Exam 16: Externalities, Externaliteis, the Environment, and Natural Resources

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?

Pollution is a relatively new phenomenon.

Economists generally prefer to deal with emissions of pollutants

Direct controls work if

Recycling rates for aluminum, paper, and glass have been increasing in the United States.

The observed change in the reserves of copper, lead, and zinc between 1960 and 1990 was most likely caused by

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

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

Dwindling resources encourage the development of substitute products.

New discoveries of lead, zinc, and copper will reduce prices.

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

A market with an externality can

The external costs of cigarettes are related to the health problem smoking produces for both smokers and nonsmokers. One estimate places these costs at 29 cents per pack. Presently, sales and excise taxes on cigarettes average about 37 cents per pack. These estimates suggest that (i)cigarette consumption is below the optimal or efficient quantity; (ii)cigarette taxes should be reduced.

Which basic approach to environment policy may be the only workable solution in brief but serious emergencies that do not allow for time to plan and enact a systematic program?

Economic theory posits that a resource that is finite and being depleted will rise in price continuously and demand will be reduced. In fact, a recent study, graphing the price behavior of lead, zinc, and copper found that until about 2007,

In retaliation for U.S. support for Israel during the Arab-Israeli War, OPEC countries stopped selling oil to the United States. For the United States, this embargo caused the

Requiring all firms to reduce emissions by the same percentage is

Under an emissions tax program, the government sets ____; under an emissions permits program, the government sets ____.

Centrally planned economies are able to cope with environmental pollution issues much better than capitalist countries.

The supply curve of a natural resource like oil has a positive slope because