Question 1

If one adopts a pure free market approach to depletable resources, then one can expect the price of resources to

Accepted Answer

A)  rise steadily. 
B)  fall steadily. 
C)  fluctuate in a random-walk fashion. 
D)  remain unchanged. 
A)  rise steadily. 
B)  fall steadily. 
C)  fluctuate in a random-walk fashion. 
D)  remain unchanged.

Question 2

One of the reasons that pollution problems are as large as they are is that

Accepted Answer

A)  markets let individuals and firms deplete valuable resources without charging money for doing so. 
B)  markets are incapable of incorporating valuable resources such as air and pure water. 
C)  governments use resources without paying for them the way that individuals and firms must. 
D)  markets are not an efficient means to address scarcity. 
A)  markets let individuals and firms deplete valuable resources without charging money for doing so. 
B)  markets are incapable of incorporating valuable resources such as air and pure water. 
C)  governments use resources without paying for them the way that individuals and firms must. 
D)  markets are not an efficient means to address scarcity.

Question 3

Water quality in the United States has ____ in the past 25 years.

Accepted Answer

A)  improved 
B)  worsened 
C)  remained unchanged 
D)  improved slightly before a recent deterioration 
A)  improved 
B)  worsened 
C)  remained unchanged 
D)  improved slightly before a recent deterioration

Question 4

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

Accepted Answer

A)  such resources are generally available in infinite quantities. 
B)  rising prices for resources have stimulated supply and encouraged innovation. 
C)  the demand for most natural resources has fallen as income levels have increased. 
D)  government price floors have prevented resource exhaustion. 
A)  such resources are generally available in infinite quantities. 
B)  rising prices for resources have stimulated supply and encouraged innovation. 
C)  the demand for most natural resources has fallen as income levels have increased. 
D)  government price floors have prevented resource exhaustion.

Question 5

Empirical evidence indicates that imposing taxes on polluting emissions by firms

Accepted Answer

A)  has no effect on the amount of pollution emitted. 
B)  does not give the government leeway to regulate more dangerous emissions differently than less dangerous emissions. 
C)  does reduce the amount of pollution emitted. 
D)  discourages firms from investing in new methods of pollution abatement. 
A)  has no effect on the amount of pollution emitted. 
B)  does not give the government leeway to regulate more dangerous emissions differently than less dangerous emissions. 
C)  does reduce the amount of pollution emitted. 
D)  discourages firms from investing in new methods of pollution abatement.

Question 6

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 7

Voluntarism in recycling garbage

Accepted Answer

A)  generally has not been successful. 
B)  works only where there is surveillance. 
C)  increases the cost of recycling waste. 
D)  has worked best of all recycling program alternatives. 
A)  generally has not been successful. 
B)  works only where there is surveillance. 
C)  increases the cost of recycling waste. 
D)  has worked best of all recycling program alternatives.

Question 8

At the interest rate r, the price of a depletable natural resource three years from the present (price in present = P) will be, everything else being equal, which of the following?

Accepted Answer

A)  3P 
B)  P₃ 
C)  P(1 + r)3 
D)  3P(1 + r)3 
A)  3P 
B)  P₃ 
C)  P(1 + r)3 
D)  3P(1 + r)3

Question 9

The opportunity cost of a completely clean environment is not worth the price for most people.

Accepted Answer

A) True 
 B)False

Question 10

Economic theory predicts that the price of a depletable resource will rise as it becomes more scarce.

Accepted Answer

A) True 
 B)False

Question 11

The legal system imposes large financial penalties on firms caught violating Environmental Protection Agency guidelines.The EPA's standards program is thus an example of a

Accepted Answer

A)  market-based approach to reducing pollution. 
B)  system of emissions taxes. 
C)  system of emissions permits. 
D)  direct-control system enforced through the courts. 
A)  market-based approach to reducing pollution. 
B)  system of emissions taxes. 
C)  system of emissions permits. 
D)  direct-control system enforced through the courts.

Question 12

Externalities can cause the market mechanism to

Accepted Answer

A)  malfunction. 
B)  improve. 
C)  operate efficiently. 
D)  move up toward the production possibility curve. 
A)  malfunction. 
B)  improve. 
C)  operate efficiently. 
D)  move up toward the production possibility curve.

