Question 1

Exhibit 17-3   In Exhibit 17-3, the welfare loss (from society's perspective)that results from 70 units of air quality is shown by area

Accepted Answer

A) edcb 
B) eda 
C) bac 
D) adc 
E) there is no loss 
A) edcb 
B) eda 
C) bac 
D) adc 
E) there is no loss

Question 2

A government passes a new law allowing only 1, 000 tons of pollution per day to be generated and simultaneously sells 1, 000 transferable rights to emit one ton each of pollution per day.Which of the following is true?

Accepted Answer

A) The pollution will be created by those least willing and able to pay the damages. 
B) The pollution will be created by those most willing and able to pay for the right to pollute. 
C) The funds collected by the government will be enough to compensate any individuals harmed by the pollution. 
D) Pollution will increase from zero to 1, 000 units per day. 
E) There will be no incentive for polluters to try to sneak emissions past government monitoring devices. 
A) The pollution will be created by those least willing and able to pay the damages. 
B) The pollution will be created by those most willing and able to pay for the right to pollute. 
C) The funds collected by the government will be enough to compensate any individuals harmed by the pollution. 
D) Pollution will increase from zero to 1, 000 units per day. 
E) There will be no incentive for polluters to try to sneak emissions past government monitoring devices.

Question 3

In the United States, federal efforts to clean up the environment are coordinated by the

Accepted Answer

A) Environmental Protection Agency 
B) Department of the Interior 
C) State Department 
D) Department of Agriculture 
E) Department of Justice 
A) Environmental Protection Agency 
B) Department of the Interior 
C) State Department 
D) Department of Agriculture 
E) Department of Justice

Question 4

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 5

More water pollution in the United States comes from __________ than any other source.

Accepted Answer

A) factories 
B) sulfur dioxide (i.e., acid rain) 
C) cars 
D) chemicals (used in pesticides and fertilizers)and sewage 
E) garbage 
A) factories 
B) sulfur dioxide (i.e., acid rain) 
C) cars 
D) chemicals (used in pesticides and fertilizers)and sewage 
E) garbage

Question 6

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal __________ is __________ __________ his personal marginal __________.

Accepted Answer

A) cost, greater than, benefit 
B) benefit, greater than, cost 
C) cost, equal to, benefit 
D) benefit, less than, cost 
E) benefit, equal to, cost 
A) cost, greater than, benefit 
B) benefit, greater than, cost 
C) cost, equal to, benefit 
D) benefit, less than, cost 
E) benefit, equal to, cost

Question 7

The optimal level of air quality

Accepted Answer

A) is 100 percent, which creates a pollution-free environment 
B) is smaller the lower the marginal social cost of air quality 
C) is greater the lower the marginal social benefit of air quality 
D) is greater the lower the marginal social cost of air quality 
E) is smaller the greater the marginal social benefit of air quality 
A) is 100 percent, which creates a pollution-free environment 
B) is smaller the lower the marginal social cost of air quality 
C) is greater the lower the marginal social benefit of air quality 
D) is greater the lower the marginal social cost of air quality 
E) is smaller the greater the marginal social benefit of air quality

Question 8

Exhibit 17-7   Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars, what would be the social gain?

Accepted Answer

A) $150 
B) $200 
C) $250 
D) $300 
E) $350 
A) $150 
B) $200 
C) $250 
D) $300 
E) $350

Question 9

The May 2007 report from the Intergovernmental Panel on Climate Change suggested reforms that would not require any lifestyle changes.

Accepted Answer

A) True 
 B)False

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

Untreated raw sewage is dumped directly into rivers and oceans

Accepted Answer

A) only in less-developed economies 
B) only in rural areas 
C) only in urban areas 
D) in every large city in the United States 
E) in some of the largest U.S.cities 
A) only in less-developed economies 
B) only in rural areas 
C) only in urban areas 
D) in every large city in the United States 
E) in some of the largest U.S.cities

Question 12

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 13

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 14

If you live in a state with a returnable deposit law and you decide to throw out your empty bottles and cans, chances are that someone down the line with a higher opportunity cost than you will find them and return them for deposits.

Accepted Answer

A) True 
 B)False

Question 15

Deforestation is occurring in tropical areas because

Accepted Answer

A) long-run economic considerations outweigh short-run considerations 
B) global economic considerations outweigh domestic considerations 
C) tropical soil is good for growing farm crops 
D) the value of jobs created by deforestation exceeds the cost to society 
E) there is no property right to the earth's climate 
A) long-run economic considerations outweigh short-run considerations 
B) global economic considerations outweigh domestic considerations 
C) tropical soil is good for growing farm crops 
D) the value of jobs created by deforestation exceeds the cost to society 
E) there is no property right to the earth's climate

Question 16

Government allocation of pollution rights cannot be efficient if polluters cannot be easily identified and monitored.

Accepted Answer

A) True 
 B)False

Question 17

The Coase solution to the externality problem only works when bargaining costs are high.

Accepted Answer

A) True 
 B)False

Question 18

When consuming a good creates positive externalities,

Accepted Answer

A) private demand increases 
B) private demand decreases 
C) the private demand curve overstates the marginal social benefit of the good 
D) the private demand curve understates the marginal social benefit of the good 
E) the equilibrium quantity increases without government intervention 
A) private demand increases 
B) private demand decreases 
C) the private demand curve overstates the marginal social benefit of the good 
D) the private demand curve understates the marginal social benefit of the good 
E) the equilibrium quantity increases without government intervention

Question 19

When society receives more benefits from a good than the individuals who consume the good,

Accepted Answer

A) the marginal social benefit for the good is less than the marginal social cost 
B) too much of the good would be produced by a private market 
C) property rights are assignable and well defined 
D) the good produces a positive externality 
E) the good is exhaustible with fixed-production technology 
A) the marginal social benefit for the good is less than the marginal social cost 
B) too much of the good would be produced by a private market 
C) property rights are assignable and well defined 
D) the good produces a positive externality 
E) the good is exhaustible with fixed-production technology

Question 20

The socially optimal amount of pollution abatement may be less than 100 percent.

Accepted Answer

A) True 
 B)False

Exam 17: Externalities and the Environment

Exhibit 17-3 In Exhibit 17-3, the welfare loss (from society's perspective)that results from 70 units of air quality is shown by area

A government passes a new law allowing only 1, 000 tons of pollution per day to be generated and simultaneously sells 1, 000 transferable rights to emit one ton each of pollution per day.Which of the following is true?

In the United States, federal efforts to clean up the environment are coordinated by the

Cutting down tropical rainforests

More water pollution in the United States comes from __________ than any other source.

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal __________ is __________ __________ his personal marginal __________.

The optimal level of air quality

Exhibit 17-7 Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars, what would be the social gain?

The May 2007 report from the Intergovernmental Panel on Climate Change suggested reforms that would not require any lifestyle changes.

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

Untreated raw sewage is dumped directly into rivers and oceans

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

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

If you live in a state with a returnable deposit law and you decide to throw out your empty bottles and cans, chances are that someone down the line with a higher opportunity cost than you will find them and return them for deposits.

Deforestation is occurring in tropical areas because

Government allocation of pollution rights cannot be efficient if polluters cannot be easily identified and monitored.

The Coase solution to the externality problem only works when bargaining costs are high.

When consuming a good creates positive externalities,

When society receives more benefits from a good than the individuals who consume the good,

The socially optimal amount of pollution abatement may be less than 100 percent.

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

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

Filters

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal is his personal marginal .