Exam 16: Externalities, the Environment, and Natural Resources

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.

Taxes on emissions have led to

Many of the new pollutants to which the world has been subjected are

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

Briefly and concisely define the following terms. a.voluntarism b.direct controls c.depletable resource

An advantage emission taxes and permits have over direct controls is that the former

____ completely deplete the most vital resources.

Define the following terms and explain their importance to the study of economics. a.greenhouse gases b.externality c.emissions permits d.known reserves

Part of the pollution problem is due to

The external costs of alcohol consumption are related to, among other things, death and injury related to auto accidents caused by drunk drivers.These costs have been estimated to be about 47 cents per ounce of alcohol consumed.Taxes on alcohol amount to 23 cents per ounce.This suggests that alcohol consumption is (i) greater than the efficient or optimal amount; (ii) should be reduced to zero to eliminate the externality.

Taxes on polluting emissions are

Serious environmental problems are

If coal prices are rising faster than the rate of interest, then

Discuss the role of individuals and governments in committing environmental damage.

Direct controls have a clear advantage where

How the price of a depletable resource changes over time depends on

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

Voluntarism in recycling garbage

Environmental damage

Economists believe that externalities can be cured by market methods.