Question 1

Which of the following creates a positive externality in production?

Accepted Answer

A) Polluting a river 
B) Playing loud music 
C) Vaccinations 
D) Reducing the cost of producing of another good 
E) Strip mining 
A) Polluting a river 
B) Playing loud music 
C) Vaccinations 
D) Reducing the cost of producing of another good 
E) Strip mining

Question 2

Pollution results in resource misallocation.

Accepted Answer

A) True 
 B)False

Question 3

In a pollution rights market,

Accepted Answer

A) Firms buy licenses to pollute 
B) Firms sell licenses to pollute 
C) Environmental groups can reduce pollution by buying licenses to pollute 
D) The government can determine the level of pollution by the number of licenses it issues 
E) All of the above 
A) Firms buy licenses to pollute 
B) Firms sell licenses to pollute 
C) Environmental groups can reduce pollution by buying licenses to pollute 
D) The government can determine the level of pollution by the number of licenses it issues 
E) All of the above

Question 4

Pollution

Accepted Answer

A) Like air and water pollution became an issue in the U.S.during the 1960's 
B) Tends to be worse in more populated than in less populated areas 
C) Occurs because large portions of the environment are owned by polluters 
D) Increases the cost of producing all goods 
E) Issues are represented in all of the above answers 
A) Like air and water pollution became an issue in the U.S.during the 1960's 
B) Tends to be worse in more populated than in less populated areas 
C) Occurs because large portions of the environment are owned by polluters 
D) Increases the cost of producing all goods 
E) Issues are represented in all of the above answers

Question 5

If a pollution tax is placed on a firm emitting pollution,the firm will pay the tax,rather than reduce its emissions,as long as the tax is

Accepted Answer

A) Above its MPC of pollution control 
B) Below its MPC of pollution control 
C) Above the MSC of pollution control 
D) Below the MSC of pollution control 
E) Reasonable 
A) Above its MPC of pollution control 
B) Below its MPC of pollution control 
C) Above the MSC of pollution control 
D) Below the MSC of pollution control 
E) Reasonable

Question 6

The Following Questions Refer to the graph below.  
-Operating at which point on the PPC TT1 will result in the most environmental degradation?

Accepted Answer

A) T 
B) T1 
C) T2 
D) A1 
E) A2 
A) T 
B) T1 
C) T2 
D) A1 
E) A2

Question 7

The Following Questions Refer to the graph below.  
-A technological advance that improves pollution control methods would cause which of the following changes on the graph? A movement from

Accepted Answer

A) A1 to A2 
B) C1 to C2 
C) q1 to q2 
D) TT1 to TT2 
E) 0 to C2 
A) A1 to A2 
B) C1 to C2 
C) q1 to q2 
D) TT1 to TT2 
E) 0 to C2

Question 8

The Following Questions Refer to the graph below.  
-Assume that the current market demand and supply curves for Z are D2 and S2.If there are positive social spillovers associated with the production of Z:

Accepted Answer

A) Government should levy a per unit tax on Z to shift the supply curve toward S1 
B) An output greater than 0G would improve resource allocation 
C) Government should levy a per unit tax on Z to shift the demand curve toward D1 
D) An output smaller than 0G would improve resource allocation 
E) Both (a)and (d) 
A) Government should levy a per unit tax on Z to shift the supply curve toward S1 
B) An output greater than 0G would improve resource allocation 
C) Government should levy a per unit tax on Z to shift the demand curve toward D1 
D) An output smaller than 0G would improve resource allocation 
E) Both (a)and (d)

Question 9

Deodorant may be an example of a good for which MSB > MPB.

Accepted Answer

A) True 
 B)False

Question 10

As additional units of pollution control are added,at some point each additional unit adds

Accepted Answer

A) Less than the previous unit to total benefits 
B) More than the previous unit to total benefits 
C) Less than the previous unit to total costs 
D) More to total benefits than to total costs 
E) Less to total costs than total benefits 
A) Less than the previous unit to total benefits 
B) More than the previous unit to total benefits 
C) Less than the previous unit to total costs 
D) More to total benefits than to total costs 
E) Less to total costs than total benefits

Question 11

The optimal level of pollution control occurs when

Accepted Answer

A) MSB of control equals MSC 
B) Pollution is zero 
C) MSB of control just exceeds MSC 
D) MSB of control is less than MSC 
E) None of the above 
A) MSB of control equals MSC 
B) Pollution is zero 
C) MSB of control just exceeds MSC 
D) MSB of control is less than MSC 
E) None of the above

