Question 1

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

Accepted Answer

A) the price of the resource to rise. 
B) less demand for the resource as people try to conserve. 
C) greater supply as people reduce inventories before it is all gone. 
D) all of the above. 
A) the price of the resource to rise. 
B) less demand for the resource as people try to conserve. 
C) greater supply as people reduce inventories before it is all gone. 
D) all of the above.

Question 2

If one tracks the prices of critical metals,one sees that

Accepted Answer

A) they have risen more slowly than the general rate of inflation. 
B) they have risen about as rapidly as the general rate of inflation. 
C) the prices indicate increasing scarcity of the metals. 
D) the prices have fluctuated too wildly to conclude anything. 
A) they have risen more slowly than the general rate of inflation. 
B) they have risen about as rapidly as the general rate of inflation. 
C) the prices indicate increasing scarcity of the metals. 
D) the prices have fluctuated too wildly to conclude anything.

Question 3

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 4

Defects in the sale of "pollution licenses" as a means of controlling emissions are present because: (i)the scheme is undermined by inflation; (ii)there is a lack of political appeal.

Accepted Answer

A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii 
A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii

Question 5

Which of the following could explain a fall over time in the price of the depletable resource aloe?

Accepted Answer

A) The productivity of aloe mines fell. 
B) New deposits of aloe were discovered. 
C) Demand for aloe increased over time. 
D) All of the above are correct. 
A) The productivity of aloe mines fell. 
B) New deposits of aloe were discovered. 
C) Demand for aloe increased over time. 
D) All of the above are correct.

Question 6

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?

Accepted Answer

A) Known reserves of the resource were depleted. 
B) The interest rate rose by 15 percent. 
C) Antitrust enforcement broke up a cartel among major suppliers of the resource. 
D) The government imposed an effective price floor. 
A) Known reserves of the resource were depleted. 
B) The interest rate rose by 15 percent. 
C) Antitrust enforcement broke up a cartel among major suppliers of the resource. 
D) The government imposed an effective price floor.

Question 7

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

Accepted Answer

A) voluntarism. 
B) direct controls. 
C) taxes on emissions. 
D) none of the above. 
A) voluntarism. 
B) direct controls. 
C) taxes on emissions. 
D) none of the above.

Question 8

At the interest rate r,the price of a depletable natural resource three years from the present (price in present = P)will be,everything else being equal,which of the following?

Accepted Answer

A) 3P 
B) P3 
C) P(1 + r)3 
D) 3P(1 + r)3 
A) 3P 
B) P3 
C) P(1 + r)3 
D) 3P(1 + r)3

Question 9

One advantage of emissions permits is that they allow the government to choose the level of pollution reduction.

Accepted Answer

A) True 
 B)False

Question 10

The opportunity cost of a completely clean environment is not worth the price for most people.

Accepted Answer

A) True 
 B)False

Question 11

The concept of the "best" level of pollution suggests that

Accepted Answer

A) economists can't integrate externalities into supply and demand models. 
B) the "public interest" prefers less pollution to more. 
C) opportunity costs of reducing pollution may sometimes exceed the benefits. 
D) markets efficiently reduce pollution to efficient levels. 
A) economists can't integrate externalities into supply and demand models. 
B) the "public interest" prefers less pollution to more. 
C) opportunity costs of reducing pollution may sometimes exceed the benefits. 
D) markets efficiently reduce pollution to efficient levels.

Question 12

Taxes on polluting firms for pollution are intended to

Accepted Answer

A) raise enough revenue to cut the deficit in half. 
B) encourage firms to reduce charges by polluting less. 
C) be efficient, i.e., result in no excess burden. 
D) raise revenue for general spending needs. 
A) raise enough revenue to cut the deficit in half. 
B) encourage firms to reduce charges by polluting less. 
C) be efficient, i.e., result in no excess burden. 
D) raise revenue for general spending needs.

