Question 1

What is true of depletable resources is that

Accepted Answer

A) increasing scarcity leads to their total disappearance. 
B) they are depleted by gradually using up the supply of homogeneous resources, every unit of which is equally available. 
C) generally the most accessible and cheapest sources are used up so that new supplies become more costly. 
D) their prices must rise at the average rate of inflation. 
A) increasing scarcity leads to their total disappearance. 
B) they are depleted by gradually using up the supply of homogeneous resources, every unit of which is equally available. 
C) generally the most accessible and cheapest sources are used up so that new supplies become more costly. 
D) their prices must rise at the average rate of inflation.

Question 2

Identify the economist who first addressed the environmental problem in terms of externalities.

Accepted Answer

A) Joseph Schumpeter 
B) Maynard Keynes 
C) A.C.Pigou 
D) J.B.Say 
A) Joseph Schumpeter 
B) Maynard Keynes 
C) A.C.Pigou 
D) J.B.Say

Question 3

A firm producing a smoke externality is producing

Accepted Answer

A) more than the socially optimal quantity of output. 
B) less than the socially optimal quantity of output. 
C) exactly the socially optimal quantity of output. 
D) There is insufficient information to answer. 
A) more than the socially optimal quantity of output. 
B) less than the socially optimal quantity of output. 
C) exactly the socially optimal quantity of output. 
D) There is insufficient information to answer.

Question 4

Increasing scarcity of a resource causes new supplies to become more and more costly.

Accepted Answer

A) True 
 B)False

Question 5

Direct controls work if

Accepted Answer

A) there is vigilance and enthusiasm in enforcement by the regulatory agency. 
B) speed and rigor are used in the court system in prosecuting cases. 
C) there are significant penalties imposed by the legal system. 
D) All of the above occur. 
A) there is vigilance and enthusiasm in enforcement by the regulatory agency. 
B) speed and rigor are used in the court system in prosecuting cases. 
C) there are significant penalties imposed by the legal system. 
D) All of the above occur.

Question 6

The increase in world oil prices during the 1970s was

Accepted Answer

A) the result of depletion of world reserves of oil. 
B) artificially created by OPEC. 
C) the result of extremely high growth rates in industrialized countries. 
D) fully reversed by 1982. 
A) the result of depletion of world reserves of oil. 
B) artificially created by OPEC. 
C) the result of extremely high growth rates in industrialized countries. 
D) fully reversed by 1982.

Question 7

In Eastern Europe and the countries of the former Soviet Union,

Accepted Answer

A) grave environmental problems plague Eastern Europe. 
B) the area suffers from widespread illness and countless premature deaths. 
C) the Aral Sea, once the world's fourth-largest inland sea, is now half its previous size. 
D) All of the above are correct. 
A) grave environmental problems plague Eastern Europe. 
B) the area suffers from widespread illness and countless premature deaths. 
C) the Aral Sea, once the world's fourth-largest inland sea, is now half its previous size. 
D) All of the above are correct.

Question 8

If a resource is in fact becoming scarcer, then one should expect

Accepted Answer

A) the price of the resource to rise. 
B) less demand for the resource as people try to conserve. 
C) greater supply as people reduce inventories before it is all gone. 
D) all of the above. 
A) the price of the resource to rise. 
B) less demand for the resource as people try to conserve. 
C) greater supply as people reduce inventories before it is all gone. 
D) all of the above.

Question 9

Which of the following observations is true?

Accepted Answer

A) Environmental damage can be reduced to zero. 
B) Pollution results from a price mechanism malfunction. 
C) Charging those who emit pollution is not a way of dealing with pollution problems. 
D) Public interest requires pollution be maintained at its free-market level. 
A) Environmental damage can be reduced to zero. 
B) Pollution results from a price mechanism malfunction. 
C) Charging those who emit pollution is not a way of dealing with pollution problems. 
D) Public interest requires pollution be maintained at its free-market level.

Question 10

Discuss the role of individuals and governments in committing environmental damage.

Accepted Answer

Private individuals and government are m

Question 11

Direct controls are considered inefficient because all firms are forced to pay the same costs.

Accepted Answer

A) True 
 B)False

Question 12

The socialist countries of Eastern Europe have

Accepted Answer

A) fewer environmental problems than capitalist countries. 
B) improved their environment more than the capitalist countries. 
C) worse environmental problems than capitalist countries. 
D) worsened since the collapse of communism there. 
A) fewer environmental problems than capitalist countries. 
B) improved their environment more than the capitalist countries. 
C) worse environmental problems than capitalist countries. 
D) worsened since the collapse of communism there.

Question 13

Serious environmental problems are

Accepted Answer

A) unique to industrial economies. 
B) unique to Western economies. 
C) unique to civilized economies (i.e., those in which people live mainly in cities). 
D) None of the above is correct. 
A) unique to industrial economies. 
B) unique to Western economies. 
C) unique to civilized economies (i.e., those in which people live mainly in cities). 
D) None of the above is correct.

Question 14

When pollution problems arise from a sudden crisis, pollution taxes are a useful form of control.

Accepted Answer

A) True 
 B)False

Question 15

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an advantage to the pollution-rights approach to environmental quality?

Accepted Answer

A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary. 
A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary.

Question 17

Unregulated markets will tend to

Accepted Answer

A) rapidly deplete any natural resource. 
B) naturally conserve any depletable natural resource by pushing up its price every year by a constant dollar amount. 
C) naturally conserve a depletable resource by pushing up its price at a constant rate every year. 
D) deplete a resource unless new supplies are found. 
A) rapidly deplete any natural resource. 
B) naturally conserve any depletable natural resource by pushing up its price every year by a constant dollar amount. 
C) naturally conserve a depletable resource by pushing up its price at a constant rate every year. 
D) deplete a resource unless new supplies are found.

Question 18

An unexpected discovery of a new mineral deposit will cause the

Accepted Answer

A) demand curve to shift outward. 
B) demand curve to shift inward. 
C) supply curve to shift outward. 
D) supply curve to shift inward. 
A) demand curve to shift outward. 
B) demand curve to shift inward. 
C) supply curve to shift outward. 
D) supply curve to shift inward.

Question 19

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Accepted Answer

A) True 
 B)False

Question 20

Pollution problems

Accepted Answer

A) have existed for many centuries. 
B) are attributable to modern industrialization. 
C) can be blamed on the profit system. 
D) have worsened in every respect in the past forty years. 
A) have existed for many centuries. 
B) are attributable to modern industrialization. 
C) can be blamed on the profit system. 
D) have worsened in every respect in the past forty years.

Exam 16: Externalities the Environment and Natural Resources

What is true of depletable resources is that

Identify the economist who first addressed the environmental problem in terms of externalities.

A firm producing a smoke externality is producing

Increasing scarcity of a resource causes new supplies to become more and more costly.

Direct controls work if

The increase in world oil prices during the 1970s was

In Eastern Europe and the countries of the former Soviet Union,

If a resource is in fact becoming scarcer, then one should expect

Which of the following observations is true?

Discuss the role of individuals and governments in committing environmental damage.

Direct controls are considered inefficient because all firms are forced to pay the same costs.

The socialist countries of Eastern Europe have

Serious environmental problems are

When pollution problems arise from a sudden crisis, pollution taxes are a useful form of control.

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Which of the following is an advantage to the pollution-rights approach to environmental quality?

Unregulated markets will tend to

An unexpected discovery of a new mineral deposit will cause the

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Pollution problems

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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