Question 1

Suppose that the "Clean and Clear" environmental group buys 20% of the pollution permits and never uses them.The effect on pollution market is:

Accepted Answer

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

Question 2

In order to increase society's well-being,a process that produces a positive externality might 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 3

If firms pollute when they produce,

Accepted Answer

A)  marginal social cost equals marginal private cost 
B)  marginal private cost exceeds marginal social cost 
C)  marginal social cost exceeds marginal private cost 
D)  marginal social cost equals marginal external cost 
E)  marginal social cost equals marginal private cost,which equals marginal external cost 
A)  marginal social cost equals marginal private cost 
B)  marginal private cost exceeds marginal social cost 
C)  marginal social cost exceeds marginal private cost 
D)  marginal social cost equals marginal external cost 
E)  marginal social cost equals marginal private cost,which equals marginal external cost

Question 4

Education confers positive externalities because

Accepted Answer

A)  some education is done outside the market (i.e. ,in public schools) 
B)  curricula are regulated by the government,even in private schools 
C)  an educated person consuming education gains many benefits he or she did not expect when the process started 
D)  an educated person who has consumed education usually behaves in a way that benefits others 
E)  education gives benefits to individuals in excess of the costs they pay to get it 
A)  some education is done outside the market (i.e. ,in public schools) 
B)  curricula are regulated by the government,even in private schools 
C)  an educated person consuming education gains many benefits he or she did not expect when the process started 
D)  an educated person who has consumed education usually behaves in a way that benefits others 
E)  education gives benefits to individuals in excess of the costs they pay to get it

Question 5

Which of the following is a positive externality of consumption?

Accepted Answer

A)  inoculations against a disease reduce the likelihood of transmitting it to others 
B)  phosphates from laundry detergents 
C)  litter from fast-food containers 
D)  ozone depletion from the production of fast-food containers 
E)  the greenhouse effect 
A)  inoculations against a disease reduce the likelihood of transmitting it to others 
B)  phosphates from laundry detergents 
C)  litter from fast-food containers 
D)  ozone depletion from the production of fast-food containers 
E)  the greenhouse effect

Question 6

Which of the following can be a renewable resource?

Accepted Answer

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

Question 7

In the production of electricity with fixed-production technology,the socially efficient price is $2 and the socially efficient level of output is 400 units;the market equilibrium price is $1.50 and the market equilibrium quantity is 600 units.The total social gain from producing the socially efficient output rather than the private equilibrium output is:

Accepted Answer

A)  $50 
B)  $200 
C)  $400 
D)  $600 
E)  There is not enough information to calculate it 
A)  $50 
B)  $200 
C)  $400 
D)  $600 
E)  There is not enough information to calculate it

Question 8

All of the following are sources of negative externalities except one.Which is the exception?

Accepted Answer

A)  a paper mill that pollutes a river 
B)  a person who throws a beer can out the window of a moving car 
C)  cars,which emit carbon monoxide 
D)  a solar water heater which is outside and obscure from view 
E)  products that contribute to the greenhouse effect 
A)  a paper mill that pollutes a river 
B)  a person who throws a beer can out the window of a moving car 
C)  cars,which emit carbon monoxide 
D)  a solar water heater which is outside and obscure from view 
E)  products that contribute to the greenhouse effect

Question 9

Exhibit 17-1
  
-In Exhibit 17-1,the socially efficient level of output is

Accepted Answer

A)  0 units 
B)  100 units 
C)  between 100 and 160 units 
D)  160 units 
E)  the answer cannot be determined from the information given 
A)  0 units 
B)  100 units 
C)  between 100 and 160 units 
D)  160 units 
E)  the answer cannot be determined from the information given

Question 10

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 11

Exhibit 17-6
  
-Exhibit 17-6 illustrates the presence of

Accepted Answer

A)  positive externalities 
B)  positive and negative externalities 
C)  negative externalities 
D)  the Coase theorem 
E)  a private market with a socially efficient equilibrium 
A)  positive externalities 
B)  positive and negative externalities 
C)  negative externalities 
D)  the Coase theorem 
E)  a private market with a socially efficient equilibrium

Question 12

Untreated raw sewage is dumped directly into rivers and oceans

Accepted Answer

A)  only in less-developed economies 
B)  only in rural areas 
C)  only in urban areas 
D)  in every large city in the United States 
E)  in some of the largest U.S.cities 
A)  only in less-developed economies 
B)  only in rural areas 
C)  only in urban areas 
D)  in every large city in the United States 
E)  in some of the largest U.S.cities