Question 12

The use of pollution rights licenses can improve efficiency and reduce pollution since

Accepted Answer

A) Pollution rights licenses do not improve efficiency nor reduce pollution 
B) The licenses give environmental groups pollution reducing permits 
C) The cost to purchase these licenses means that social costs are 
A) Pollution rights licenses do not improve efficiency nor reduce pollution 
B) The licenses give environmental groups pollution reducing permits 
C) The cost to purchase these licenses means that social costs are

Question 13

The Following Questions Refer to the graph below.  
-What is the quantity of the firm's product in a market with no pollution regulation?

Accepted Answer

A) Q1 
B) Q2 
C) Q3 
D) 0 
E) It cannot be determined 
A) Q1 
B) Q2 
C) Q3 
D) 0 
E) It cannot be determined

Question 14

The Following Questions Refer to the graph below.  
-If the discharge of the firm is q1 units per day and a tax of T1 per unit is placed on polluted discharge,the firm will

Accepted Answer

A) Clean all of its discharge of wastes 
B) Clean none of its discharge of wastes 
C) Spend A0B0 dollars on cleaning the discharge 
D) Spend A0q0 dollars on cleaning the discharge 
E) (a)and (d) 
A) Clean all of its discharge of wastes 
B) Clean none of its discharge of wastes 
C) Spend A0B0 dollars on cleaning the discharge 
D) Spend A0q0 dollars on cleaning the discharge 
E) (a)and (d)

Question 15

Following Questions are based on the following information.
In a small city located on a lake,the raw sewage of the city is dumped directly into the lakE.This has been a source of distress for citizens who like to swim,fish,and water ski.A study has been instituted to determine what value the citizens place on pollution control,and the results are listed in the following tablE.Costs of pollution control are also listed.
  
-As the units of pollution control increase,the MSB of controlling pollution is

Accepted Answer

A) Increasing 
B) Decreasing 
C) Constant 
D) Harder to define 
E) Impossible to determine 
A) Increasing 
B) Decreasing 
C) Constant 
D) Harder to define 
E) Impossible to determine

Question 16

Suppose the government imposes a tax on electric companies for each unit of sulfur they emit.Which of the following would NOT occur?

Accepted Answer

A) Higher prices for electricity 
B) Lower prices for electricity 
C) Electric companies shifting to low sulfur oil 
D) A decrease in the amount of electricity produced 
E) A shift to alternative energy resources 
A) Higher prices for electricity 
B) Lower prices for electricity 
C) Electric companies shifting to low sulfur oil 
D) A decrease in the amount of electricity produced 
E) A shift to alternative energy resources

Question 17

Following Questions are based on the following information.
In a small city located on a lake,the raw sewage of the city is dumped directly into the lakE.This has been a source of distress for citizens who like to swim,fish,and water ski.A study has been instituted to determine what value the citizens place on pollution control,and the results are listed in the following tablE.Costs of pollution control are also listed.
  
-The economically efficient level of pollution control is

Accepted Answer

A) 10 units 
B) 9 units 
C) 8 units 
D) 4 units 
E) 2 units 
A) 10 units 
B) 9 units 
C) 8 units 
D) 4 units 
E) 2 units

Question 18

Following Questions are based on the following information.
In a small city located on a lake,the raw sewage of the city is dumped directly into the lakE.This has been a source of distress for citizens who like to swim,fish,and water ski.A study has been instituted to determine what value the citizens place on pollution control,and the results are listed in the following tablE.Costs of pollution control are also listed.
  
-At the economically efficient level of control,MSB

Accepted Answer

A) Equals MSC 
B) Equals $30,000 
C) Is lower than at one unit less pollution control 
D) Is higher than at one unit more pollution control 
E) Is all of the above 
A) Equals MSC 
B) Equals $30,000 
C) Is lower than at one unit less pollution control 
D) Is higher than at one unit more pollution control 
E) Is all of the above

Question 19

An increase in a tax per unit of polluted discharge will decrease the amount of pollution.

