Question 1

Pollution is an example of a negative externality.

Accepted Answer

A) True 
 B)False

Question 2

Pollution taxes are preferred to direct controls because they don't require a way of measuring pollutants produced.

Accepted Answer

A) True 
 B)False

Question 3

During the second Bush administration, environmental fines and prosecutions

Accepted Answer

A) increased rapidly. 
B) declined significantly. 
C) grew with the rate of inflation. 
D) declined slightly from earlier levels. 
A) increased rapidly. 
B) declined significantly. 
C) grew with the rate of inflation. 
D) declined slightly from earlier levels.

Question 4

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

Accepted Answer

A) True 
 B)False

Question 5

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an advantage to the pollution-rights approach to environmental quality?

Accepted Answer

A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary. 
A) Polluters are compelled to clean up completely. 
B) Polluters have appropriate incentives to clean up. 
C) This is a method of direct government regulation. 
D) Compliance with legal guidelines is discretionary.

Question 7

The price of an exhaustible resource sold in a perfectly competitive market in which technology and consumer preferences do not change over time will tend to

Accepted Answer

A) stay constant over time. 
B) always equal the price of the closest substitute for that resource. 
C) fall over time. 
D) rise over time. 
A) stay constant over time. 
B) always equal the price of the closest substitute for that resource. 
C) fall over time. 
D) rise over time.

Question 8

Economists use a resource's price as an indicator of its relative scarcity.

Accepted Answer

A) True 
 B)False

Question 9

Regulations that strictly limit pollution

Accepted Answer

A) provide firms no incentives to reduce pollution once a standard is met. 
B) provide incentives for firms to discover loopholes in the regulations. 
C) tend to be economically inefficient ways to reduce pollution. 
D) All of the above are true. 
A) provide firms no incentives to reduce pollution once a standard is met. 
B) provide incentives for firms to discover loopholes in the regulations. 
C) tend to be economically inefficient ways to reduce pollution. 
D) All of the above are true.

Question 10

The observed change in the reserves of copper, lead, and zinc between 1960 and 1990 was most likely caused by

Accepted Answer

A) low prices discouraging exploration for new reserves. 
B) a slowdown in demand growth. 
C) high prices that stimulated exploration. 
D) the discovery of substitutes. 
A) low prices discouraging exploration for new reserves. 
B) a slowdown in demand growth. 
C) high prices that stimulated exploration. 
D) the discovery of substitutes.

Question 11

Increasing environmental awareness in the United States has occurred with increasing GDP, which has reduced concerns about basic needs.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following could be called a virtue of raising prices of depletable resources?

Accepted Answer

A) It would discourage consumption and waste. 
B) It would stimulate more efficient use of resources. 
C) It would encourage innovation and discovery of alternatives. 
D) All of the above are true. 
A) It would discourage consumption and waste. 
B) It would stimulate more efficient use of resources. 
C) It would encourage innovation and discovery of alternatives. 
D) All of the above are true.

Question 13

Most economists agree that exclusive reliance on direct controls

Accepted Answer

A) is a sound approach. 
B) has worked well for us in the past. 
C) is cheaper than any other enforcement mechanism. 
D) is a mistake. 
A) is a sound approach. 
B) has worked well for us in the past. 
C) is cheaper than any other enforcement mechanism. 
D) is a mistake.

Question 14

Which of the following is most likely to reduce the consumption of an exhaustible natural resource?

Accepted Answer

A) a decrease in monopoly control of the market for the resource 
B) government tax policies that give tax breaks to entrepreneurs who search for new reserves of the resource 
C) implementation of a price ceiling for the resource below its equilibrium price 
D) government macroeconomic policies that lower the interest rate on bonds 
A) a decrease in monopoly control of the market for the resource 
B) government tax policies that give tax breaks to entrepreneurs who search for new reserves of the resource 
C) implementation of a price ceiling for the resource below its equilibrium price 
D) government macroeconomic policies that lower the interest rate on bonds

Question 15

Direct controls that impose equal percentage reductions in emissions on all firms in the area

Accepted Answer

A) impose the same costs on all firms. 
B) minimize the cost of pollution reduction. 
C) penalize firms that have already incurred some costs to reduce pollution. 
D) are the fairest way to distribute the burden 
A) impose the same costs on all firms. 
B) minimize the cost of pollution reduction. 
C) penalize firms that have already incurred some costs to reduce pollution. 
D) are the fairest way to distribute the burden

Question 16

Direct controls work if

Accepted Answer

A) there is vigilance and enthusiasm in enforcement by the regulatory agency. 
B) speed and rigor are used in the court system in prosecuting cases. 
C) there are significant penalties imposed by the legal system. 
D) All of the above occur. 
A) there is vigilance and enthusiasm in enforcement by the regulatory agency. 
B) speed and rigor are used in the court system in prosecuting cases. 
C) there are significant penalties imposed by the legal system. 
D) All of the above occur.

Question 17

Voluntary programs are dependable ways to protect the environment.

Accepted Answer

A) True 
 B)False

Question 18

Voluntary programs, direct controls, and emissions taxes are all equally effective ways of controlling pollution.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

What are the implications of the law of conservation of matter and energy for recycling and waste disposal?

Accepted Answer

The physical law of conservation of matt

Exam 16: Externalities, the Environment, and Natural Resources

Pollution is an example of a negative externality.

Pollution taxes are preferred to direct controls because they don't require a way of measuring pollutants produced.

During the second Bush administration, environmental fines and prosecutions

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Which of the following is an advantage to the pollution-rights approach to environmental quality?

The price of an exhaustible resource sold in a perfectly competitive market in which technology and consumer preferences do not change over time will tend to

Economists use a resource's price as an indicator of its relative scarcity.

Regulations that strictly limit pollution

The observed change in the reserves of copper, lead, and zinc between 1960 and 1990 was most likely caused by

Increasing environmental awareness in the United States has occurred with increasing GDP, which has reduced concerns about basic needs.

Which of the following could be called a virtue of raising prices of depletable resources?

Most economists agree that exclusive reliance on direct controls

Which of the following is most likely to reduce the consumption of an exhaustible natural resource?

Direct controls that impose equal percentage reductions in emissions on all firms in the area

Direct controls work if

Voluntary programs are dependable ways to protect the environment.

Voluntary programs, direct controls, and emissions taxes are all equally effective ways of controlling pollution.

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

What are the implications of the law of conservation of matter and energy for recycling and waste disposal?

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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