Exam 16: Externalities, the Environment, and Natural Resources

In North Carolina, a car must pass an emissions test before it can be registered.The emissions test costs $20 per car.This system is an example of

If a resource is in fact becoming scarcer, then one should expect

Since World War II,

The increase in world oil prices during the 1970s was

If a depletable resource is selling in a perfectly competitive market, its price will rise by greater and greater dollar amounts each year.

Rising prices for a natural resource stimulate

Prohibiting the use of "dirty" fuels by industry is an example of

Unregulated markets will tend to

Wastes impose costs upon the community if they are

Explain why environmentally minded firms in a competitive industry will find it difficult to take environmental action.

The major problem with direct controls as an environmental protection measure has been

Cleaning an environment may lead to

Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Increasing scarcity of a resource causes new supplies to become more and more costly.

Empirical evidence indicates that imposing taxes on polluting emissions by firms

As a competitive economy uses its stocks of a depletable resource,

Why do polluting firms overproduce? Use a completely and correctly labeled graph to illustrate your answer.

The invention of new mining methods will affect price through the supply side.

The cause of the "greenhouse effect" is the

Detrimental externalities like pollution are a shortcoming of the market mechanism.Do they occur in free market economies alone? Explain with examples.