Question 1

Charging firms that emit pollutants is one way to deal with pollution.

Accepted Answer

A) True 
 B)False

Question 2

Taxes on polluting firms have

Accepted Answer

A)  been tried, but not successfully. 
B)  been successful in Germany in reducing water pollution. 
C)  resulted in bankruptcy of the affected firms. 
D)  never been tried to see if they work. 
A)  been tried, but not successfully. 
B)  been successful in Germany in reducing water pollution. 
C)  resulted in bankruptcy of the affected firms. 
D)  never been tried to see if they work.

Question 3

Explain why environmental damage would be classified as an externality.

Accepted Answer

An externality is an incidental conseque

Question 4

Taxes on polluting firms for pollution are intended to

Accepted Answer

A)  raise enough revenue to cut the deficit in half. 
B)  encourage firms to reduce charges by polluting less. 
C)  be efficient, i.e., result in no excess burden. 
D)  raise revenue for general spending needs. 
A)  raise enough revenue to cut the deficit in half. 
B)  encourage firms to reduce charges by polluting less. 
C)  be efficient, i.e., result in no excess burden. 
D)  raise revenue for general spending needs.

Question 5

Direct controls that impose equal percentage reductions in emissions on all firms in the area

Accepted Answer

A)  impose the same costs on all firms. 
B)  minimize the cost of pollution reduction. 
C)  penalize firms that have already incurred some costs to reduce pollution. 
D)  are the fairest way to distribute the burden 
A)  impose the same costs on all firms. 
B)  minimize the cost of pollution reduction. 
C)  penalize firms that have already incurred some costs to reduce pollution. 
D)  are the fairest way to distribute the burden

Question 6

Pollution taxes are preferred to direct controls because they don't require a way of measuring pollutants produced.

Accepted Answer

A) True 
 B)False

Question 7

Many states charge a 10-cent deposit on every can of soda sold.A purchaser pays an extra 10 cents per can and will get his money back by returning the empty can to a store.This policy encourages recycling by

Accepted Answer

A)  increasing the supply of recyclable materials. 
B)  shifting in the demand curve for canned soda. 
C)  raising the opportunity cost of discarding empty cans. 
D)  taxing the production of canned soda. 
A)  increasing the supply of recyclable materials. 
B)  shifting in the demand curve for canned soda. 
C)  raising the opportunity cost of discarding empty cans. 
D)  taxing the production of canned soda.

Question 8

The external costs of alcohol consumption are related to, among other things, death and injury related to auto accidents caused by drunk drivers.These costs have been estimated to be about 47 cents per ounce of alcohol consumed.Taxes on alcohol amount to 23 cents per ounce.This suggests that alcohol consumption is (i) greater than the efficient or optimal amount; (ii) should be reduced to zero to eliminate the externality.

Accepted Answer

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

Question 9

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

Accepted Answer

A)  voluntarism. 
B)  direct controls. 
C)  taxes on emissions. 
D)  none of the above. 
A)  voluntarism. 
B)  direct controls. 
C)  taxes on emissions. 
D)  none of the above.

Question 10

The price elasticity of demand for an exhaustible natural resource tends to

Accepted Answer

A)  fall over time because extraction costs rise over time. 
B)  stay constant over time because the resource's price rises at a constant rate. 
C)  rise over time because the resource's rising price stimulates conservation and the development of substitutes. 
D)  rise over time because resource extraction tends to become more efficient over time. 
A)  fall over time because extraction costs rise over time. 
B)  stay constant over time because the resource's price rises at a constant rate. 
C)  rise over time because the resource's rising price stimulates conservation and the development of substitutes. 
D)  rise over time because resource extraction tends to become more efficient over time.

Question 11

If a firm that emits a form of pollution is also a monopolist, is the firm more likely to be allocatively efficient? Explain.

Accepted Answer

Yes.A monopolist maximizes profit by red

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

How do rising prices slow resource depletion?

Accepted Answer

Three ways: reduce consumption (conserva

Question 14

Compare market price and quantity of steel to socially optimal price and quantity if steel producers ignore soot emitted from their smokestacks.Use a graph to assist your explanation.

Accepted Answer

The market results in too low a price an

Question 15

Environmental quality is

Accepted Answer

A)  a public good. 
B)  best improved through government's prohibiting externalities. 
C)  maximized when costs of pollution are external. 
D)  minimized when optimal levels of pollution are produced. 
A)  a public good. 
B)  best improved through government's prohibiting externalities. 
C)  maximized when costs of pollution are external. 
D)  minimized when optimal levels of pollution are produced.

Question 16

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 17

Supply and demand analysis

Accepted Answer

A)  can be used to understand solutions to pollution, but not causes. 
B)  can be used to analyze how externalities lead to environmental problems. 
C)  cannot be used to analyze pollution, which is a physical and chemical problem. 
D)  cannot be used to solve the pollution problem, but can be used to analyze it. 
A)  can be used to understand solutions to pollution, but not causes. 
B)  can be used to analyze how externalities lead to environmental problems. 
C)  cannot be used to analyze pollution, which is a physical and chemical problem. 
D)  cannot be used to solve the pollution problem, but can be used to analyze it.

Question 18

Direct controls on polluting activity

Accepted Answer

A)  have never been tried as an instrument of environmental policy. 
B)  have been the chief instrument of environmental policy. 
C)  have been rejected as a tool of environmental policy. 
D)  are the tool of future environmental policy, based on 1993 legislation. 
A)  have never been tried as an instrument of environmental policy. 
B)  have been the chief instrument of environmental policy. 
C)  have been rejected as a tool of environmental policy. 
D)  are the tool of future environmental policy, based on 1993 legislation.

Question 19

Direct controls have traditionally been used heavily to control pollution in the U.S.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 17: Externalities, the Environment, and Natural Resources

Charging firms that emit pollutants is one way to deal with pollution.

Taxes on polluting firms have

Explain why environmental damage would be classified as an externality.

Taxes on polluting firms for pollution are intended to

Direct controls that impose equal percentage reductions in emissions on all firms in the area

Pollution taxes are preferred to direct controls because they don't require a way of measuring pollutants produced.

Many states charge a 10-cent deposit on every can of soda sold.A purchaser pays an extra 10 cents per can and will get his money back by returning the empty can to a store.This policy encourages recycling by

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

The price elasticity of demand for an exhaustible natural resource tends to

If a firm that emits a form of pollution is also a monopolist, is the firm more likely to be allocatively efficient? Explain.

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

How do rising prices slow resource depletion?

Compare market price and quantity of steel to socially optimal price and quantity if steel producers ignore soot emitted from their smokestacks.Use a graph to assist your explanation.

Environmental quality is

Which of the following observations is true?

Supply and demand analysis

Direct controls on polluting activity

Direct controls have traditionally been used heavily to control pollution in the U.S.

What is true of depletable resources is that

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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