Question 1

One of the conclusions of A.C.Pigou was that

Accepted Answer

A)  a system of mandatory controls is the only effective means to control pollution. 
B)  a system of charges can be an effective means to control pollution. 
C)  pollution will wither away if a socialist system is in place. 
D)  pollution cannot be adequately addressed in a price system. 
A)  a system of mandatory controls is the only effective means to control pollution. 
B)  a system of charges can be an effective means to control pollution. 
C)  pollution will wither away if a socialist system is in place. 
D)  pollution cannot be adequately addressed in a price system.

Question 2

A government currently uses price controls to hold down the price of zinc, an exhaustible resource.If price controls are removed,

Accepted Answer

A)  production of zinc will probably fall. 
B)  zinc mines with high marginal cost of production will probably stop producing. 
C)  consumers of zinc will probably want substitutes for zinc. 
D)  income will probably be redistributed from zinc producers to zinc consumers. 
A)  production of zinc will probably fall. 
B)  zinc mines with high marginal cost of production will probably stop producing. 
C)  consumers of zinc will probably want substitutes for zinc. 
D)  income will probably be redistributed from zinc producers to zinc consumers.

Question 3

Most economists agree that exclusive reliance on direct controls

Accepted Answer

A)  is a sound approach. 
B)  has worked well for us in the past. 
C)  is cheaper than any other enforcement mechanism. 
D)  is a mistake. 
A)  is a sound approach. 
B)  has worked well for us in the past. 
C)  is cheaper than any other enforcement mechanism. 
D)  is a mistake.

Question 4

China, the last large communist society,

Accepted Answer

A)  has proved that a command economy has far less pollution problems than capitalist economies. 
B)  has urban smog levels higher than Los Angeles. 
C)  has the world's most sophisticated pollution-control devices. 
D)  has lowered its level of pollution dramatically since 1980. 
A)  has proved that a command economy has far less pollution problems than capitalist economies. 
B)  has urban smog levels higher than Los Angeles. 
C)  has the world's most sophisticated pollution-control devices. 
D)  has lowered its level of pollution dramatically since 1980.

Question 5

Under EPA regulations, a factory

Accepted Answer

A)  must pay for the right to pollute. 
B)  can increase air pollution from its grinding process if it decreases air pollution from its smelting process. 
C)  cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. 
D)  None of the above is correct. 
A)  must pay for the right to pollute. 
B)  can increase air pollution from its grinding process if it decreases air pollution from its smelting process. 
C)  cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. 
D)  None of the above is correct.

Question 6

Since World War II,

Accepted Answer

A)  air pollution has worsened in most U.S.cities. 
B)  many new pollutants have been introduced or identified. 
C)  the federal government has reduced its reliance on economic incentives as a means of reducing pollution. 
D)  All of the above are correct. 
A)  air pollution has worsened in most U.S.cities. 
B)  many new pollutants have been introduced or identified. 
C)  the federal government has reduced its reliance on economic incentives as a means of reducing pollution. 
D)  All of the above are correct.

Question 7

Under perfect competition the price of a depletable resource whose cost of extraction is not changing must rise at

Accepted Answer

A)  the same rate as the increase in GDP. 
B)  the same rate as the increase in consumer prices. 
C)  the same rate as the rate of interest. 
D)  a rate higher than the increase in the rate of interest. 
A)  the same rate as the increase in GDP. 
B)  the same rate as the increase in consumer prices. 
C)  the same rate as the rate of interest. 
D)  a rate higher than the increase in the rate of interest.

Question 8

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

Accepted Answer

A)  stay constant over time. 
B)  always equal the price of the closest substitute for that resource. 
C)  fall over time. 
D)  rise over time. 
A)  stay constant over time. 
B)  always equal the price of the closest substitute for that resource. 
C)  fall over time. 
D)  rise over time.

Question 9

If the prices of natural resources begin to rise, as economists might expect, what will happen to the level of economic rent in this industry?

Accepted Answer

Economic rent will increase.The resource

Question 10

Who of the following has been prominently accused of acting on the basis of the "edifice complex?"

