Question 1

More water pollution in the United States comes from __________ than any other source.

Accepted Answer

A)  factories 
B)  sulfur dioxide (i.e. ,acid rain) 
C)  cars 
D)  chemicals (used in pesticides and fertilizers) and sewage 
E)  garbage 
A)  factories 
B)  sulfur dioxide (i.e. ,acid rain) 
C)  cars 
D)  chemicals (used in pesticides and fertilizers) and sewage 
E)  garbage

Question 2

If consuming a good creates a positive externality,

Accepted Answer

A)  marginal private benefits exceed marginal social benefits 
B)  marginal social benefits exceed marginal private benefits 
C)  private demand is equal to marginal social benefit 
D)  private demand is greater than marginal social benefit 
E)  the private demand curve shifts to the right to coincide with the marginal social benefit curve 
A)  marginal private benefits exceed marginal social benefits 
B)  marginal social benefits exceed marginal private benefits 
C)  private demand is equal to marginal social benefit 
D)  private demand is greater than marginal social benefit 
E)  the private demand curve shifts to the right to coincide with the marginal social benefit curve

Question 3

Unpriced by-products of production or consumption that impose costs on other consumers or firms are known as

Accepted Answer

A)  negative externalities 
B)  effluent fees 
C)  pollution rights 
D)  positive externalities 
E)  moral hazards 
A)  negative externalities 
B)  effluent fees 
C)  pollution rights 
D)  positive externalities 
E)  moral hazards

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 17-6
  
-In Exhibit 17-6,a per-unit subsidy of __________ would result in production of the socially optimal quantity.

Accepted Answer

A)  $4 
B)  $6 
C)  $2 
D)  $1.50 
E)  $3.00 
A)  $4 
B)  $6 
C)  $2 
D)  $1.50 
E)  $3.00

Question 6

In a free market,a firm's rate of output is determined

Accepted Answer

A)  where marginal social cost equals marginal social benefit 
B)  where marginal private benefit equals marginal social benefit 
C)  where marginal social cost equals marginal private cost 
D)  where marginal private cost equals marginal private benefit 
E)  by government 
A)  where marginal social cost equals marginal social benefit 
B)  where marginal private benefit equals marginal social benefit 
C)  where marginal social cost equals marginal private cost 
D)  where marginal private cost equals marginal private benefit 
E)  by government

Question 7

Which of the following did not help account for the recent decline in the growth of trash-to-energy plants?

Accepted Answer

A)  a decline in energy prices 
B)  less favorable tax treatment 
C)  a decline in the amount of garbage per capita 
D)  the 1986 tax reform act 
E)  environmental concerns over sites for the plants 
A)  a decline in energy prices 
B)  less favorable tax treatment 
C)  a decline in the amount of garbage per capita 
D)  the 1986 tax reform act 
E)  environmental concerns over sites for the plants

Question 8

In the absence of government intervention,the marginal social cost of pollution abatement would equal its marginal social benefit.

Accepted Answer

A) True 
 B)False

Question 9

The marginal social benefit curve for water quality slopes downward because

Accepted Answer

A)  the total benefit from clean water decreases as water becomes cleaner 
B)  the added benefit from cleaner water is greater when water quality is poor than when water quality is high 
C)  the added benefit from cleaner water is smaller when water quality is poor than when water quality is high 
D)  the total benefit from clean water increases as water becomes cleaner 
E)  people demand clean water at any price 
A)  the total benefit from clean water decreases as water becomes cleaner 
B)  the added benefit from cleaner water is greater when water quality is poor than when water quality is high 
C)  the added benefit from cleaner water is smaller when water quality is poor than when water quality is high 
D)  the total benefit from clean water increases as water becomes cleaner 
E)  people demand clean water at any price

Question 10

The 'Nuts & Bolts' factory is located next to the movie set for 'The silent man'.The noise coming from the factory makes the movie production close to impossible.The factory can be sound-proofed for $2 million or it can be moved for $4 million.The movie set can be moved for $1.5 million.Assume that the factory has the property right.What would be the optimal solution to this problem?

