Exam 16: Externalities the Environment and Natural Resources

The price of an exhaustible resource sold in a perfectly competitive market in which technology and consumer preferences do not change over time will tend to

If coal prices are rising faster than the rate of interest, then

What is new about environmental problems today is

A pollution tax penalizes inefficient firms.

The effectiveness of direct controls on pollution depends on: (i) the budgets and enthusiasm of the regulatory bodies; (ii) sufficiently strong statutory penalties.

Increasing environmental awareness in the United States has occurred with increasing GDP, which has reduced concerns about basic needs.

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

China, the last large communist society,

By providing free garbage removal, a community

Pollution taxes are more efficient in cleaning up the environment than direct controls.What role is there for direct controls?

In a free market the quantity demanded will not exceed the quantity supplied of a resource, even if it is undergoing rapid depletion.

The British economist A.C.Pigou

One advantage about an emissions permit system is that

Rising prices will discourage consumption and encourage conservation.

Since World War II,

Most prophecies of the imminent exhaustion of many natural resources have not come true because

The external costs of cigarettes are related to the health problem smoking produces for both smokers and nonsmokers.One estimate places these costs at 29 cents per pack.Presently, sales and excise taxes on cigarettes average about 37 cents per pack.These estimates suggest that (i) cigarette consumption is below the optimal or efficient quantity; (ii) cigarette taxes should be reduced.

The share of the burden of an emissions tax on output borne by the consumer of the polluting output will rise as

A "backstop resource" is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost.Shale oil is a backstop resource for crude oil.Which of the following statements is correct?

Prohibiting the use of "dirty" fuels by industry is an example of