Accepted Answer

A)  the Environmental Protection Agency? 
B)  A.C.Pigou 
C)  the Army Corps of Engineers 
D)  environmental activists 
A)  the Environmental Protection Agency? 
B)  A.C.Pigou 
C)  the Army Corps of Engineers 
D)  environmental activists

Question 11

Which of the following statements is false?

Accepted Answer

A)  In a competitive market, the price mechanism encourages conservation of a depletable resource. 
B)  As the price of a depletable resource rises, its known reserves often increase. 
C)  Prices of depletable resources have risen in the twentieth century primarily because resource producers have exercised monopoly or oligopoly power. 
D)  Shortages of depletable resources occur primarily when governments or others interfere with the price mechanism. 
A)  In a competitive market, the price mechanism encourages conservation of a depletable resource. 
B)  As the price of a depletable resource rises, its known reserves often increase. 
C)  Prices of depletable resources have risen in the twentieth century primarily because resource producers have exercised monopoly or oligopoly power. 
D)  Shortages of depletable resources occur primarily when governments or others interfere with the price mechanism.

Question 12

Describe how a pollution-control authority might use an emissions permits system to reduce pollution.

Accepted Answer

An authority could create a permit for a

Question 13

When pollution emissions can be measured taxation will tend to be more effective than any other method of controlling pollution.

Accepted Answer

A) True 
 B)False

Question 14

Forecasts of an inevitable exhaustion of essential natural resources are "simply beside the point" because higher prices

Accepted Answer

A)  reduce quantity demanded. 
B)  stimulate supply. 
C)  stimulate alternative technology. 
D)  All of the above are true. 
A)  reduce quantity demanded. 
B)  stimulate supply. 
C)  stimulate alternative technology. 
D)  All of the above are true.

Question 15

The "edifice complex" is based on the idea that bigger is better.

Accepted Answer

A) True 
 B)False

Question 16

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

Accepted Answer

A)  Known reserves of the resource were depleted. 
B)  The interest rate rose by 15 percent. 
C)  Antitrust enforcement broke up a cartel among major suppliers of the resource. 
D)  The government imposed an effective price floor. 
A)  Known reserves of the resource were depleted. 
B)  The interest rate rose by 15 percent. 
C)  Antitrust enforcement broke up a cartel among major suppliers of the resource. 
D)  The government imposed an effective price floor.

Question 17

Centrally planned economies like China produce relatively little pollution.

Accepted Answer

A) True 
 B)False

Question 18

Economic theory would lead us to suspect that deep sea oil reserves would be accessed before those located in the Middle East or on the U.S.mainland.

Accepted Answer

A) True 
 B)False

Question 19

Air quality in most U.S.cities has ____ since World War II.

Accepted Answer

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

Question 20

Voluntarism often has proved to be weak and unreliable.Does it still have a place in controlling activities that damage the environment?

Accepted Answer

Yes, voluntary measures do have their pl

Exam 17: Externalities, the Environment, and Natural Resources

One of the conclusions of A.C.Pigou was that

A government currently uses price controls to hold down the price of zinc, an exhaustible resource.If price controls are removed,

Most economists agree that exclusive reliance on direct controls

China, the last large communist society,

Under EPA regulations, a factory

Since World War II,

Under perfect competition the price of a depletable resource whose cost of extraction is not changing must rise at

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 the prices of natural resources begin to rise, as economists might expect, what will happen to the level of economic rent in this industry?

Who of the following has been prominently accused of acting on the basis of the "edifice complex?"

Which of the following statements is false?

Describe how a pollution-control authority might use an emissions permits system to reduce pollution.

When pollution emissions can be measured taxation will tend to be more effective than any other method of controlling pollution.

Forecasts of an inevitable exhaustion of essential natural resources are "simply beside the point" because higher prices

The "edifice complex" is based on the idea that bigger is better.

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

Centrally planned economies like China produce relatively little pollution.

Economic theory would lead us to suspect that deep sea oil reserves would be accessed before those located in the Middle East or on the U.S.mainland.

Air quality in most U.S.cities has ____ since World War II.

Voluntarism often has proved to be weak and unreliable.Does it still have a place in controlling activities that damage the environment?

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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