Question 1

Exhibit 17.1
  
-Refer to Exhibit 17.1 which shows a market for electricity.The socially efficient price and level of output are _____

Accepted Answer

A) $0.10 and 75 million kilowatt hours, respectively. 
B) $0.15 and 75 million kilowatt hours, respectively. 
C) $0.10 and 50 million kilowatt hours, respectively. 
D) $0.15 and 50 million kilowatt hours, respectively. 
E) less than $0.10 and more than 50 million kilowatt hours, respectively. 
A) $0.10 and 75 million kilowatt hours, respectively. 
B) $0.15 and 75 million kilowatt hours, respectively. 
C) $0.10 and 50 million kilowatt hours, respectively. 
D) $0.15 and 50 million kilowatt hours, respectively. 
E) less than $0.10 and more than 50 million kilowatt hours, respectively.

Question 2

Dumping raw sewage into Boston Harbor is an example of a _____

Accepted Answer

A) negative externality. 
B) positive externality. 
C) private cost. 
D) sunk cost. 
E) public good. 
A) negative externality. 
B) positive externality. 
C) private cost. 
D) sunk cost. 
E) public good.

Question 3

Which of the following helps explain why pesticides account for much of the water pollution in the United States?

Accepted Answer

A) Pesticide regulations were repealed by the Environmental Protection Agency. 
B) Pesticide regulations favored genetically engineered crops. 
C) Pesticide regulations were applicable only to large farms. 
D) Pesticide regulations were administered by state agricultural departments. 
E) Pesticide regulations were administered by the federal government. 
A) Pesticide regulations were repealed by the Environmental Protection Agency. 
B) Pesticide regulations favored genetically engineered crops. 
C) Pesticide regulations were applicable only to large farms. 
D) Pesticide regulations were administered by state agricultural departments. 
E) Pesticide regulations were administered by the federal government.

Question 4

In the United States,people tend to discard items rather than repair them because _____

Accepted Answer

A) leisure is valued more than work. 
B) of the high opportunity cost of time. 
C) it is costly to use land for waste dispsal. 
D) high wages in the waste disposal industry discourage repairs. 
E) of the low opportunity cost of time. 
A) leisure is valued more than work. 
B) of the high opportunity cost of time. 
C) it is costly to use land for waste dispsal. 
D) high wages in the waste disposal industry discourage repairs. 
E) of the low opportunity cost of time.

Question 5

Exhibit 17.1
  
-Refer to Exhibit 17.1,which shows a market for electricity.If producers base their output on marginal private cost,how much electricity is produced per month?

Accepted Answer

A) 0 kilowatt-hours 
B) 50 million kilowatt-hours 
C) 75 million kilowatt-hours 
D) between 0 and 50 million kilowatt-hours 
E) between 50 and 75 million kilowatt-hours 
A) 0 kilowatt-hours 
B) 50 million kilowatt-hours 
C) 75 million kilowatt-hours 
D) between 0 and 50 million kilowatt-hours 
E) between 50 and 75 million kilowatt-hours

Question 6

Exhibit 17.1
  
-Refer to Exhibit 17.1,which shows a market for electricity.The equilibrium level of output for the firm is _____

Accepted Answer

A) 0 kilowatt-hours. 
B) 50 million kilowatt-hours. 
C) 75 million kilowatt-hours. 
D) between 0 and 50 million kilowatt-hours. 
E) between 50 and 75 million kilowatt-hours. 
A) 0 kilowatt-hours. 
B) 50 million kilowatt-hours. 
C) 75 million kilowatt-hours. 
D) between 0 and 50 million kilowatt-hours. 
E) between 50 and 75 million kilowatt-hours.

Question 7

Which of the following is an example of a positive externality?

