Exam 3: Dealing With Externalities: How Can We Save the Environment

Radicals hold that in cost-benefit analyses of pollution cleanups, there is an inherent tendency to underestimate the resulting social benefits.

The society is best served whenever the outlays for maintaining clean air are such that the marginal social benefit is just equal to the marginal social cost for the last unit of clean air obtained.

Which of the following is not a view advanced by any of our representative paradigms?

By and large, Liberals are more likely to support direct controls of pollution levels than are Conservatives.

Liberals generally claim

There is no evidence that enforcing pollution standards on American industry has had any effect on lowering damage from pollution.

According to Milton Friedman

An example of a good or service with significant spillover benefits would be

An example of external diseconomy would be

Generally, Radicals have opposed past pollution policies on the grounds that

Air pollution is an example of an external economy.

Opinion surveys indicate that most Americans have little interest in environmental problems.

The EPA may set permissible emission levels for all industrial sites.

Government subsidies--as a technique for inducing firms to clean up their effluents--is attractive because it is costless.

One technique for balancing costs and benefits of antipollution efforts is to simply let the damaged parties initiate a lawsuit against those that harmed them.

Liberals argue that George W. Bush's Administration has really stepped up funding for the Environmental Protection Agency compared to 1999.

Liberals and Conservatives agree that subsidies paid to firms that undertake cleanup activities is the best way for internalizing the external costs of pollution.

The United States is the world's strongest advocate for adoption of the Kyoto Treaty.

Conservatives, Liberals, and Radicals agree that the acid rain problem is proof that all of the environmental efforts of the past several decades have done little or nothing to improve national environmental quality.

A "spillover cost" refers to the fact that not all costs of a good have been internalized into that good's price.