Accepted Answer

A)  The factory should pay for its own sound-proofing 
B)  The movie producers should pay for the sound-proofing of the factory 
C)  The movie producers should pay to move the movie set 
D)  The factory should pay to move the movie set 
E)  The factory should pay to move the factory 
A)  The factory should pay for its own sound-proofing 
B)  The movie producers should pay for the sound-proofing of the factory 
C)  The movie producers should pay to move the movie set 
D)  The factory should pay to move the movie set 
E)  The factory should pay to move the factory

Question 11

Pollution arises because

Accepted Answer

A)  the atmosphere is a nonrenewable resource 
B)  the atmosphere is a renewable resource 
C)  of enforceable property rights 
D)  the atmosphere is an open-access resource 
E)  there is no supply of pollution curve 
A)  the atmosphere is a nonrenewable resource 
B)  the atmosphere is a renewable resource 
C)  of enforceable property rights 
D)  the atmosphere is an open-access resource 
E)  there is no supply of pollution curve

Question 12

Sailboats and motorboats share Emerson Lake,which nobody owns.The sailors say the motorboats are a hazard;the motorboaters say it is the other way around.Frequent collisions occur,with many injuries and some deaths every year.If the City of Emerson were to buy the lake itself,

Accepted Answer

A)  the problem would be solved,because the lake would have an owner 
B)  the problem would be solved,because no one could use the lake 
C)  the city would still have to assign property rights so that use of the lake would be efficient 
D)  the city would give the right to use the lake to the larger group 
E)  the city would give the right to use the lake to the richer group 
A)  the problem would be solved,because the lake would have an owner 
B)  the problem would be solved,because no one could use the lake 
C)  the city would still have to assign property rights so that use of the lake would be efficient 
D)  the city would give the right to use the lake to the larger group 
E)  the city would give the right to use the lake to the richer group

Question 13

If tuna in the sea are open-access resources,they will be used until the marginal value of additional use equals

Accepted Answer

A)  the marginal product of the resource 
B)  the marginal revenue of the resource 
C)  infinity 
D)  negative infinity 
E)  zero 
A)  the marginal product of the resource 
B)  the marginal revenue of the resource 
C)  infinity 
D)  negative infinity 
E)  zero

Question 14

A meditation class meets on the second floor of a building;the first floor is a nightclub.The loud music from the club disturbs the classes.The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000.The class can't soundproof enough to overcome the music,but could be moved for $4,000.According to Coase,

Accepted Answer

A)  the club should be soundproofed so both businesses can stay open 
B)  the club should be soundproofed because it is the one generating the externality 
C)  the club should move rather than be soundproofed because eliminating an externality is better than compensating for it 
D)  the class should move because it can eliminate the externality at a lower cost than can the nightclub 
E)  whichever business has been there longer has the overriding property right;the other should adjust 
A)  the club should be soundproofed so both businesses can stay open 
B)  the club should be soundproofed because it is the one generating the externality 
C)  the club should move rather than be soundproofed because eliminating an externality is better than compensating for it 
D)  the class should move because it can eliminate the externality at a lower cost than can the nightclub 
E)  whichever business has been there longer has the overriding property right;the other should adjust

Question 15

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

Accepted Answer

A)  impose a depletion tax;prohibit resource use entirely 
B)  impose a depletion tax;restrict output 
C)  introduce an offsetting positive externality;prohibit resource use entirely 
D)  use a variable technology;impose a depletion tax 
E)  restrict output;prohibit resource use entirely 
A)  impose a depletion tax;prohibit resource use entirely 
B)  impose a depletion tax;restrict output 
C)  introduce an offsetting positive externality;prohibit resource use entirely 
D)  use a variable technology;impose a depletion tax 
E)  restrict output;prohibit resource use entirely

Question 16

If production is characterized by variable technology,the optimal level of air quality occurs where

Accepted Answer

A)  the marginal private cost of air quality equals the marginal social benefit 
B)  the marginal social cost of air quality equals the marginal social benefit 
C)  the marginal social cost of air quality equals the marginal private cost of air quality 
D)  government regulators set it 
E)  all costs are absorbed by the polluter 
A)  the marginal private cost of air quality equals the marginal social benefit 
B)  the marginal social cost of air quality equals the marginal social benefit 
C)  the marginal social cost of air quality equals the marginal private cost of air quality 
D)  government regulators set it 
E)  all costs are absorbed by the polluter

Question 17

Exhibit 17-6
  
-In Exhibit 17-6,an unregulated market would produce

Accepted Answer

A)  0 units 
B)  10 units 
C)  20 units 
D)  40 units 
E)  50 units 
A)  0 units 
B)  10 units 
C)  20 units 
D)  40 units 
E)  50 units

Question 18

According to the Coase theorem,externality problems may be solved if the parties involved can negotiate.Which of the following is also needed?

