Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. $\begin{array}{|c|c|c|c|c|c|} \hline \text { Process } & \text { A } & \text { B } & \text { D } & \text { D } \\ \hline \text { (smoke/day) } & \text { (10 tons/day) } & \text { (8 tons/day) } & \text { (6 tons/day) } & \text { (4 tons/day) } & \text { (2 tons/day) } \\ \hline \text { Cost to Acme (\$/day) } & \$ 750 & \$ 800 & \$ 1,000 & \$ 1,400 & \$ 2,000 \\ \hline \text { Cost to FirmCo (\$/day) } & \$ 500 & \$ 750 & \$ 1,200 & \$ 2,200 & \$ 4,000 \\ \hline \end{array}$ Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the total cost to society of this policy will be ______ per day.

A) $300 B) $950 C) $1,550 D) $2,350 A) $300 B) $950 C) $1,550 D) $2,350

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. $\begin{array}{|c|c|c|c|c|c|} \hline \text { Process } & \text { A } & \text { B } & \text { D } & \text { D } \\ \hline \text { (smoke/day) } & \text { (10 tons/day) } & \text { (8 tons/day) } & \text { (6 tons/day) } & \text { (4 tons/day) } & \text { (2 tons/day) } \\ \hline \text { Cost to Acme (\$/day) } & \$ 750 & \$ 800 & \$ 1,000 & \$ 1,400 & \$ 2,000 \\ \hline \text { Cost to FirmCo (\$/day) } & \$ 500 & \$ 750 & \$ 1,200 & \$ 2,200 & \$ 4,000 \\ \hline \end{array}$ If pollution is unregulated, the two firms will produce using process ______, and a total of ______ tons of smoke will be emitted each day.

A) C; 12 B) D; 4 C) B; 16 D) A; 20 A) C; 12 B) D; 4 C) B; 16 D) A; 20

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. $\begin{array}{|c|c|c|c|c|c|} \hline \text { Process } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\ \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & (1 \text { ton/day) } & \text { (0 tons/day) } \\ \hline \text { Cost to Firm } X(\$ / \text { day) } & \$ 500 & \$ 514 & \$ 530 & \$ 555 & \$ 585 \\ \hline \text { Cost to Firm Y (\$/day) } & \$ 400 & \$ 420 & \$ 445 & \$ 480 & \$ 520 \\ \hline \text { Cost to Firm Z(\$/day) } & \$ 300 & \$ 325 & \$ 360 & \$ 400 & \$ 550 \\ \hline \end{array}$ Suppose the government decides to impose a tax on each ton of smoke emitted. What would be the lowest tax, in whole dollars, that would reduce emissions to 6 tons per day?

A) $21 per ton B) $26 per ton C) $36 per ton D) $41 per ton A) $21 per ton B) $26 per ton C) $36 per ton D) $41 per ton

Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. \[\begin{array} { | c | c | c | c | c | c | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\ \hline \text { Process } & \text { (smoke/day) } & \text { (4 tons/day) } & \text { (3 tons/day) } & \text { (2 tons/day) } & \text { (1 tons/day) } \\ \hline \text { Cost to Industrio (\$/day) } & \$ 350 & \$ 400 & \$ 500 & \$ 700 & \$ 1,000 \\ \hline \text { Cost to Capitalista (\$/day) } & \$ 225 & \$ 250 & \$ 290 & \$ 400 &\$600 \\ \hline \end{array}\] Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for ______ with Industrio buying ______ and Capitalista buying ______.

A) $31; 2; 4 B) $41; 4; 2 C) $51; 4; 2 D) $101; 3; 3 A) $31; 2; 4 B) $41; 4; 2 C) $51; 4; 2 D) $101; 3; 3

Exam 13: The Environment, Health, and Safety

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Process A B D D (smoke/day) (10 tons/day) (8 tons/day) (6 tons/day) (4 tons/day) (2 tons/day) Cost to Acme ( \/ day) \ 750 \ 800 \ 1,000 \ 1,400 \ 2,000 Cost to FirmCo ( \/ day) \ 500 \ 750 \ 1,200 \ 2,200 \ 4,000 Suppose the firms are both currently using process A. If the government requires each firm to reduce pollution by 20%, then the total cost to society of this policy will be ______ per day.

(Multiple Choice)

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Question 41

First-dollar health insurance reduces the:

(Multiple Choice)

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Question 42

Suppose the figure below shows Luke's demand curve for check-ups along with the supply curve for check-ups. What is the marginal cost of one extra check-up?

(Multiple Choice)

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Question 43

Profit-maximizing firms should:

(Multiple Choice)

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Question 44

If the cost to firms of reducing workplace injuries by 1 percent is $1,000 a year for each worker, then it is efficient for firms to reduce workplace injuries by 1 percent if:

(Multiple Choice)

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Question 45

Pollution permit policies achieve an __ outcome because _.

(Multiple Choice)

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Question 46

Suppose that all workers value a safe job $2,000 per year more than a risky job. The cost to firms of providing a safe job is $700 per year for each worker. Firms currently pay workers $35,000 per year, without any effort to improve safety. If new firms began to offer workers $34,000 per year and safe jobs, the value workers would place on the new firms' offer would be compared to at the existing firms.