Accepted Answer

A) water pollution 
B) the installation of a streetlight 
C) second-hand smoke 
D) a loud conversation in the workplace 
E) the emission of harmful gases by a factory 
A) water pollution 
B) the installation of a streetlight 
C) second-hand smoke 
D) a loud conversation in the workplace 
E) the emission of harmful gases by a factory

Question 8

Exhibit 17.5
  
-Refer to Exhibit 17.5,which shows greenhouse gas emissions for a given rate of electricity production.Point c shows _____

Accepted Answer

A) the social welfare loss. 
B) the optimal level of greenhouse gas emissions for a given rate of output. 
C) the total social gain from producing the socially efficient output. 
D) the marginal social cost. 
E) the marginal social benefit. 
A) the social welfare loss. 
B) the optimal level of greenhouse gas emissions for a given rate of output. 
C) the total social gain from producing the socially efficient output. 
D) the marginal social cost. 
E) the marginal social benefit.

Question 9

In order to increase a society's total welfare,a production process that produces a negative externality should be _____

Accepted Answer

A) taxed. 
B) encouraged to produce goods in excess of the socially optimum level. 
C) encouraged to produce in excess of the private optimum level. 
D) subsidized if the good is produced for foreign markets. 
E) subsidized if the good is produced for the domestic market. 
A) taxed. 
B) encouraged to produce goods in excess of the socially optimum level. 
C) encouraged to produce in excess of the private optimum level. 
D) subsidized if the good is produced for foreign markets. 
E) subsidized if the good is produced for the domestic market.

Question 10

Control of water pollution from pesticide runoff in the United States is the responsibility of _____

Accepted Answer

A) the U.S. Department of Agriculture. 
B) the Environmental Protection Agency. 
C) state attorneys general. 
D) state departments of agriculture. 
E) state environmental protection agencies. 
A) the U.S. Department of Agriculture. 
B) the Environmental Protection Agency. 
C) state attorneys general. 
D) state departments of agriculture. 
E) state environmental protection agencies.

Question 11

The Coase theorem argues that the assignment of property rights will generate an efficient solution to the problem of _____

Accepted Answer

A) arbitrage, as long as bargaining costs are small. 
B) negative externalities, as long as bargaining costs are small. 
C) negative externalities, as long as bargaining costs are high. 
D) moral hazard, as long as bargaining costs are small. 
E) adverse selection, as long as bargaining costs are small. 
A) arbitrage, as long as bargaining costs are small. 
B) negative externalities, as long as bargaining costs are small. 
C) negative externalities, as long as bargaining costs are high. 
D) moral hazard, as long as bargaining costs are small. 
E) adverse selection, as long as bargaining costs are small.

Question 12

The United States recycles a greater portion of its garbage than Japan does.

Accepted Answer

A) True 
 B)False

Question 13

Environmental problems result when social costs and benefits are different from private costs and benefits.

Accepted Answer

A) True 
 B)False

Question 14

Markets tend to underproduce goods that generate positive externalities.

Accepted Answer

A) True 
 B)False

Question 15

To achieve the socially optimal level of pollution,the biggest polluters should be targeted for the greatest reduction in pollution.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 17.3
  
-Refer to Exhibit 17.3,which shows market equilibrium in the presence of an externality.The total social gain from producing the socially efficient output is _____

Accepted Answer

A) $60. 
B) $30. 
C) $6. 
D) $480. 
E) $300. 
A) $60. 
B) $30. 
C) $6. 
D) $480. 
E) $300.

Question 17

Smokers and loud talkers help in generating positive externalities.

Accepted Answer

A) True 
 B)False

Question 18

Private property rights are easily assigned to open-access resources.

Accepted Answer

A) True 
 B)False

Question 19

A metal stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.It would cost the factory $5 million to move,and it would cost the day care center $1 million to move.Sound insulation for the factory costs $1 million,while insulation for the day care center costs $200,000.The court determines that the day care center has the property right.Which of the following optimal solutions is likely to be true given the scenario?