Accepted Answer

A)  clearly defined bargaining costs 
B)  enforceable bargaining costs 
C)  clearly defined,enforceable property rights and low bargaining costs 
D)  a property right that cannot be bought or sold 
E)  government regulation 
A)  clearly defined bargaining costs 
B)  enforceable bargaining costs 
C)  clearly defined,enforceable property rights and low bargaining costs 
D)  a property right that cannot be bought or sold 
E)  government regulation

Question 19

Private markets can allocate resources optimally

Accepted Answer

A)  under all circumstances 
B)  only if property rights are well defined and can be easily enforced 
C)  whenever property rights are well defined,regardless of whether they can be easily enforced 
D)  whenever property rights can be easily enforced,regardless of whether they are well defined 
E)  whenever there is no government intervention in the market 
A)  under all circumstances 
B)  only if property rights are well defined and can be easily enforced 
C)  whenever property rights are well defined,regardless of whether they can be easily enforced 
D)  whenever property rights can be easily enforced,regardless of whether they are well defined 
E)  whenever there is no government intervention in the market

Question 20

When a citizens' group opposes expansion of the prison located in town,the basis of the opposition is that the larger prison will produce

Accepted Answer

A)  a negative externality for the community 
B)  a positive externality for the community 
C)  more jobs in the community 
D)  tax revenue for the community 
E)  improved criminal justice options 
A)  a negative externality for the community 
B)  a positive externality for the community 
C)  more jobs in the community 
D)  tax revenue for the community 
E)  improved criminal justice options

More water pollution in the United States comes from __________ than any other source.

If consuming a good creates a positive externality,

Unpriced by-products of production or consumption that impose costs on other consumers or firms are known as

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

Exhibit 17-6 -In Exhibit 17-6,a per-unit subsidy of __________ would result in production of the socially optimal quantity.

In a free market,a firm's rate of output is determined

Which of the following did not help account for the recent decline in the growth of trash-to-energy plants?

In the absence of government intervention,the marginal social cost of pollution abatement would equal its marginal social benefit.

The marginal social benefit curve for water quality slopes downward because

Pollution arises because

Sailboats and motorboats share Emerson Lake,which nobody owns.The sailors say the motorboats are a hazard;the motorboaters say it is the other way around.Frequent collisions occur,with many injuries and some deaths every year.If the City of Emerson were to buy the lake itself,

If tuna in the sea are open-access resources,they will be used until the marginal value of additional use equals

To solve the common pool problem in fishing,governments can _,or _.

If production is characterized by variable technology,the optimal level of air quality occurs where

Exhibit 17-6 -In Exhibit 17-6,an unregulated market would produce

According to the Coase theorem,externality problems may be solved if the parties involved can negotiate.Which of the following is also needed?

Private markets can allocate resources optimally

When a citizens' group opposes expansion of the prison located in town,the basis of the opposition is that the larger prison will produce

The Art and Science of Economic Analysis

Economic Tools and Economics 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

Amonopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, and Corporate Finance

Transaction Costs, imperfect Information, and Market Behavior

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Income Distribution and Poverty

International Trade

International Finance

Developing and Transitional Economies

Filters

Exam 17: Externalities and the Environment

More water pollution in the United States comes from __________ than any other source.

If consuming a good creates a positive externality,

Unpriced by-products of production or consumption that impose costs on other consumers or firms are known as

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

Exhibit 17-6 -In Exhibit 17-6,a per-unit subsidy of __________ would result in production of the socially optimal quantity.

In a free market,a firm's rate of output is determined

Which of the following did not help account for the recent decline in the growth of trash-to-energy plants?

In the absence of government intervention,the marginal social cost of pollution abatement would equal its marginal social benefit.

The marginal social benefit curve for water quality slopes downward because

Pollution arises because

Sailboats and motorboats share Emerson Lake,which nobody owns.The sailors say the motorboats are a hazard;the motorboaters say it is the other way around.Frequent collisions occur,with many injuries and some deaths every year.If the City of Emerson were to buy the lake itself,

If tuna in the sea are open-access resources,they will be used until the marginal value of additional use equals

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

If production is characterized by variable technology,the optimal level of air quality occurs where

Exhibit 17-6 -In Exhibit 17-6,an unregulated market would produce

According to the Coase theorem,externality problems may be solved if the parties involved can negotiate.Which of the following is also needed?

Private markets can allocate resources optimally

When a citizens' group opposes expansion of the prison located in town,the basis of the opposition is that the larger prison will produce

The Art and Science of Economic Analysis

Economic Tools and Economics 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

Amonopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, and Corporate Finance

Transaction Costs, imperfect Information, and Market Behavior

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Income Distribution and Poverty

International Trade

International Finance

Developing and Transitional Economies

Filters

To solve the common pool problem in fishing,governments can _,or _.