Question 13

How do rising prices slow resource depletion?

Accepted Answer

Three ways: reduce consumption (conserva

Question 14

Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i)unexpected discoveries of new reserves; (ii)new technologies which reduce extraction costs.

Accepted Answer

A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii 
A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii

Question 15

Rising prices help control the process of resource depletion by

Accepted Answer

A) discouraging consumption and waste. 
B) stimulating more efficient use of the depletable resource. 
C) encouraging resource-saving innovation. 
D) doing all of the above. 
A) discouraging consumption and waste. 
B) stimulating more efficient use of the depletable resource. 
C) encouraging resource-saving innovation. 
D) doing all of the above.

Question 16

The supply curve of a depletable natural resource is usually

Accepted Answer

A) downward sloping because the resource runs out over time. 
B) upward sloping because more of the resource can be profitably extracted at higher prices. 
C) upward sloping because the price of the resource rises over time. 
D) vertical because the supply of the resource is fixed. 
A) downward sloping because the resource runs out over time. 
B) upward sloping because more of the resource can be profitably extracted at higher prices. 
C) upward sloping because the price of the resource rises over time. 
D) vertical because the supply of the resource is fixed.

Question 17

In retaliation for U.S.support for Israel during the Arab-Israeli War,OPEC countries stopped selling oil to the United States.For the United States,this embargo caused the

Accepted Answer

A) demand curve for oil to shift out. 
B) demand curve for oil to shift in. 
C) supply curve of oil to shift out. 
D) supply curve of oil to shift in. 
A) demand curve for oil to shift out. 
B) demand curve for oil to shift in. 
C) supply curve of oil to shift out. 
D) supply curve of oil to shift in.

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

Environmental damage

Accepted Answer

A) cannot be reduced to zero. 
B) is inevitable where humans exist. 
C) tends to increase as long as benefits outweigh the costs to the damagers. 
D) All of the above are correct. 
A) cannot be reduced to zero. 
B) is inevitable where humans exist. 
C) tends to increase as long as benefits outweigh the costs to the damagers. 
D) All of the above are correct.

Question 20

Voluntary programs for reducing pollution

Accepted Answer

A) have been more successful in the United States in encouraging recycling than any other type of program. 
B) are most appropriate when surveillance and enforcement are impractical. 
C) work most reliably when voluntary reduction of pollution over a long period is encouraged. 
D) are enforced by legal authority. 
A) have been more successful in the United States in encouraging recycling than any other type of program. 
B) are most appropriate when surveillance and enforcement are impractical. 
C) work most reliably when voluntary reduction of pollution over a long period is encouraged. 
D) are enforced by legal authority.

Exam 17: Externalities, the Environment, and Natural Resources

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

If one tracks the prices of critical metals,one sees that

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

Defects in the sale of "pollution licenses" as a means of controlling emissions are present because: (i)the scheme is undermined by inflation; (ii)there is a lack of political appeal.

Which of the following could explain a fall over time in the price of the depletable resource aloe?

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?

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

At the interest rate r,the price of a depletable natural resource three years from the present (price in present = P)will be,everything else being equal,which of the following?

One advantage of emissions permits is that they allow the government to choose the level of pollution reduction.

The opportunity cost of a completely clean environment is not worth the price for most people.

The concept of the "best" level of pollution suggests that

Taxes on polluting firms for pollution are intended to

How do rising prices slow resource depletion?

Among the factors that might lead to a divergence from the path of prices for a depletable resource predicted by the economic models are: (i)unexpected discoveries of new reserves; (ii)new technologies which reduce extraction costs.

Rising prices help control the process of resource depletion by

The supply curve of a depletable natural resource is usually

In retaliation for U.S.support for Israel during the Arab-Israeli War,OPEC countries stopped selling oil to the United States.For the United States,this embargo caused the

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.

Environmental damage

Voluntary programs for reducing pollution

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

Filters