Question 13

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

Accepted Answer

A)  the tax rises. 
B)  demand elasticity falls. 
C)  demand elasticity rises. 
D)  the tax falls. 
A)  the tax rises. 
B)  demand elasticity falls. 
C)  demand elasticity rises. 
D)  the tax falls.

Question 14

"One of the failings of a market system is the damage to the environment.Pollution would not exist with a centrally planned economy." Evaluate this statement.

Accepted Answer

Market systems fail to include external

Question 15

The position of the supply curve in the market for garbage removal

Accepted Answer

A)  is irrelevant since the cost is fixed. 
B)  depends on the marginal cost of garbage removal. 
C)  depends on the demand for garbage removal services. 
D)  is unaffected by taxes levied per household amount of garbage. 
A)  is irrelevant since the cost is fixed. 
B)  depends on the marginal cost of garbage removal. 
C)  depends on the demand for garbage removal services. 
D)  is unaffected by taxes levied per household amount of garbage.

Question 16

Requiring all firms to reduce emissions by the same percentage is

Accepted Answer

A)  impossible. 
B)  inefficient. 
C)  inequitable. 
D)  unenforceable under the law. 
A)  impossible. 
B)  inefficient. 
C)  inequitable. 
D)  unenforceable under the law.

Question 17

By the year 2100, global warming may lead to

Accepted Answer

A)  shifts in world rain patterns. 
B)  disruption of agriculture. 
C)  expanded deserts. 
D)  coastal inundation. 
E)  all of the above 
A)  shifts in world rain patterns. 
B)  disruption of agriculture. 
C)  expanded deserts. 
D)  coastal inundation. 
E)  all of the above

Question 18

Environmental damage

Accepted Answer

A)  cannot be reduced to zero. 
B)  is inevitable where humans exist. 
C)  tends to increase as long as benefits outweigh the costs to the damagers. 
D)  All of the above are correct. 
A)  cannot be reduced to zero. 
B)  is inevitable where humans exist. 
C)  tends to increase as long as benefits outweigh the costs to the damagers. 
D)  All of the above are correct.

Question 19

The government prefers a market-based approach to reduce firms' emissions of a toxic gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever emitted in a single day.The most efficient policy under these circumstances is likely to be a system of

Accepted Answer

A)  per-unit taxes on emissions of the gas. 
B)  per-unit taxes on the goods produced by firms that emit the gas. 
C)  subsidies to firms that agree not to emit the gas. 
D)  sales of permits to emit specified quantities of the gas on specified days. 
A)  per-unit taxes on emissions of the gas. 
B)  per-unit taxes on the goods produced by firms that emit the gas. 
C)  subsidies to firms that agree not to emit the gas. 
D)  sales of permits to emit specified quantities of the gas on specified days.

Question 20

Increasing GDP generally causes increases in problems of waste disposal.

Accepted Answer

A) True 
 B)False

Exam 17: Externalities, the Environment, and Natural Resources

If one adopts a pure free market approach to depletable resources, then one can expect the price of resources to

One of the reasons that pollution problems are as large as they are is that

Water quality in the United States has ____ in the past 25 years.

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

Empirical evidence indicates that imposing taxes on polluting emissions by firms

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

Voluntarism in recycling garbage

At the interest rate r, the price of a depletable natural resource three years from the present (price in present = P) will be, everything else being equal, which of the following?

The opportunity cost of a completely clean environment is not worth the price for most people.

Economic theory predicts that the price of a depletable resource will rise as it becomes more scarce.

The legal system imposes large financial penalties on firms caught violating Environmental Protection Agency guidelines.The EPA's standards program is thus an example of a

Externalities can cause the market mechanism to

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

"One of the failings of a market system is the damage to the environment.Pollution would not exist with a centrally planned economy." Evaluate this statement.

The position of the supply curve in the market for garbage removal

Requiring all firms to reduce emissions by the same percentage is

By the year 2100, global warming may lead to

Environmental damage

The government prefers a market-based approach to reduce firms' emissions of a toxic gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever emitted in a single day.The most efficient policy under these circumstances is likely to be a system of

Increasing GDP generally causes increases in problems of waste disposal.

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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