(Multiple Choice)

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Question 47

Medical insurance covering routine medical care became common:

(Multiple Choice)

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Question 48

Suppose you are an economic researcher, and you have access to detailed information about all of the firms in a given geographic area. You would conclude that the pollution reduction policy in that area is efficient if you observe that:

(Multiple Choice)

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Question 49

Two firms, Acme and FirmCo, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Process A B D D (smoke/day) (10 tons/day) (8 tons/day) (6 tons/day) (4 tons/day) (2 tons/day) Cost to Acme ( \/ day) \ 750 \ 800 \ 1,000 \ 1,400 \ 2,000 Cost to FirmCo ( \/ day) \ 500 \ 750 \ 1,200 \ 2,200 \ 4,000 If pollution is unregulated, the two firms will produce using process , and a total of tons of smoke will be emitted each day.

(Multiple Choice)

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Question 50

In general, the optimal amount of medical care is:

(Multiple Choice)

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Question 51

Pat has just graduated from college and has two job offers. One pays $45,000 and requires that Pat supervise employees doing construction work on a busy highway. The other is an office job that pays $40,000. Chris has received the same offers from the same firms. Pat values the added safety of the office job at $6,000 per year, and Chris values the added safety of the office job at $3,000 per year. Pat will be better off taking the job and Chris will be better off taking the job.

(Multiple Choice)

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Question 52

Consider a police department trying to decide how to allocate its crime prevention resources between motor vehicle thefts and burglaries. The marginal benefit of one less motor vehicle theft is $20,000, and the marginal benefit of one less burglary is $1,000. Suppose the annual number of motor vehicle thefts and the annual number of burglaries depends on the number of detectives assigned to each type of crime, as shown in the table below. Each detective costs $35,000 each per year, regardless of whether the detective is assigned to motor vehicle thefts or burglaries. Suppose the police department hires 4 detectives and assigns all of them to motor vehicle theft. The marginal benefit of the fourth detective assigned to motor vehicle theft is , and the marginal benefit that would have been gained had the detective instead been assigned to burglary is .

(Multiple Choice)

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Question 53

First-dollar insurance coverage means that:

(Multiple Choice)

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Question 54

The overconsumption of medical care due to first-dollar health insurance coverage is:

(Multiple Choice)

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Question 55

Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each. Process A B C D E (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 ton/day) (0 tons/day) Cost to Firm X(\ / day) \ 500 \ 514 \ 530 \ 555 \ 585 Cost to Firm Y ( \/ day) \ 400 \ 420 \ 445 \ 480 \ 520 Cost to Firm Z( \/ day) \ 300 \ 325 \ 360 \ 400 \ 550 Suppose the government decides to impose a tax on each ton of smoke emitted. What would be the lowest tax, in whole dollars, that would reduce emissions to 6 tons per day?

(Multiple Choice)

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Question 56

According to the textbook, as it is currently administered, the workers' compensation system in the United States:

(Multiple Choice)

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Question 57

Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. A B C D E Process (smoke/day) (4 tons/day) (3 tons/day) (2 tons/day) (1 tons/day) Cost to Industrio ( \/ day) \ 350 \ 400 \ 500 \ 700 \ 1,000 Cost to Capitalista ( \/ day) \ 225 \ 250 \ 290 \ 400 \6 00 Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for with Industrio buying and Capitalista buying __.

(Multiple Choice)

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Question 58

Compared to a fixed percentage reduction regulation, a tax on pollution encourages:

(Multiple Choice)

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Question 59

In the absence of environmental protection laws, firms pollute because:

(Multiple Choice)

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Question 60

First-dollar health insurance reduces the:

Suppose the figure below shows Luke's demand curve for check-ups along with the supply curve for check-ups. What is the marginal cost of one extra check-up?

Profit-maximizing firms should:

If the cost to firms of reducing workplace injuries by 1 percent is $1,000 a year for each worker, then it is efficient for firms to reduce workplace injuries by 1 percent if:

Pollution permit policies achieve an __ outcome because _.

Medical insurance covering routine medical care became common:

Suppose you are an economic researcher, and you have access to detailed information about all of the firms in a given geographic area. You would conclude that the pollution reduction policy in that area is efficient if you observe that:

In general, the optimal amount of medical care is:

First-dollar insurance coverage means that:

The overconsumption of medical care due to first-dollar health insurance coverage is:

According to the textbook, as it is currently administered, the workers' compensation system in the United States:

Compared to a fixed percentage reduction regulation, a tax on pollution encourages:

In the absence of environmental protection laws, firms pollute because:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

Filters

Exam 13: The Environment, Health, and Safety

First-dollar health insurance reduces the:

Suppose the figure below shows Luke's demand curve for check-ups along with the supply curve for check-ups. What is the marginal cost of one extra check-up?

Profit-maximizing firms should:

If the cost to firms of reducing workplace injuries by 1 percent is $1,000 a year for each worker, then it is efficient for firms to reduce workplace injuries by 1 percent if:

Pollution permit policies achieve an ______ outcome because _____.

Medical insurance covering routine medical care became common:

Suppose you are an economic researcher, and you have access to detailed information about all of the firms in a given geographic area. You would conclude that the pollution reduction policy in that area is efficient if you observe that:

In general, the optimal amount of medical care is:

First-dollar insurance coverage means that:

The overconsumption of medical care due to first-dollar health insurance coverage is:

According to the textbook, as it is currently administered, the workers' compensation system in the United States:

Compared to a fixed percentage reduction regulation, a tax on pollution encourages:

In the absence of environmental protection laws, firms pollute because:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

Filters

Pollution permit policies achieve an __ outcome because _.