Accepted Answer

A) True 
 B)False

Question 20

Another term for implicit cost is

Accepted Answer

A) Out-of-pocket costs 
B) Explicit costs 
C) Opportunity cost 
D) Total cost 
E) Marginal cost 
A) Out-of-pocket costs 
B) Explicit costs 
C) Opportunity cost 
D) Total cost 
E) Marginal cost

Which of the following creates a positive externality in production?

Pollution results in resource misallocation.

In a pollution rights market,

Pollution

If a pollution tax is placed on a firm emitting pollution,the firm will pay the tax,rather than reduce its emissions,as long as the tax is

The Following Questions Refer to the graph below. -Operating at which point on the PPC TT₁ will result in the most environmental degradation?

The Following Questions Refer to the graph below. -A technological advance that improves pollution control methods would cause which of the following changes on the graph? A movement from

The Following Questions Refer to the graph below. -Assume that the current market demand and supply curves for Z are D₂ and S₂.If there are positive social spillovers associated with the production of Z:

Deodorant may be an example of a good for which MSB > MPB.

As additional units of pollution control are added,at some point each additional unit adds

The optimal level of pollution control occurs when

The use of pollution rights licenses can improve efficiency and reduce pollution since

The Following Questions Refer to the graph below. -What is the quantity of the firm's product in a market with no pollution regulation?

The Following Questions Refer to the graph below. -If the discharge of the firm is q₁ units per day and a tax of T1 per unit is placed on polluted discharge,the firm will

Suppose the government imposes a tax on electric companies for each unit of sulfur they emit.Which of the following would NOT occur?

An increase in a tax per unit of polluted discharge will decrease the amount of pollution.

Another term for implicit cost is

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Money,Banking and the Financial System: Old Problems With New Twists

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

Filters

Exam 4: Pollution Problems: Must We Foul Our Own Nests

Which of the following creates a positive externality in production?

Pollution results in resource misallocation.

In a pollution rights market,

Pollution

If a pollution tax is placed on a firm emitting pollution,the firm will pay the tax,rather than reduce its emissions,as long as the tax is

The Following Questions Refer to the graph below. -Operating at which point on the PPC TT1 will result in the most environmental degradation?

The Following Questions Refer to the graph below. -A technological advance that improves pollution control methods would cause which of the following changes on the graph? A movement from

The Following Questions Refer to the graph below. -Assume that the current market demand and supply curves for Z are D2 and S2.If there are positive social spillovers associated with the production of Z:

Deodorant may be an example of a good for which MSB > MPB.

As additional units of pollution control are added,at some point each additional unit adds

The optimal level of pollution control occurs when

The use of pollution rights licenses can improve efficiency and reduce pollution since

The Following Questions Refer to the graph below. -What is the quantity of the firm's product in a market with no pollution regulation?

The Following Questions Refer to the graph below. -If the discharge of the firm is q1 units per day and a tax of T1 per unit is placed on polluted discharge,the firm will

Suppose the government imposes a tax on electric companies for each unit of sulfur they emit.Which of the following would NOT occur?

An increase in a tax per unit of polluted discharge will decrease the amount of pollution.

Another term for implicit cost is

Alleviating Human Misery: The Role of Economic Reasoning

Economic Systems, Resource Allocation, and Social Well-Being: Lessons From Chinas Transition

Government Control of Prices in Mixed Systems: Who Are the Winners and Losers

Economics of Crime and Its Prevention: How Much Is Too Much

The Economics of Education: Crisis and Reform

Poverty Problems and Discrimination: Why Are so Many Still so Poor

The Economics of Monopoly Power: Can Markets Be Controlled

The Economics of Professional Sports: What Is the Real Score

Competition in the Global Market-Place: Should We Protect Ourselves From International Trade

Economic Growth: Why Is the Economic Road so Bumpy

Money,Banking and the Financial System: Old Problems With New Twists

Unemployment and Inflation: Can We Find a Balance

Government Spending,Taxation,and the National Debt: Who Wins and Who Loses

Social Security and Medicare: How Secure Is Our Safety Net for the Elderly

Filters

The Following Questions Refer to the graph below. -Operating at which point on the PPC TT₁ will result in the most environmental degradation?

The Following Questions Refer to the graph below. -Assume that the current market demand and supply curves for Z are D₂ and S₂.If there are positive social spillovers associated with the production of Z:

The Following Questions Refer to the graph below. -If the discharge of the firm is q₁ units per day and a tax of T1 per unit is placed on polluted discharge,the firm will