Question 1

In the last three decades, air quality in American cities has improved.

Accepted Answer

A) True 
 B)False  True

Question 2

Major contributors to pollution are

Accepted Answer

A)  individuals. 
B)  firms. 
C)  government. 
D)  All of the above are correct. 
A)  individuals. 
B)  firms. 
C)  government. 
D)  All of the above are correct. D

Question 3

The optimal level of pollution is achieved when the

Accepted Answer

A)  marginal social benefits from decreased pollution are equal to its marginal social costs of reducing pollution. 
B)  level of pollution is zero. 
C)  pollution abatement exceeds the pollution level. 
D)  benefits from further pollution abatement are zero. 
A)  marginal social benefits from decreased pollution are equal to its marginal social costs of reducing pollution. 
B)  level of pollution is zero. 
C)  pollution abatement exceeds the pollution level. 
D)  benefits from further pollution abatement are zero. A

Question 4

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

Accepted Answer

A)  i and ii 
B)  i but not ii 
C)  ii but not i 
D)  neither i nor ii 
A)  i and ii 
B)  i but not ii 
C)  ii but not i 
D)  neither i nor ii

Question 5

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy.Which of the following statements was probably made by an economist?

Accepted Answer

A)  "We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved." 
B)  "Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost." 
C)  "Pollution is a moral issue that cannot be reduced to dollars and cents." 
D)  "Clean air and water are things we can buy-if the price is right." 
A)  "We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved." 
B)  "Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost." 
C)  "Pollution is a moral issue that cannot be reduced to dollars and cents." 
D)  "Clean air and water are things we can buy-if the price is right."

Question 6

Externalities are commonly generated from

Accepted Answer

A)  purely competitive retail industries. 
B)  modern computer technologies. 
C)  ordinary consumption and production activities. 
D)  benefits from further pollution abatement, which are zero. 
A)  purely competitive retail industries. 
B)  modern computer technologies. 
C)  ordinary consumption and production activities. 
D)  benefits from further pollution abatement, which are zero.

Question 7

The deregulation of oil pricing will

Accepted Answer

A)  increase our dependence on foreign oil. 
B)  make the United States energy-independent by the year 2000. 
C)  decrease domestic production. 
D)  decrease the extent of the nation's dependence on foreign oil. 
A)  increase our dependence on foreign oil. 
B)  make the United States energy-independent by the year 2000. 
C)  decrease domestic production. 
D)  decrease the extent of the nation's dependence on foreign oil.

Question 8

Which of the following is an example of detrimental externality?

Accepted Answer

A)  A trailer's entry onto an overcrowded road that delays the movement of other vehicles. 
B)  Fall in demand for gasoline in the US softens the price of gasoline in the global market. 
C)  Government investment in energy generation from non-conventional sources. 
D)  Society devotes huge quantity of its scarce resources for vital innovative activity. 
A)  A trailer's entry onto an overcrowded road that delays the movement of other vehicles. 
B)  Fall in demand for gasoline in the US softens the price of gasoline in the global market. 
C)  Government investment in energy generation from non-conventional sources. 
D)  Society devotes huge quantity of its scarce resources for vital innovative activity.

Question 9

The use of tax penalties to control pollution represents a

Accepted Answer

A)  price-based market approach to the pollution problem. 
B)  non-market approach to the pollution problem. 
C)  major source of current federal revenues. 
D)  pollution-rights solution to the pollution problem. 
A)  price-based market approach to the pollution problem. 
B)  non-market approach to the pollution problem. 
C)  major source of current federal revenues. 
D)  pollution-rights solution to the pollution problem.

Question 10

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

Accepted Answer

A)  a large part of the land is now declared "ecologically hazardous." 
B)  life expectancies are among the lowest in the industrialized world. 
C)  high levels of pollution contribute to severe health problems. 
D)  All of the above are correct. 
A)  a large part of the land is now declared "ecologically hazardous." 
B)  life expectancies are among the lowest in the industrialized world. 
C)  high levels of pollution contribute to severe health problems. 
D)  All of the above are correct.

Question 11

____ completely deplete the most vital resources.

Accepted Answer

A)  We are not going to 
B)  In the near future we will 
C)  We are eventually going to 
D)  We have already begun to 
A)  We are not going to 
B)  In the near future we will 
C)  We are eventually going to 
D)  We have already begun to

Question 12

Emissions permits are sometimes referred to as a "license to pollute."

Accepted Answer

A) True 
 B)False

Question 13

Direct controls often require long legal proceedings before they can be effective.

Accepted Answer

A) True 
 B)False

Question 14

Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i) unexpected discoveries of new reserves; (ii) new technologies which reduce extraction costs.

Accepted Answer

A)  i and ii 
B)  i but not ii 
C)  ii but not i 
D)  neither i nor ii 
A)  i and ii 
B)  i but not ii 
C)  ii but not i 
D)  neither i nor ii

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

Accepted Answer

A) True 
 B)False

Question 18

The major problem with direct controls as an environmental protection measure has been

Accepted Answer

A)  inept administrators. 
B)  corrupt judges. 
C)  illegal dumping. 
D)  legislation with no teeth. 
A)  inept administrators. 
B)  corrupt judges. 
C)  illegal dumping. 
D)  legislation with no teeth.

Question 19

Voluntary programs are dependable ways to protect the environment.

Accepted Answer

A) True 
 B)False

Question 20

A pollution tax penalizes inefficient firms.

Accepted Answer

A) True 
 B)False

Exam 17: Externalities, the Environment, and Natural Resources

In the last three decades, air quality in American cities has improved.

Major contributors to pollution are

The optimal level of pollution is achieved when the

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

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy.Which of the following statements was probably made by an economist?

Externalities are commonly generated from

The deregulation of oil pricing will

Which of the following is an example of detrimental externality?

The use of tax penalties to control pollution represents a

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

____ completely deplete the most vital resources.

Emissions permits are sometimes referred to as a "license to pollute."

Direct controls often require long legal proceedings before they can be effective.

Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i) unexpected discoveries of new reserves; (ii) new technologies which reduce extraction costs.

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

Pollution problems

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

The major problem with direct controls as an environmental protection measure has been

Voluntary programs are dependable ways to protect the environment.

A pollution tax penalizes inefficient firms.

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 I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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