Question 1

In order to increase society's well-being, a process that produces a positive externality might be

Accepted Answer

A) taxed to discourage production 
B) subsidized to encourage production 
C) taxed to encourage production 
D) subsidized to discourage production 
E) provided without government intervention 
A) taxed to discourage production 
B) subsidized to encourage production 
C) taxed to encourage production 
D) subsidized to discourage production 
E) provided without government intervention

Question 2

Most waste generated in the U.S.ends up in landfills because

Accepted Answer

A) the low opportunity cost of time discourages recycling 
B) Americans earn low incomes 
C) the price of land is relatively low 
D) the low wages in the repair industry encourages repairs 
E) of low productivity and high wages in the waste disposal industry 
A) the low opportunity cost of time discourages recycling 
B) Americans earn low incomes 
C) the price of land is relatively low 
D) the low wages in the repair industry encourages repairs 
E) of low productivity and high wages in the waste disposal industry

Question 3

A person can cause a negative externality by

Accepted Answer

A) becoming immunized 
B) talking loudly in a restaurant 
C) landscaping her lawn 
D) paying taxes 
E) attending school 
A) becoming immunized 
B) talking loudly in a restaurant 
C) landscaping her lawn 
D) paying taxes 
E) attending school

Question 4

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 5

Control of water pollution from pesticide runoff in the United States is the responsibility of

Accepted Answer

A) the U.S.Department of Agriculture 
B) the Environmental Protection Agency 
C) state attorneys general 
D) state departments of agriculture 
E) state environmental protection agencies 
A) the U.S.Department of Agriculture 
B) the Environmental Protection Agency 
C) state attorneys general 
D) state departments of agriculture 
E) state environmental protection agencies

Question 6

If producers cannot afford the fees for pollution rights,

Accepted Answer

A) they will pollute 
B) they will buy pollution rights 
C) they will sell pollution rights 
D) they will have to find a cheaper way to deal with their pollution 
E) they will not be able to use their pollution rights 
A) they will pollute 
B) they will buy pollution rights 
C) they will sell pollution rights 
D) they will have to find a cheaper way to deal with their pollution 
E) they will not be able to use their pollution rights

Question 7

A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by

Accepted Answer

A) zero 
B) the amount of the tax 
C) the marginal product of the resource 
D) the average private cost of using the resource 
E) the average social cost of using the resource 
A) zero 
B) the amount of the tax 
C) the marginal product of the resource 
D) the average private cost of using the resource 
E) the average social cost of using the resource

Question 8

The socially efficient level of output is determined where

Accepted Answer

A) marginal social cost equals marginal social benefit 
B) marginal private cost equals marginal social benefit 
C) average social cost equals average social benefit 
D) average private cost equals average social benefit 
E) total social cost equals total social benefit 
A) marginal social cost equals marginal social benefit 
B) marginal private cost equals marginal social benefit 
C) average social cost equals average social benefit 
D) average private cost equals average social benefit 
E) total social cost equals total social benefit

Question 9

Which of the following has not contributed to the high rate of tropical deforestation?

Accepted Answer

A) a lack of property rights to forests and trees 
B) a shortage of farmland 
C) banks' forgiveness of the debts of less-developed economies 
D) high demand for lumber 
E) high demand for beef and other ranch products 
A) a lack of property rights to forests and trees 
B) a shortage of farmland 
C) banks' forgiveness of the debts of less-developed economies 
D) high demand for lumber 
E) high demand for beef and other ranch products

Question 10

Markets for pollution rights

Accepted Answer

A) have never been tried in the United States 
B) assign property rights to those who value them least 
C) allow the government to assign property rights 
D) enable those who value them most to pollute 
E) are less efficient than pollution standards 
A) have never been tried in the United States 
B) assign property rights to those who value them least 
C) allow the government to assign property rights 
D) enable those who value them most to pollute 
E) are less efficient than pollution standards

Question 11

Firms that emit toxins into the air tend to

Accepted Answer

A) underproduce because the private cost of production exceeds the social cost 
B) overproduce because the social cost of production exceeds the private cost 
C) produce the same as nonpolluting firms 
D) produce at the socially optimal amount 
E) cover pollution costs in the product's price 
A) underproduce because the private cost of production exceeds the social cost 
B) overproduce because the social cost of production exceeds the private cost 
C) produce the same as nonpolluting firms 
D) produce at the socially optimal amount 
E) cover pollution costs in the product's price

Question 12

As more pollution is abated, the marginal social benefit from further abatement diminishes.

