Question 1

How does the price system cope with depletable resources?

Accepted Answer

The rule is that under perfect competiti

Question 2

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 3

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 4

Which of the following is not part of the pollution problem?

Accepted Answer

A) The absence of markets for goods like clean air and clean water 
B) The lack of well-defined property rights to clean air and clean water 
C) The unreliability of voluntary programs to cut pollution 
D) The willingness of citizens to take steps to reduce detrimental externalities 
A) The absence of markets for goods like clean air and clean water 
B) The lack of well-defined property rights to clean air and clean water 
C) The unreliability of voluntary programs to cut pollution 
D) The willingness of citizens to take steps to reduce detrimental externalities

Question 5

Centrally planned economies have historically been more damaging to the environment than capitalist ones.

Accepted Answer

A) True 
 B)False

Question 6

The environmental problems of China is not caused by

Accepted Answer

A) a lack of central planning in the economy. 
B) the burning of low-quality, high-sulfur coal. 
C) a lack of pollution controls. 
D) the one-child policy of population control. 
A) a lack of central planning in the economy. 
B) the burning of low-quality, high-sulfur coal. 
C) a lack of pollution controls. 
D) the one-child policy of population control.

Question 7

Americans are creating an enormous amount of solid waste daily-over 4 pounds per person per day. How is the United States coping with this extraordinary problem?

Accepted Answer

Fortunately, recycling rates are rising

Question 8

An unregulated paper firm that pours waste into a waterway

Accepted Answer

A) is producing at a quantity where marginal social cost is greater than marginal social benefit. . 
B) is producing at a quantity where marginal social benefit is greater than marginal social cost. 
C) is producing the social optimal quantity. 
D) has taken social cost into account. 
A) is producing at a quantity where marginal social cost is greater than marginal social benefit. . 
B) is producing at a quantity where marginal social benefit is greater than marginal social cost. 
C) is producing the social optimal quantity. 
D) has taken social cost into account.

Question 9

The invention of new mining methods will affect price through the supply side.

Accepted Answer

A) True 
 B)False

Question 10

The deregulation of oil pricing will

Accepted Answer

A) increase our dependence on foreign oil. 
B) make the United States energy independent by the year 2000. 
C) decrease domestic production. 
D) decrease the extent of the nation's dependence on foreign oil. 
A) increase our dependence on foreign oil. 
B) make the United States energy independent by the year 2000. 
C) decrease domestic production. 
D) decrease the extent of the nation's dependence on foreign oil.

Question 11

Which of the following could explain a fall over time in the price of the depletable resource bauxite?

Accepted Answer

A) The productivity of bauxite mines fell. 
B) New deposits of bauxite were discovered. 
C) Demand for bauxite increased over time. 
D) The cost of extraction increased. 
A) The productivity of bauxite mines fell. 
B) New deposits of bauxite were discovered. 
C) Demand for bauxite increased over time. 
D) The cost of extraction increased.

Question 12

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

If the price of a depleting resource does not rise as anticipated, it may be because

Accepted Answer

A) the government prohibited the methods to extract the resource. 
B) new methods of mining or refining were developed. 
C) a price floor was passed by law. 
D) firms that distribute the resource cartelized. 
A) the government prohibited the methods to extract the resource. 
B) new methods of mining or refining were developed. 
C) a price floor was passed by law. 
D) firms that distribute the resource cartelized.

Question 15

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

Question 16

As a resource becomes more scarce, we expect its price to

Accepted Answer

A) rise. 
B) fall. 
C) remain constant. 
D) fluctuate wildly. 
A) rise. 
B) fall. 
C) remain constant. 
D) fluctuate wildly.

Question 17

What is not true for a system of financial penalties for polluters?

Accepted Answer

A) Firms may be fined for pollution. 
B) Firms might have to pay a tax for each unit of pollution created. 
C) Firms would be encouraged to pollute less. 
D) Firms are always guaranteed the permit to pollute. 
A) Firms may be fined for pollution. 
B) Firms might have to pay a tax for each unit of pollution created. 
C) Firms would be encouraged to pollute less. 
D) Firms are always guaranteed the permit to pollute.

Question 18

Serious environmental problems are

Accepted Answer

A) unique to industrial economies. 
B) unique to Western economies. 
C) unique to civilized economies (i.e., those in which people live mainly in cities). 
D) experienced by centrally planned and market-based economic systems. 
A) unique to industrial economies. 
B) unique to Western economies. 
C) unique to civilized economies (i.e., those in which people live mainly in cities). 
D) experienced by centrally planned and market-based economic systems.

Question 19

Forecasts of an inevitable exhaustion of essential natural resources are "simply beside the point" because higher prices (i)reduce quantity demanded; (ii)stimulate supply; (iii)stimulate alternative technology.

Accepted Answer

A) i only. 
B) ii only. 
C) iii only. 
D) i, ii, and iii. 
A) i only. 
B) ii only. 
C) iii only. 
D) i, ii, and iii.

Question 20

Regulations that strictly limit pollution

Accepted Answer

A) provide firms no incentives to reduce pollution once a standard is met. 
B) provide no incentives for firms to discover loopholes in the regulations. 
C) tend to be an economically efficient way to reduce pollution. 
D) has been a simple way for some firms to reduce pollution to zero. 
A) provide firms no incentives to reduce pollution once a standard is met. 
B) provide no incentives for firms to discover loopholes in the regulations. 
C) tend to be an economically efficient way to reduce pollution. 
D) has been a simple way for some firms to reduce pollution to zero.

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

How does the price system cope with depletable resources?

Supply and demand analysis

Which of the following is not part of the pollution problem?

Centrally planned economies have historically been more damaging to the environment than capitalist ones.

The environmental problems of China is not caused by

Americans are creating an enormous amount of solid waste daily-over 4 pounds per person per day. How is the United States coping with this extraordinary problem?

An unregulated paper firm that pours waste into a waterway

The invention of new mining methods will affect price through the supply side.

The deregulation of oil pricing will

Which of the following could explain a fall over time in the price of the depletable resource bauxite?

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

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

If the price of a depleting resource does not rise as anticipated, it may be because

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?

As a resource becomes more scarce, we expect its price to

What is not true for a system of financial penalties for polluters?

Serious environmental problems are

Forecasts of an inevitable exhaustion of essential natural resources are "simply beside the point" because higher prices (i)reduce quantity demanded; (ii)stimulate supply; (iii)stimulate alternative technology.

Regulations that strictly limit pollution

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

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

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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