Question 1

Dwindling resources encourage the development of substitute products.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

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

Accepted Answer

A) True 
 B)False

Question 5

According to economic theory, under perfect competition, the price of a depletable resource

Accepted Answer

A) becomes an inaccurate signal of scarcity. 
B) may fall as firms will develop substitutes. 
C) will be too volatile to let markets adjust. 
D) will increase as firms develop new innovations to extract the resource. 
A) becomes an inaccurate signal of scarcity. 
B) may fall as firms will develop substitutes. 
C) will be too volatile to let markets adjust. 
D) will increase as firms develop new innovations to extract the resource.

Question 6

Economists use a resource's price as an indicator of its relative scarcity.

Accepted Answer

A) True 
 B)False

Question 7

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?

Accepted Answer

A) The production of shale oil is likely to increase over time even if crude oil is still available. 
B) Shale oil is unlikely to be produced until all the crude oil has been depleted. 
C) The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. 
D) In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price. 
A) The production of shale oil is likely to increase over time even if crude oil is still available. 
B) Shale oil is unlikely to be produced until all the crude oil has been depleted. 
C) The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. 
D) In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.

Question 8

The increase in world oil prices during the 1970s was

Accepted Answer

A) the result of depletion of world reserves of oil. 
B) artificially created by OPEC. 
C) the result of extremely high growth rates in industrialized countries. 
D) fully reversed by 1982. 
A) the result of depletion of world reserves of oil. 
B) artificially created by OPEC. 
C) the result of extremely high growth rates in industrialized countries. 
D) fully reversed by 1982.

Question 9

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 10

Briefly and concisely define the following terms.

Accepted Answer

The answer of Briefly and concisely define the following terms....

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

A tax on polluting emissions will

Accepted Answer

A) provide incentives for firms to reduce the volume of polluting materials 
B) raise revenue sufficient to eliminate the deficit. 
C) necessarily lower the price of the products. 
D) require no agency to administer the tax. 
A) provide incentives for firms to reduce the volume of polluting materials 
B) raise revenue sufficient to eliminate the deficit. 
C) necessarily lower the price of the products. 
D) require no agency to administer the tax.

Question 13

Statistical studies suggest that the cost of direct controls for any target level of pollution is

Accepted Answer

A) much higher than the cost of taxes on emissions. 
B) about the same as the cost of taxes on emissions. 
C) lower than the cost of taxes on emissions. 
D) impossible to compare to the cost of taxes on emissions. 
A) much higher than the cost of taxes on emissions. 
B) about the same as the cost of taxes on emissions. 
C) lower than the cost of taxes on emissions. 
D) impossible to compare to the cost of taxes on emissions.

Question 14

There is concern that CFCs, a chemical by-product of refrigeration, are destroying Earth's protective ozone layer, leaving us more vulnerable to cataracts and skin cancer.Suppose each air conditioner creates 10 pounds of CFCs.The demand and supply of air conditioners follow:   What will be the free-market price and quantity, and what will be the price and quantity if the government forces suppliers to pay a $100 tax for each air conditioner produced?

Accepted Answer

The free-market equilibrium occurs at Q

Question 15

Depletable resource prices change over time depending on

Accepted Answer

A) how the technology of resource extraction changes. 
B) the prices of publicly traded stock. 
C) the number of countries that have nationalized production. 
D) the prices of substitutable renewable resources. 
A) how the technology of resource extraction changes. 
B) the prices of publicly traded stock. 
C) the number of countries that have nationalized production. 
D) the prices of substitutable renewable resources.

Question 16

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 17

Price controls would ordinarily be used to increase rather than decrease prices of depletable resources.

Accepted Answer

A) True 
 B)False

Question 18

Cap-and-trade programs limit pollution by selling firms a fixed amount of permits to pollute.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about waste disposal is not true?

Accepted Answer

A) Raw material that has been used must be recycled or disposed. 
B) The physical law of conservation of matter dictates that objects like petroleum can be transformed, but cannot simply vanish. 
C) The simplest way of dealing with waste is through incineration. 
D) The amount of recycling in the United States and European Union has risen over time. 
A) Raw material that has been used must be recycled or disposed. 
B) The physical law of conservation of matter dictates that objects like petroleum can be transformed, but cannot simply vanish. 
C) The simplest way of dealing with waste is through incineration. 
D) The amount of recycling in the United States and European Union has risen over time.

Question 20

Which of the following is an advantage to the pollution-rights approach to environmental quality?

Accepted Answer

A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary. 
A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary.

Exam 16: The Economics of the Environment, and Natural Resources

Dwindling resources encourage the development of substitute products.

Which of the following observations is true?

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

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

According to economic theory, under perfect competition, the price of a depletable resource

Economists use a resource's price as an indicator of its relative scarcity.

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?

The increase in world oil prices during the 1970s was

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.

Briefly and concisely define the following terms.

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

A tax on polluting emissions will

Statistical studies suggest that the cost of direct controls for any target level of pollution is

Depletable resource prices change over time depending on

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

Price controls would ordinarily be used to increase rather than decrease prices of depletable resources.

Cap-and-trade programs limit pollution by selling firms a fixed amount of permits to pollute.

Which of the following statements about waste disposal is not true?

Which of the following is an advantage to the pollution-rights approach to environmental quality?

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

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

Contemporary Issues in the Useconomy

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