Accepted Answer

A) True 
 B)False

Question 13

Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed.Therefore, the greater the marginal benefit of reducing greenhouse gases, other things constant,

Accepted Answer

A) the lower the optimal level of emissions 
B) the higher the optimal level of emissions 
C) the likelier that the level of emissions would have no effect 
D) the lower the optimal level of cleaner air 
E) None of the answers is correct 
A) the lower the optimal level of emissions 
B) the higher the optimal level of emissions 
C) the likelier that the level of emissions would have no effect 
D) the lower the optimal level of cleaner air 
E) None of the answers is correct

Question 14

Exhibit 17-5   In Exhibit 17-5, if the government sells the right to pollute a river,

Accepted Answer

A) firms will emit Q1 units of pollutant at a price of P0 each 
B) firms will emit Q2 units of pollutant at a price of P0 each 
C) firms will emit Q0 units of pollutant at a price of P3 each 
D) firms will emit Q1 units of pollutant at a price of P1 each 
E) firms will emit Q2 units of pollutant at a price of P3 each 
A) firms will emit Q1 units of pollutant at a price of P0 each 
B) firms will emit Q2 units of pollutant at a price of P0 each 
C) firms will emit Q0 units of pollutant at a price of P3 each 
D) firms will emit Q1 units of pollutant at a price of P1 each 
E) firms will emit Q2 units of pollutant at a price of P3 each

Question 15

If production is characterized by variable technology, the optimal level of air quality occurs where

Accepted Answer

A) the marginal private cost of air quality equals the marginal social benefit 
B) the marginal social cost of air quality equals the marginal social benefit 
C) the marginal social cost of air quality equals the marginal private cost of air quality 
D) government regulators set it 
E) all costs are absorbed by the polluter 
A) the marginal private cost of air quality equals the marginal social benefit 
B) the marginal social cost of air quality equals the marginal social benefit 
C) the marginal social cost of air quality equals the marginal private cost of air quality 
D) government regulators set it 
E) all costs are absorbed by the polluter

Question 16

In the United States, what percentage of smog comes from automobiles?

Accepted Answer

A) 5 percent 
B) 15 percent 
C) 25 percent 
D) 40 percent 
E) 80 percent 
A) 5 percent 
B) 15 percent 
C) 25 percent 
D) 40 percent 
E) 80 percent

Question 17

Pollution and other negative externalities arise because

Accepted Answer

A) there are no enforceable property rights to open-access resources 
B) legislators cannot agree on what to do about them 
C) they are the price consumers are willing to pay for production of goods and services 
D) private property rights to pollute are controlled by businesses 
E) science cannot decide how to control them 
A) there are no enforceable property rights to open-access resources 
B) legislators cannot agree on what to do about them 
C) they are the price consumers are willing to pay for production of goods and services 
D) private property rights to pollute are controlled by businesses 
E) science cannot decide how to control them

Question 18

Exhibit 17-6   Exhibit 17-6 illustrates the presence of

Accepted Answer

A) positive externalities 
B) positive and negative externalities 
C) negative externalities 
D) the Coase theorem 
E) a private market with a socially efficient equilibrium 
A) positive externalities 
B) positive and negative externalities 
C) negative externalities 
D) the Coase theorem 
E) a private market with a socially efficient equilibrium

Question 19

The marginal social cost of air quality increases as air quality increases.If the dirtiest production process would create 700 tons of pollutants, then

Accepted Answer

A) eliminating the first 20 tons of pollution is cheaper than eliminating the last 20 tons 
B) eliminating the last 20 tons of pollution is cheaper than eliminating the first 20 tons 
C) more damage will be done by the first 20 tons of pollution than by the last 20 tons 
D) more damage will be done by the last 20 tons of pollution than by the first 20 tons 
E) the optimal level of air quality is to reduce pollution by 700 tons 
A) eliminating the first 20 tons of pollution is cheaper than eliminating the last 20 tons 
B) eliminating the last 20 tons of pollution is cheaper than eliminating the first 20 tons 
C) more damage will be done by the first 20 tons of pollution than by the last 20 tons 
D) more damage will be done by the last 20 tons of pollution than by the first 20 tons 
E) the optimal level of air quality is to reduce pollution by 700 tons

Question 20

To solve the common pool problem in fishing, governments can __________, or __________.

Accepted Answer

A) impose a depletion tax; prohibit resource use entirely 
B) impose a depletion tax; restrict output 
C) introduce an offsetting positive externality; prohibit resource use entirely 
D) use a variable technology; impose a depletion tax 
E) restrict output; prohibit resource use entirely 
A) impose a depletion tax; prohibit resource use entirely 
B) impose a depletion tax; restrict output 
C) introduce an offsetting positive externality; prohibit resource use entirely 
D) use a variable technology; impose a depletion tax 
E) restrict output; prohibit resource use entirely

Exam 17: Externalities and the Environment

In order to increase society's well-being, a process that produces a positive externality might be

Most waste generated in the U.S.ends up in landfills because

A person can cause a negative externality by

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

Control of water pollution from pesticide runoff in the United States is the responsibility of

If producers cannot afford the fees for pollution rights,

A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by

The socially efficient level of output is determined where

Which of the following has not contributed to the high rate of tropical deforestation?

Markets for pollution rights

Firms that emit toxins into the air tend to

As more pollution is abated, the marginal social benefit from further abatement diminishes.

Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed.Therefore, the greater the marginal benefit of reducing greenhouse gases, other things constant,

Exhibit 17-5 In Exhibit 17-5, if the government sells the right to pollute a river,

If production is characterized by variable technology, the optimal level of air quality occurs where

In the United States, what percentage of smog comes from automobiles?

Pollution and other negative externalities arise because

Exhibit 17-6 Exhibit 17-6 illustrates the presence of

The marginal social cost of air quality increases as air quality increases.If the dirtiest production process would create 700 tons of pollutants, then

To solve the common pool problem in fishing, governments can __________, or __________.

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

To solve the common pool problem in fishing, governments can , or .