Question 1

Exhibit 17-4
  
-Which of the following could not have caused the increase in demand indicated in Exhibit 17-4?

Accepted Answer

A)  new firms located on the river 
B)  the pollution was discovered to be more hazardous than had previously been supposed 
C)  the cost of pollution abatement equipment rose 
D)  consumers wanted to buy more of the good produced by the polluters 
E)  the government subsidized firms so they could better afford to buy pollution rights 
A)  new firms located on the river 
B)  the pollution was discovered to be more hazardous than had previously been supposed 
C)  the cost of pollution abatement equipment rose 
D)  consumers wanted to buy more of the good produced by the polluters 
E)  the government subsidized firms so they could better afford to buy pollution rights

Question 2

Fishing,the lumber industry,tourism,and even city buildings in Canada are harmed by acid rain,most of which comes from the United States.According to the Coase theorem,the problem is

Accepted Answer

A)  easy to solve because the United States and Canada are geographically close 
B)  easy to solve because the United States and Canada are allies 
C)  easy to solve because international property rights are recognized among capitalist countries 
D)  hard to solve because international negotiations are more costly than domestic ones 
E)  hard to solve because Canadians have property rights to clean,nonacidic rain 
A)  easy to solve because the United States and Canada are geographically close 
B)  easy to solve because the United States and Canada are allies 
C)  easy to solve because international property rights are recognized among capitalist countries 
D)  hard to solve because international negotiations are more costly than domestic ones 
E)  hard to solve because Canadians have property rights to clean,nonacidic rain

Question 3

If managed appropriately,all of the following resources are renewable,except:

Accepted Answer

A)  Oil 
B)  Timber 
C)  Fish 
D)  Rivers 
E)  Grasslands 
A)  Oil 
B)  Timber 
C)  Fish 
D)  Rivers 
E)  Grasslands

Question 4

Exhibit 17-3
  
-The economic efficiency approach to emission control provides the polluting firm with

Accepted Answer

A)  a license produce as much emissions as it wants 
B)  the option of choosing between focusing on profit or cost 
C)  a process for determining the optimum quantity of emissions 
D)  more flexibility in selecting the most cost effective method of control 
E)  a subsidy for producing additional emissions 
A)  a license produce as much emissions as it wants 
B)  the option of choosing between focusing on profit or cost 
C)  a process for determining the optimum quantity of emissions 
D)  more flexibility in selecting the most cost effective method of control 
E)  a subsidy for producing additional emissions

Question 5

Exhibit 17-3
  
-In Exhibit 17-3,the welfare loss (from society's perspective) that results from 70 units of air quality is shown by area

Accepted Answer

A)  edcb 
B)  eda 
C)  bac 
D)  adc 
E)  there is no loss 
A)  edcb 
B)  eda 
C)  bac 
D)  adc 
E)  there is no loss

Question 6

Some pollution occurs because property rights to some resources are well defined.

Accepted Answer

A) True 
 B)False

Question 7

Government restrictions on the use of an open-access resource

Accepted Answer

A)  may improve efficiency 
B)  will decrease efficiency 
C)  are unnecessary 
D)  contribute to pollution of the resource 
E)  contribute to depletion of the resource 
A)  may improve efficiency 
B)  will decrease efficiency 
C)  are unnecessary 
D)  contribute to pollution of the resource 
E)  contribute to depletion of the resource

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The equilibrium price and quantity in a free market usually reflect private marginal costs and benefits,not social ones.

Accepted Answer

A) True 
 B)False

Question 10

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal _____ is _____ his personal marginal _____.

Accepted Answer

A)  cost,greater than,benefit 
B)  benefit,greater than,cost 
C)  cost,equal to,benefit 
D)  benefit,less than,cost 
E)  benefit,equal to,cost 
A)  cost,greater than,benefit 
B)  benefit,greater than,cost 
C)  cost,equal to,benefit 
D)  benefit,less than,cost 
E)  benefit,equal to,cost

Question 11

Other things equal,if the government increased the quantity of pollution rights to be sold,

Accepted Answer

A)  pollution would not be affected 
B)  the price of pollution rights would rise,and the amount of pollution would decrease 
C)  the price of pollution rights would fall,and the amount of pollution would decrease 
D)  the price of pollution rights would fall,and the amount of pollution would increase 
E)  the price of pollution rights would rise,and the amount of pollution would increase 
A)  pollution would not be affected 
B)  the price of pollution rights would rise,and the amount of pollution would decrease 
C)  the price of pollution rights would fall,and the amount of pollution would decrease 
D)  the price of pollution rights would fall,and the amount of pollution would increase 
E)  the price of pollution rights would rise,and the amount of pollution would increase

Question 12

If periodic use of a resource can be continued indefinitely,that resource is said to be

Accepted Answer

A)  removable 
B)  renewable 
C)  cyclical 
D)  recyclable 
E)  part of a common pool 
A)  removable 
B)  renewable 
C)  cyclical 
D)  recyclable 
E)  part of a common pool

Question 13

Exhibit 17-3
  
-In Exhibit 17-3,the optimal air quality level is

Accepted Answer

A)  0 
B)  40 
C)  50 
D)  70 
E)  100 
A)  0 
B)  40 
C)  50 
D)  70 
E)  100

Question 14

Firms that emit toxins into the air tend to

Accepted Answer

A)  underproduce because the private cost of production exceeds the social cost 
B)  overproduce because the social cost of production exceeds the private cost 
C)  produce the same as nonpolluting firms 
D)  produce at the socially optimal amount 
E)  cover pollution costs in the product's price 
A)  underproduce because the private cost of production exceeds the social cost 
B)  overproduce because the social cost of production exceeds the private cost 
C)  produce the same as nonpolluting firms 
D)  produce at the socially optimal amount 
E)  cover pollution costs in the product's price

Question 15

The marginal social benefit of education is the marginal private benefit of education plus the marginal external benefit of education.