Accepted Answer

A) The factory should install sound insulation because that is cheaper than moving. 
B) The factory should pay for the relocation of the day care center. 
C) The factory should buy insulation for the day care center. 
D) The day care center should buy its own insulation. 
E) The day care center should relocate. 
A) The factory should install sound insulation because that is cheaper than moving. 
B) The factory should pay for the relocation of the day care center. 
C) The factory should buy insulation for the day care center. 
D) The day care center should buy its own insulation. 
E) The day care center should relocate.

Question 20

The equilibrium permit price of a pollution right is _______

Accepted Answer

A) determined by the consumers consuming the products of the polluting firms. 
B) determined by the government. 
C) determined by the municipal corporation of the area. 
D) determined by the supply of and the demand for pollution rights. 
E) determined by the marginal social costs of the products of the polluting firms. 
A) determined by the consumers consuming the products of the polluting firms. 
B) determined by the government. 
C) determined by the municipal corporation of the area. 
D) determined by the supply of and the demand for pollution rights. 
E) determined by the marginal social costs of the products of the polluting firms.

Exhibit 17.1 -Refer to Exhibit 17.1 which shows a market for electricity.The socially efficient price and level of output are _____

Dumping raw sewage into Boston Harbor is an example of a _____

Which of the following helps explain why pesticides account for much of the water pollution in the United States?

In the United States,people tend to discard items rather than repair them because _____

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.If producers base their output on marginal private cost,how much electricity is produced per month?

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.The equilibrium level of output for the firm is _____

Which of the following is an example of a positive externality?

Exhibit 17.5 -Refer to Exhibit 17.5,which shows greenhouse gas emissions for a given rate of electricity production.Point c shows _____

In order to increase a society's total welfare,a production process that produces a negative externality should be _____

Control of water pollution from pesticide runoff in the United States is the responsibility of _____

The Coase theorem argues that the assignment of property rights will generate an efficient solution to the problem of _____

The United States recycles a greater portion of its garbage than Japan does.

Environmental problems result when social costs and benefits are different from private costs and benefits.

Markets tend to underproduce goods that generate positive externalities.

To achieve the socially optimal level of pollution,the biggest polluters should be targeted for the greatest reduction in pollution.

Exhibit 17.3 -Refer to Exhibit 17.3,which shows market equilibrium in the presence of an externality.The total social gain from producing the socially efficient output is _____

Smokers and loud talkers help in generating positive externalities.

Private property rights are easily assigned to open-access resources.

The equilibrium permit price of a pollution right is _______

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

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Exam 17: Externalities and the Environment

Exhibit 17.1 -Refer to Exhibit 17.1 which shows a market for electricity.The socially efficient price and level of output are _____

Dumping raw sewage into Boston Harbor is an example of a _____

Which of the following helps explain why pesticides account for much of the water pollution in the United States?

In the United States,people tend to discard items rather than repair them because _____

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.If producers base their output on marginal private cost,how much electricity is produced per month?

Exhibit 17.1 -Refer to Exhibit 17.1,which shows a market for electricity.The equilibrium level of output for the firm is _____

Which of the following is an example of a positive externality?

Exhibit 17.5 -Refer to Exhibit 17.5,which shows greenhouse gas emissions for a given rate of electricity production.Point c shows _____

In order to increase a society's total welfare,a production process that produces a negative externality should be _____

Control of water pollution from pesticide runoff in the United States is the responsibility of _____

The Coase theorem argues that the assignment of property rights will generate an efficient solution to the problem of _____

The United States recycles a greater portion of its garbage than Japan does.

Environmental problems result when social costs and benefits are different from private costs and benefits.

Markets tend to underproduce goods that generate positive externalities.

To achieve the socially optimal level of pollution,the biggest polluters should be targeted for the greatest reduction in pollution.

Exhibit 17.3 -Refer to Exhibit 17.3,which shows market equilibrium in the presence of an externality.The total social gain from producing the socially efficient output is _____

Smokers and loud talkers help in generating positive externalities.

Private property rights are easily assigned to open-access resources.

The equilibrium permit price of a pollution right is _______

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Poverty and Redistribution

International Trade

International Finance

Economic Development

Filters