

Accepted Answer

A)  education of the public on environmental issues 
B)  research 
C)  court costs and legal fees 
D)  cleanup and rehabilitation of polluted areas 
E)  development and installation of antipollution devices 
A)  education of the public on environmental issues 
B)  research 
C)  court costs and legal fees 
D)  cleanup and rehabilitation of polluted areas 
E)  development and installation of antipollution devices

Question 19

Exhibit 17-1  
-In Exhibit 17-1, the socially efficient level of output is

Accepted Answer

A)  0 units 
B)  100 units 
C)  between 100 and 160 units 
D)  160 units 
E)  the answer cannot be determined from the information given 
A)  0 units 
B)  100 units 
C)  between 100 and 160 units 
D)  160 units 
E)  the answer cannot be determined from the information given

Question 20

Sailboats and motorboats share Emerson Lake, which nobody owns. The sailors say the motorboats are a hazard; the motorboaters say it is the other way around. Frequent collisions occur, with many injuries and some deaths every year. If the City of Emerson were to buy the lake itself,

Accepted Answer

A)  the problem would be solved, because the lake would have an owner 
B)  the problem would be solved, because no one could use the lake 
C)  the city would still have to assign property rights so that use of the lake would be efficient 
D)  the city would give the right to use the lake to the larger group 
E)  the city would give the right to use the lake to the richer group 
A)  the problem would be solved, because the lake would have an owner 
B)  the problem would be solved, because no one could use the lake 
C)  the city would still have to assign property rights so that use of the lake would be efficient 
D)  the city would give the right to use the lake to the larger group 
E)  the city would give the right to use the lake to the richer group

Exam 17: Externalities and the Environment

Depletion of tropical rainforests is an example of

Some U.S. cities still dump raw sewage directly into rivers or oceans.

Exhibit 17-6 -In Exhibit 17-6, a subsidy of $3 per unit will lead to the socially optimal level of production.

Exhibit 17-4 -In Exhibit 17-4, the shift of the demand curve from D to D' indicates that

In the absence of government intervention, the marginal social cost of pollution abatement would equal its marginal social benefit.

In Japan most garbage is

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

If firms pollute when they produce,

Fish are

Which of the following helps explain why pesticides account for much of the water pollution in the United States?

The optimal level of air quality will increase if

The optimal level of water and air quality

Free markets produce too little output when

As an example of how interrelated the global economy has become, the increased demand for biofuels to replace fossil fuels is a major driver of

Exhibit 17-6 -In Exhibit 17-6, the socially efficient production level is

If periodic use of a resource can be continued indefinitely, that resource is said to be

Exhibit 17-2 -In Exhibit 17-2, the total social gain from producing the socially efficient output rather than the private equilibrium output is

Most of the Superfund has been spent on

Exhibit 17-1 -In Exhibit 17-1, the socially efficient level of output is

Sailboats and motorboats share Emerson Lake, which nobody owns. The sailors say the motorboats are a hazard; the motorboaters say it is the other way around. Frequent collisions occur, with many injuries and some deaths every year. If the City of Emerson were to buy the lake itself,

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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