Question 1

Exhibit 17.1
  
-Refer to Exhibit 17.1,which shows a market for electricity.The marginal social cost of production equals the marginal benefit at _____

Accepted Answer

A)  point a. 
B)  point b. 
C)  point c. 
D)  point d. 
E)  demand curve D. 
A)  point a. 
B)  point b. 
C)  point c. 
D)  point d. 
E)  demand curve D.

Question 2

Pollution arises because _____

Accepted Answer

A) the atmosphere is a nonrenewable resource. 
B) the atmosphere is a finite resource. 
C) private property rights can be enforced on the atmosphere. 
D) the atmosphere is an open-access resource. 
E) the atmosphere is a private property. 
A) the atmosphere is a nonrenewable resource. 
B) the atmosphere is a finite resource. 
C) private property rights can be enforced on the atmosphere. 
D) the atmosphere is an open-access resource. 
E) the atmosphere is a private property.

Question 3

To solve the common-pool problem in fishing,governments can _____

Accepted Answer

A) restrict production to the socially optimal level. 
B) restrict output. 
C) prohibit resource use entirely. 
D) make property rights flexible. 
E) shutdown all firms in this industry. 
A) restrict production to the socially optimal level. 
B) restrict output. 
C) prohibit resource use entirely. 
D) make property rights flexible. 
E) shutdown all firms in this industry.

Question 4

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates.On a graph of the optimal level of air quality,the use of the new technology would be represented by _____

Accepted Answer

A) a leftward shift of the marginal social cost curve. 
B) a rightward shift of the marginal social cost curve. 
C) movement to the right along the marginal social cost curve. 
D) movement to the left along the marginal social cost curve. 
E) a downward shift of the marginal social benefit curve. 
A) a leftward shift of the marginal social cost curve. 
B) a rightward shift of the marginal social cost curve. 
C) movement to the right along the marginal social cost curve. 
D) movement to the left along the marginal social cost curve. 
E) a downward shift of the marginal social benefit curve.

Question 5

If the marginal social cost of producing a good exceeds the marginal private cost,then _____

Accepted Answer

A) the quantity of the good being produced is too less. 
B) the price charged for the good is too high. 
C) the good produces a positive externality. 
D) the good produces a negative externality. 
E) social welfare is likely to increase by producing more of the good. 
A) the quantity of the good being produced is too less. 
B) the price charged for the good is too high. 
C) the good produces a positive externality. 
D) the good produces a negative externality. 
E) social welfare is likely to increase by producing more of the good.

Question 6

The Superfund law was designed to clean up _____

Accepted Answer

A) land pollution in agricultural areas. 
B) air pollution from automobiles, buses, and trucks. 
C) water pollution from agricultural sources (i.e., pesticides). 
D) water pollution from dumping raw sewage. 
E) toxic waste dumps. 
A) land pollution in agricultural areas. 
B) air pollution from automobiles, buses, and trucks. 
C) water pollution from agricultural sources (i.e., pesticides). 
D) water pollution from dumping raw sewage. 
E) toxic waste dumps.

Question 7

Output restrictions or taxes could force people to _____

Accepted Answer

A) use the resource at a rate that is socially optimal. 
B) use the resource at a rate that supports an unsustainable yield. 
C) be more competitive. 
D) overuse exhaustible resources. 
E) overuse renewable resources. 
A) use the resource at a rate that is socially optimal. 
B) use the resource at a rate that supports an unsustainable yield. 
C) be more competitive. 
D) overuse exhaustible resources. 
E) overuse renewable resources.

Question 8

In order to increase society's well-being,education should be _____

Accepted Answer

A) taxed to discourage production. 
B) subsidized to encourage production. 
C) taxed to encourage production. 
D) subsidized to discourage production. 
E) provided without government intervention. 
A) taxed to discourage production. 
B) subsidized to encourage production. 
C) taxed to encourage production. 
D) subsidized to discourage production. 
E) provided without government intervention.

Question 9

Marginal social cost includes both the marginal private cost and the marginal external cost that production imposes on society.

Accepted Answer

A) True 
 B)False

Question 10

When the benefits to society of using a product exceed the benefits to the user,then _____

Accepted Answer

A) the product should be strictly regulated. 
B) the product should be taxed. 
C) the product provides a positive externality. 
D) the product is overproduced at the privately determined equilibrium. 
E) the product provides a negative externality. 
A) the product should be strictly regulated. 
B) the product should be taxed. 
C) the product provides a positive externality. 
D) the product is overproduced at the privately determined equilibrium. 
E) the product provides a negative externality.

Question 11

If the benefits to society of students attending college exceed the benefits to the students,then _____

Accepted Answer

A) higher education should be strictly regulated. 
B) higher education should be taxed. 
C) higher education provides a positive externality. 
D) higher education is overproduced at the privately determined equilibrium. 
E) higher education provides a negative externality. 
A) higher education should be strictly regulated. 
B) higher education should be taxed. 
C) higher education provides a positive externality. 
D) higher education is overproduced at the privately determined equilibrium. 
E) higher education provides a negative externality.

Question 12

Which of the following is true of renewable resources?

