Question 1

During the second Bush administration,environmental fines and prosecutions

Accepted Answer

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

Question 2

Which of the following has also been called the command and control approach?

Accepted Answer

A) Direct controls 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Taxes on pollution 
A) Direct controls 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Taxes on pollution

Question 3

Most prophecies of the imminent exhaustion of many natural resources have not come true because

Accepted Answer

A) such resources are generally available in infinite quantities. 
B) rising prices for resources have stimulated supply and encouraged innovation. 
C) the demand for most natural resources has fallen as income levels have increased. 
D) government price floors have prevented resource exhaustion. 
A) such resources are generally available in infinite quantities. 
B) rising prices for resources have stimulated supply and encouraged innovation. 
C) the demand for most natural resources has fallen as income levels have increased. 
D) government price floors have prevented resource exhaustion.

Question 4

____ completely deplete the most vital resources.

Accepted Answer

A) We are not going to 
B) In the near future we will 
C) We are eventually going to 
D) We have already begun to 
A) We are not going to 
B) In the near future we will 
C) We are eventually going to 
D) We have already begun to

Question 5

Unexpected discoveries of mineral reserves will ordinarily cause the price of these minerals to increase.

Accepted Answer

A) True 
 B)False

Question 6

One of the reasons that pollution problems are as large as they are is that

Accepted Answer

A) markets let individuals and firms deplete valuable resources without charging money for doing so. 
B) markets are incapable of incorporating valuable resources such as air and pure water. 
C) governments use resources without paying for them the way that individuals and firms must. 
D) markets are not an efficient means to address scarcity. 
A) markets let individuals and firms deplete valuable resources without charging money for doing so. 
B) markets are incapable of incorporating valuable resources such as air and pure water. 
C) governments use resources without paying for them the way that individuals and firms must. 
D) markets are not an efficient means to address scarcity.

Question 7

The use of tax penalties to control pollution represents a

Accepted Answer

A) price-based market approach to the pollution problem. 
B) non-market approach to the pollution problem. 
C) major source of current federal revenues. 
D) pollution-rights solution to the pollution problem. 
A) price-based market approach to the pollution problem. 
B) non-market approach to the pollution problem. 
C) major source of current federal revenues. 
D) pollution-rights solution to the pollution problem.

Question 8

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 9

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Accepted Answer

A) True 
 B)False

Question 10

A "backstop resource" is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost.Shale oil is a backstop resource for crude oil.Which of the following statements is correct?

Accepted Answer

A) The production of shale oil is likely to increase over time even if crude oil is still available. 
B) Shale oil is unlikely to be produced until all the crude oil has been depleted. 
C) The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. 
D) In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price. 
A) The production of shale oil is likely to increase over time even if crude oil is still available. 
B) Shale oil is unlikely to be produced until all the crude oil has been depleted. 
C) The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. 
D) In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.

Question 11

Rising prices will discourage consumption and encourage conservation.

Accepted Answer

A) True 
 B)False

Question 12

Rising prices for a natural resource stimulate

Accepted Answer

A) the development of complements for the resource. 
B) the development of substitutes for the resource. 
C) the development of externalities from the resource. 
D) All of the above are correct. 
A) the development of complements for the resource. 
B) the development of substitutes for the resource. 
C) the development of externalities from the resource. 
D) All of the above are correct.

Question 13

Charging firms that emit pollutants is one way to deal with pollution.

Accepted Answer

A) True 
 B)False

Question 14

The legal system imposes large financial penalties on firms caught violating Environmental Protection Agency guidelines.The EPA's standards program is thus an example of a

Accepted Answer

A) market-based approach to reducing pollution. 
B) system of emissions taxes. 
C) system of emissions permits. 
D) direct-control system enforced through the courts. 
A) market-based approach to reducing pollution. 
B) system of emissions taxes. 
C) system of emissions permits. 
D) direct-control system enforced through the courts.

Question 15

Explain some important situations where direct controls have a clear advantage over taxes.

Accepted Answer

1.Where an emission is so dangerous that

Question 16

A firm producing a smoke externality is producing

Accepted Answer

A) more than the socially optimal quantity of output. 
B) less than the socially optimal quantity of output. 
C) exactly the socially optimal quantity of output. 
D) There is insufficient information to answer. 
A) more than the socially optimal quantity of output. 
B) less than the socially optimal quantity of output. 
C) exactly the socially optimal quantity of output. 
D) There is insufficient information to answer.

Question 17

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 18

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 19

Which of the following observations is true?

Accepted Answer

A) Environmental damage can be reduced to zero. 
B) Pollution results from a price mechanism malfunction. 
C) Charging those who emit pollution is not a way of dealing with pollution problems. 
D) Public interest requires pollution be maintained at its free-market level. 
A) Environmental damage can be reduced to zero. 
B) Pollution results from a price mechanism malfunction. 
C) Charging those who emit pollution is not a way of dealing with pollution problems. 
D) Public interest requires pollution be maintained at its free-market level.

Question 20

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.

Exam 17: Externalities, the Environment, and Natural Resources

During the second Bush administration,environmental fines and prosecutions

Which of the following has also been called the command and control approach?

Most prophecies of the imminent exhaustion of many natural resources have not come true because

____ completely deplete the most vital resources.

Unexpected discoveries of mineral reserves will ordinarily cause the price of these minerals to increase.

One of the reasons that pollution problems are as large as they are is that

The use of tax penalties to control pollution represents a

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

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

A "backstop resource" is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost.Shale oil is a backstop resource for crude oil.Which of the following statements is correct?

Rising prices will discourage consumption and encourage conservation.

Rising prices for a natural resource stimulate

Charging firms that emit pollutants is one way to deal with pollution.

The legal system imposes large financial penalties on firms caught violating Environmental Protection Agency guidelines.The EPA's standards program is thus an example of a

Explain some important situations where direct controls have a clear advantage over taxes.

A firm producing a smoke externality is producing

Which of the following statements is false?

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

Which of the following observations is true?

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

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 I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

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