Question 1

If one adopts a pure free market approach to depletable resources, then one can expect the price of resources to

Accepted Answer

A) rise steadily. 
B) fall steadily. 
C) fluctuate in a random-walk fashion. 
D) remain unchanged. 
A) rise steadily. 
B) fall steadily. 
C) fluctuate in a random-walk fashion. 
D) remain unchanged.

Question 2

Interest in environmental problems has intensified, perhaps because

Accepted Answer

A) for the first time in history in the 1970s people began to die from pollution-related diseases. 
B) rising incomes have caused people to be more concerned with the quality of their lives. 
C) the centrally planned economies are polluted. 
D) All of the above are true. 
A) for the first time in history in the 1970s people began to die from pollution-related diseases. 
B) rising incomes have caused people to be more concerned with the quality of their lives. 
C) the centrally planned economies are polluted. 
D) All of the above are true.

Question 3

Emissions permits allow polluters to pay for the right to pollute a specified amount.

Accepted Answer

A) True 
 B)False

Question 4

The pricing system has a failure built into it when externalities exist.

Accepted Answer

A) True 
 B)False

Question 5

"One of the failings of a market system is the damage to the environment.Pollution would not exist with a centrally planned economy." Evaluate this statement.

Accepted Answer

Market systems fail to include external

Question 6

The use of pollution charges to reduce pollution confronts the problem of

Accepted Answer

A) free riders who avoid revealing benefits from abatement. 
B) determining specific individual damages and appropriate charges associated with pollutants. 
C) necessarily lowering the price of the products. 
D) requiring no agency to administer the tax. 
A) free riders who avoid revealing benefits from abatement. 
B) determining specific individual damages and appropriate charges associated with pollutants. 
C) necessarily lowering the price of the products. 
D) requiring no agency to administer the tax.

Question 7

Which of the following environmental approaches is most appropriate when surveillance and enforcement is impractical?

Accepted Answer

A) direct controls 
B) emissions tax 
C) volunteerism 
D) tradable emission permits 
A) direct controls 
B) emissions tax 
C) volunteerism 
D) tradable emission permits

Question 8

Economic theory would lead us to suspect that deep sea oil reserves would be accessed before those located in the Middle East or on the U.S.mainland.

Accepted Answer

A) True 
 B)False

Question 9

A failure of the pricing system has led to pollution.

Accepted Answer

A) True 
 B)False

Question 10

Rising prices of resources leads to inefficient resource use by industry.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is false?

Accepted Answer

A) In a competitive market, the price mechanism encourages conservation of a depletable resource. 
B) As the price of a depletable resource rises, its known reserves often increase. 
C) Prices of depletable resources have risen in the twentieth century primarily because resource producers have exercised monopoly or oligopoly power. 
D) Shortages of depletable resources occur primarily when governments or others interfere with the price mechanism. 
A) In a competitive market, the price mechanism encourages conservation of a depletable resource. 
B) As the price of a depletable resource rises, its known reserves often increase. 
C) Prices of depletable resources have risen in the twentieth century primarily because resource producers have exercised monopoly or oligopoly power. 
D) Shortages of depletable resources occur primarily when governments or others interfere with the price mechanism.

Question 12

In a free market for depletable natural resources, any shortage where there is an excess of quantity demanded over quantity supplied must be

Accepted Answer

A) expected as a matter of course. 
B) due to a price floor. 
C) the result of discovery of new deposits of the resources. 
D) artificial. 
A) expected as a matter of course. 
B) due to a price floor. 
C) the result of discovery of new deposits of the resources. 
D) artificial.

Question 13

The British economist A.C.Pigou

Accepted Answer

A) wrote The Economics of Welfare in 1911. 
B) offered an explanation of the market economy's poor environmental performance. 
C) outlined an approach to environmental policy still in favor with economists today. 
D) All of the above are correct. 
A) wrote The Economics of Welfare in 1911. 
B) offered an explanation of the market economy's poor environmental performance. 
C) outlined an approach to environmental policy still in favor with economists today. 
D) All of the above are correct.

Question 14

Externalities can create a threat to environmental quality.

Accepted Answer

A) True 
 B)False

Question 15

The environmental problems of China:

Accepted Answer

A) were caused by a lack of central planning in the economy. 
B) were caused by the burning of low-quality, high-sulfur coal. 
C) were caused by a lack of pollution controls. 
D) All of the above are correct. 
A) were caused by a lack of central planning in the economy. 
B) were caused by the burning of low-quality, high-sulfur coal. 
C) were caused by a lack of pollution controls. 
D) All of the above are correct.

Question 16

In Eastern Europe and the countries of the former Soviet Union,

Accepted Answer

A) grave environmental problems plague Eastern Europe. 
B) the area suffers from widespread illness and countless premature deaths. 
C) the Aral Sea, once the world's fourth-largest inland sea, is now half its previous size. 
D) All of the above are correct. 
A) grave environmental problems plague Eastern Europe. 
B) the area suffers from widespread illness and countless premature deaths. 
C) the Aral Sea, once the world's fourth-largest inland sea, is now half its previous size. 
D) All of the above are correct.

Question 17

In a free market the quantity demanded will not exceed the quantity supplied of a resource, even if it is undergoing rapid depletion.

Accepted Answer

A) True 
 B)False

Question 18

Why do most economists favor emissions taxes over direct controls as a pollution deterrent?

Accepted Answer

Direct controls require monitoring and e

Question 19

Pollution problems

Accepted Answer

A) have existed for many centuries. 
B) are attributable to modern industrialization. 
C) can be blamed on the profit system. 
D) have worsened in every respect in the past forty years. 
A) have existed for many centuries. 
B) are attributable to modern industrialization. 
C) can be blamed on the profit system. 
D) have worsened in every respect in the past forty years.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 16: Externalities, the Environment, and Natural Resources

If one adopts a pure free market approach to depletable resources, then one can expect the price of resources to

Interest in environmental problems has intensified, perhaps because

Emissions permits allow polluters to pay for the right to pollute a specified amount.

The pricing system has a failure built into it when externalities exist.

"One of the failings of a market system is the damage to the environment.Pollution would not exist with a centrally planned economy." Evaluate this statement.

The use of pollution charges to reduce pollution confronts the problem of

Which of the following environmental approaches is most appropriate when surveillance and enforcement is impractical?

Economic theory would lead us to suspect that deep sea oil reserves would be accessed before those located in the Middle East or on the U.S.mainland.

A failure of the pricing system has led to pollution.

Rising prices of resources leads to inefficient resource use by industry.

Which of the following statements is false?

In a free market for depletable natural resources, any shortage where there is an excess of quantity demanded over quantity supplied must be

The British economist A.C.Pigou

Externalities can create a threat to environmental quality.

The environmental problems of China:

In Eastern Europe and the countries of the former Soviet Union,

In a free market the quantity demanded will not exceed the quantity supplied of a resource, even if it is undergoing rapid depletion.

Why do most economists favor emissions taxes over direct controls as a pollution deterrent?

Pollution problems

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

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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