Accepted Answer

A) Additional units of these resources can be purchased in the market. 
B) Additional units of these resources are provided by the government. 
C) Worn-out units cannot be repaired for further use. 
D) They can be drawn on indefinitely if used conservatively. 
E) They are available in finite amounts. 
A) Additional units of these resources can be purchased in the market. 
B) Additional units of these resources are provided by the government. 
C) Worn-out units cannot be repaired for further use. 
D) They can be drawn on indefinitely if used conservatively. 
E) They are available in finite amounts.

Question 13

The main objective of the Comprehensive Environmental Response,Compensation,and Liability Act was to ensure that _____

Accepted Answer

A) companies that generated hazardous wastes pay to clean up any wastes that are improperly disposed. 
B) individuals who dispose garbage and other hazardous wastes in rivers pay for the cleanup of rivers. 
C) automobile emissions are reduced by 90 percent. 
D) all waste products are converted into reusable materials. 
E) harmful pesticides are not used by farmers. 
A) companies that generated hazardous wastes pay to clean up any wastes that are improperly disposed. 
B) individuals who dispose garbage and other hazardous wastes in rivers pay for the cleanup of rivers. 
C) automobile emissions are reduced by 90 percent. 
D) all waste products are converted into reusable materials. 
E) harmful pesticides are not used by farmers.

Question 14

Which of the following is an example of an open-access resource?

Accepted Answer

A) a city subway system 
B) college education 
C) the healthcare system in a city 
D) whales in the ocean 
E) pandas in a zoo 
A) a city subway system 
B) college education 
C) the healthcare system in a city 
D) whales in the ocean 
E) pandas in a zoo

Question 15

Which of the following is a renewable resource?

Accepted Answer

A) oil 
B) air 
C) coal 
D) iron ore 
E) uranium 
A) oil 
B) air 
C) coal 
D) iron ore 
E) uranium

Question 16

Exhibit 17.1
  
-Refer to Exhibit 17.1,which shows a market for electricity.If technology is fixed,the discrepancy between the market output and the efficient level of output is eliminated by _____

Accepted Answer

A) subsidizing production by $0.05 per kilowatt hour. 
B) imposing a tax of $0.05 per kilowatt hour on the utility. 
C) using a quota system to restrict production to 75 million kilowatt hours. 
D) subsidizing production of the good by $0.10 kilowatt hours. 
E) letting the utility operate freely. 
A) subsidizing production by $0.05 per kilowatt hour. 
B) imposing a tax of $0.05 per kilowatt hour on the utility. 
C) using a quota system to restrict production to 75 million kilowatt hours. 
D) subsidizing production of the good by $0.10 kilowatt hours. 
E) letting the utility operate freely.

Question 17

Negative externalities of open resources arise because _____

Accepted Answer

A) there are no enforceable property rights to open-access resources. 
B) these are private goods and government enforces property rights. 
C) consumers have to pay for each unit of production. 
D) the government undertakes the distribution of these resources. 
E) these are available in finite amounts. 
A) there are no enforceable property rights to open-access resources. 
B) these are private goods and government enforces property rights. 
C) consumers have to pay for each unit of production. 
D) the government undertakes the distribution of these resources. 
E) these are available in finite amounts.

Question 18

A society is better off when the level of education exceeds the private equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

The optimal level of air quality will increase if _____

Accepted Answer

A) the cost of polluting increases. 
B) the price of pollution reducing equipment increases. 
C) a new process allows pollution to be removed more cheaply. 
D) the marginal social cost of air quality increases. 
E) the marginal social benefit of air quality decreases. 
A) the cost of polluting increases. 
B) the price of pollution reducing equipment increases. 
C) a new process allows pollution to be removed more cheaply. 
D) the marginal social cost of air quality increases. 
E) the marginal social benefit of air quality decreases.

Question 20

The imposition of a tax on an open-access resource increases the marginal private cost of using the resource by _____

Accepted Answer

A) zero. 
B) the amount of the tax. 
C) the marginal cost of the resource. 
D) the average private cost of using the resource. 
E) the average social cost of using the resource. 
A) zero. 
B) the amount of the tax. 
C) the marginal cost of the resource. 
D) the average private cost of using the resource. 
E) the average social cost of using the resource.

Exam 17: Externalities and the Environment

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.The marginal social cost of production equals the marginal benefit at _____

Pollution arises because _____

To solve the common-pool problem in fishing,governments can _____

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates.On a graph of the optimal level of air quality,the use of the new technology would be represented by _____

If the marginal social cost of producing a good exceeds the marginal private cost,then _____

The Superfund law was designed to clean up _____

Output restrictions or taxes could force people to _____

In order to increase society's well-being,education should be _____

Marginal social cost includes both the marginal private cost and the marginal external cost that production imposes on society.

When the benefits to society of using a product exceed the benefits to the user,then _____

If the benefits to society of students attending college exceed the benefits to the students,then _____

Which of the following is true of renewable resources?

The main objective of the Comprehensive Environmental Response,Compensation,and Liability Act was to ensure that _____

Which of the following is an example of an open-access resource?

Which of the following is a renewable resource?

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.If technology is fixed,the discrepancy between the market output and the efficient level of output is eliminated by _____

Negative externalities of open resources arise because _____

A society is better off when the level of education exceeds the private equilibrium.

The optimal level of air quality will increase if _____

The imposition of a tax on an open-access resource increases the marginal private cost of using the resource by _____

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