Question 1

____ has(have) traditionally been the chief instrument of environmental policy in the United States.

Accepted Answer

A) Taxes on pollution 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Direct controls 
A) Taxes on pollution 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Direct controls

Question 2

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

Accepted Answer

A) The productivity of aloe mines fell. 
B) New deposits of aloe were discovered. 
C) Demand for aloe increased over time. 
D) All of the above are correct. 
A) The productivity of aloe mines fell. 
B) New deposits of aloe were discovered. 
C) Demand for aloe increased over time. 
D) All of the above are correct.

Question 3

Contrary to most thinking, governments play ____ in causing pollution.

Accepted Answer

A) almost no role 
B) a large but decreasing role 
C) a major role 
D) a reconstructive role 
A) almost no role 
B) a large but decreasing role 
C) a major role 
D) a reconstructive role

Question 4

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 5

Externalities can cause the market mechanism to

Accepted Answer

A) malfunction. 
B) improve. 
C) operate efficiently. 
D) move up toward the production possibility curve. 
A) malfunction. 
B) improve. 
C) operate efficiently. 
D) move up toward the production possibility curve.

Question 6

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 7

Voluntarism as an approach to environmental problems

Accepted Answer

A) has no place at all in solving the problems. 
B) is quite successful in reducing pollution. 
C) is more effective than first meets the eye. 
D) often has proved weak and unreliable. 
A) has no place at all in solving the problems. 
B) is quite successful in reducing pollution. 
C) is more effective than first meets the eye. 
D) often has proved weak and unreliable.

Question 8

There has been a downward trend in the United States since 1980 in the ambient concentrations of

Accepted Answer

A) sulfur dioxide. 
B) carbon monoxide. 
C) lead. 
D) all of the above. 
A) sulfur dioxide. 
B) carbon monoxide. 
C) lead. 
D) all of the above.

Question 9

The supply curve of a depletable natural resource is usually

Accepted Answer

A) downward sloping because the resource runs out over time. 
B) upward sloping because more of the resource can be profitably extracted at higher prices. 
C) upward sloping because the price of the resource rises over time. 
D) vertical because the supply of the resource is fixed. 
A) downward sloping because the resource runs out over time. 
B) upward sloping because more of the resource can be profitably extracted at higher prices. 
C) upward sloping because the price of the resource rises over time. 
D) vertical because the supply of the resource is fixed.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If one tracks the prices of critical metals, one sees that

Accepted Answer

A) they have risen more slowly than the general rate of inflation. 
B) they have risen about as rapidly as the general rate of inflation. 
C) the prices indicate increasing scarcity of the metals. 
D) the prices have fluctuated too wildly to conclude anything. 
A) they have risen more slowly than the general rate of inflation. 
B) they have risen about as rapidly as the general rate of inflation. 
C) the prices indicate increasing scarcity of the metals. 
D) the prices have fluctuated too wildly to conclude anything.

Question 12

According to economic theory, under perfect competition, the price of a depletable resource whose costs of transportation and extraction are negligible

Accepted Answer

A) is a poor indicator of scarcity. 
B) must rise at the rate of interest. 
C) will be unable to change to avert running out of it. 
D) is too erratic to allow markets to respond to shortages. 
A) is a poor indicator of scarcity. 
B) must rise at the rate of interest. 
C) will be unable to change to avert running out of it. 
D) is too erratic to allow markets to respond to shortages.

Question 13

The reason why cleanup costs are lower for a taxes approach than for a direct controls approach is that

Accepted Answer

A) all firms reduce pollution equally and fairly. 
B) firms that are able to clean up at lowest cost do so; others don't. 
C) large polluters clean up the most, which is always lowest cost. 
D) small polluters clean up the most, which is generally the cheapest. 
A) all firms reduce pollution equally and fairly. 
B) firms that are able to clean up at lowest cost do so; others don't. 
C) large polluters clean up the most, which is always lowest cost. 
D) small polluters clean up the most, which is generally the cheapest.

Question 14

Economists consider environmental pollution to be a(n)

Accepted Answer

A) externality. 
B) pure public good. 
C) allocatively efficient outcome. 
D) public interest outcome. 
A) externality. 
B) pure public good. 
C) allocatively efficient outcome. 
D) public interest outcome.

Question 15

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 16

Under perfect competition the price of a depletable resource whose cost of extraction is not changing must rise at

Accepted Answer

A) the same rate as the increase in GDP. 
B) the same rate as the increase in consumer prices. 
C) the same rate as the rate of interest. 
D) a rate higher than the increase in the rate of interest. 
A) the same rate as the increase in GDP. 
B) the same rate as the increase in consumer prices. 
C) the same rate as the rate of interest. 
D) a rate higher than the increase in the rate of interest.

Question 17

Direct controls often require long legal proceedings before they can be effective.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) ​new reserves of the resource were discovered. 
B) ​new methods of mining or refining were developed. 
C) ​price controls were passed by law. 
D) ​All of the above are correct. 
A) ​new reserves of the resource were discovered. 
B) ​new methods of mining or refining were developed. 
C) ​price controls were passed by law. 
D) ​All of the above are correct.

Question 19

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 20

Economists believe it is feasible and desirable to reduce environmental damage to zero.

Accepted Answer

A) True 
 B)False

Exam 16: Externalities, the Environment, and Natural Resources

____ has(have) traditionally been the chief instrument of environmental policy in the United States.

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

Contrary to most thinking, governments play ____ in causing pollution.

Environmental quality is

Externalities can cause the market mechanism to

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

Voluntarism as an approach to environmental problems

There has been a downward trend in the United States since 1980 in the ambient concentrations of

The supply curve of a depletable natural resource is usually

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

If one tracks the prices of critical metals, one sees that

According to economic theory, under perfect competition, the price of a depletable resource whose costs of transportation and extraction are negligible

The reason why cleanup costs are lower for a taxes approach than for a direct controls approach is that

Economists consider environmental pollution to be a(n)

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

Under perfect competition the price of a depletable resource whose cost of extraction is not changing must rise at

Direct controls often require long legal proceedings before they can be effective.

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

A tax on polluting emissions will

Economists believe it is feasible and desirable to reduce environmental damage to zero.

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: the Price System

The Shortcomings of Free Markets

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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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