Accepted Answer

A) True 
 B)False

Question 16

Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold.Other things equal,

Accepted Answer

A)  pollution would not be affected 
B)  the price of pollution rights would rise,and the amount of pollution would decrease 
C)  the price of pollution rights would fall,and the amount of pollution would decrease 
D)  the price of pollution rights would fall,and the amount of pollution would increase 
E)  the price of pollution rights would rise,and the amount of pollution would increase 
A)  pollution would not be affected 
B)  the price of pollution rights would rise,and the amount of pollution would decrease 
C)  the price of pollution rights would fall,and the amount of pollution would decrease 
D)  the price of pollution rights would fall,and the amount of pollution would increase 
E)  the price of pollution rights would rise,and the amount of pollution would increase

Question 17

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

Accepted Answer

A) True 
 B)False

Question 18

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 during the Reagan administration. 
B)  Pesticide regulations are often administered by state environmental protection agencies,not the federal Environmental Protection Agency. 
C)  Pesticide regulations are administered by the federal Environmental Protection Agency,not by state agencies. 
D)  Pesticide regulations are often administered by state agricultural departments rather than environmental protection agencies. 
E)  Pesticide regulations are often administered by state environmental protection agencies rather than agricultural departments. 
A)  Pesticide regulations were repealed during the Reagan administration. 
B)  Pesticide regulations are often administered by state environmental protection agencies,not the federal Environmental Protection Agency. 
C)  Pesticide regulations are administered by the federal Environmental Protection Agency,not by state agencies. 
D)  Pesticide regulations are often administered by state agricultural departments rather than environmental protection agencies. 
E)  Pesticide regulations are often administered by state environmental protection agencies rather than agricultural departments.

Question 19

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 $200,000 or it can be moved for $4 million.The movie set can be moved for $1.5 million.Assume that the movie set 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 20

The Coase solution to the externality problem only works when bargaining costs are high.

Accepted Answer

A) True 
 B)False

Exhibit 17-4 -Which of the following could not have caused the increase in demand indicated in Exhibit 17-4?

Fishing,the lumber industry,tourism,and even city buildings in Canada are harmed by acid rain,most of which comes from the United States.According to the Coase theorem,the problem is

If managed appropriately,all of the following resources are renewable,except:

Exhibit 17-3 -The economic efficiency approach to emission control provides the polluting firm with

Exhibit 17-3 -In Exhibit 17-3,the welfare loss (from society's perspective) that results from 70 units of air quality is shown by area

Some pollution occurs because property rights to some resources are well defined.

Government restrictions on the use of an open-access resource

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

The equilibrium price and quantity in a free market usually reflect private marginal costs and benefits,not social ones.

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal ___ is _ his personal marginal ___.

Other things equal,if the government increased the quantity of pollution rights to be sold,

If periodic use of a resource can be continued indefinitely,that resource is said to be

Exhibit 17-3 -In Exhibit 17-3,the optimal air quality level is

Firms that emit toxins into the air tend to

The marginal social benefit of education is the marginal private benefit of education plus the marginal external benefit of education.

Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold.Other things equal,

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

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

The Coase solution to the externality problem only works when bargaining costs are high.

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

Exhibit 17-4 -Which of the following could not have caused the increase in demand indicated in Exhibit 17-4?

Fishing,the lumber industry,tourism,and even city buildings in Canada are harmed by acid rain,most of which comes from the United States.According to the Coase theorem,the problem is

If managed appropriately,all of the following resources are renewable,except:

Exhibit 17-3 -The economic efficiency approach to emission control provides the polluting firm with

Exhibit 17-3 -In Exhibit 17-3,the welfare loss (from society's perspective) that results from 70 units of air quality is shown by area

Some pollution occurs because property rights to some resources are well defined.

Government restrictions on the use of an open-access resource

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

The equilibrium price and quantity in a free market usually reflect private marginal costs and benefits,not social ones.

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal _____ is _____ his personal marginal _____.

Other things equal,if the government increased the quantity of pollution rights to be sold,

If periodic use of a resource can be continued indefinitely,that resource is said to be

Exhibit 17-3 -In Exhibit 17-3,the optimal air quality level is

Firms that emit toxins into the air tend to

The marginal social benefit of education is the marginal private benefit of education plus the marginal external benefit of education.

Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold.Other things equal,

Smokers and loud talkers who ignore the external effects of their actions are being rational in the economic sense.

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

The Coase solution to the externality problem only works when bargaining costs are high.

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

Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal ___ is _ his personal marginal ___.