Question 13

In the U.S. ,people tend to discard items rather than repair them because

Accepted Answer

A)  Americans are lazy 
B)  of the high opportunity cost of time 
C)  it is costly to use land for waste disposal 
D)  high wages in the waste disposal industry discourages repairs 
E)  low wages in the repair industry encourages disposal 
A)  Americans are lazy 
B)  of the high opportunity cost of time 
C)  it is costly to use land for waste disposal 
D)  high wages in the waste disposal industry discourages repairs 
E)  low wages in the repair industry encourages disposal

Question 14

The optimal level of pollution is

Accepted Answer

A)  zero 
B)  the level at which the marginal social cost of air quality equals the marginal social benefit 
C)  the level at which the average social cost of air quality equals the average social benefit 
D)  the level at which the total social cost of air quality equals the total social benefit 
E)  the level at which the marginal social cost of air quality is minimized 
A)  zero 
B)  the level at which the marginal social cost of air quality equals the marginal social benefit 
C)  the level at which the average social cost of air quality equals the average social benefit 
D)  the level at which the total social cost of air quality equals the total social benefit 
E)  the level at which the marginal social cost of air quality is minimized

Question 15

As more pollution is abated,the total social benefit from pollution abatement increases.

Accepted Answer

A) True 
 B)False

Question 16

When the free market produces less than the socially optimal quantity of a good,

Accepted Answer

A)  negative externalities must be present 
B)  marginal social cost must exceed marginal private cost 
C)  marginal private benefit must exceed marginal social benefit 
D)  the government should tax production of the good 
E)  there has been a market failure 
A)  negative externalities must be present 
B)  marginal social cost must exceed marginal private cost 
C)  marginal private benefit must exceed marginal social benefit 
D)  the government should tax production of the good 
E)  there has been a market failure

Question 17

The common pool problem

Accepted Answer

A)  occurs whenever goods are not rivals in consumption 
B)  is an example of adverse selection 
C)  arises whenever property rights are well defined 
D)  is usually caused by government intervention into private markets 
E)  is one in which resources to which access is unrestricted will tend to be overused 
A)  occurs whenever goods are not rivals in consumption 
B)  is an example of adverse selection 
C)  arises whenever property rights are well defined 
D)  is usually caused by government intervention into private markets 
E)  is one in which resources to which access is unrestricted will tend to be overused

Question 18

In order to increase society's well-being,education might 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 19

Some companies and celebrities are using a variant of pollution rights to become "carbon neutral."

Accepted Answer

A) True 
 B)False

Question 20

When using the economic efficiency approach to controlling air and water pollution,the government

Accepted Answer

A)  forces each firm to produce emissions in the most cost efficient manner irrespective of its cost structure 
B)  offers each firm the flexibility to reduce emissions in the most cost effective manner,given its unique cost structure 
C)  offers each firm the option of choosing between the cost minimizing emission level and the profit maximizing emission level 
D)  provides each firm with some fixed rules and then requires them to maximize profits given these fixed rules 
E)  offers each firm the option of using marginal cost pricing and average cost pricing when determining the optimum emissions levels 
A)  forces each firm to produce emissions in the most cost efficient manner irrespective of its cost structure 
B)  offers each firm the flexibility to reduce emissions in the most cost effective manner,given its unique cost structure 
C)  offers each firm the option of choosing between the cost minimizing emission level and the profit maximizing emission level 
D)  provides each firm with some fixed rules and then requires them to maximize profits given these fixed rules 
E)  offers each firm the option of using marginal cost pricing and average cost pricing when determining the optimum emissions levels

Suppose that the "Clean and Clear" environmental group buys 20% of the pollution permits and never uses them.The effect on pollution market is:

In order to increase society's well-being,a process that produces a positive externality might be

If firms pollute when they produce,

Education confers positive externalities because

Which of the following is a positive externality of consumption?

Which of the following can be a renewable resource?

All of the following are sources of negative externalities except one.Which is the exception?

Exhibit 17-1 -In Exhibit 17-1,the socially efficient level of output is

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

Exhibit 17-6 -Exhibit 17-6 illustrates the presence of

Untreated raw sewage is dumped directly into rivers and oceans

In the U.S. ,people tend to discard items rather than repair them because

The optimal level of pollution is

As more pollution is abated,the total social benefit from pollution abatement increases.

When the free market produces less than the socially optimal quantity of a good,

The common pool problem

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

Some companies and celebrities are using a variant of pollution rights to become "carbon neutral."

When using the economic efficiency approach to controlling air and water pollution,the government

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

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Exam 17: Externalities and the Environment

Suppose that the "Clean and Clear" environmental group buys 20% of the pollution permits and never uses them.The effect on pollution market is:

In order to increase society's well-being,a process that produces a positive externality might be

If firms pollute when they produce,

Education confers positive externalities because

Which of the following is a positive externality of consumption?

Which of the following can be a renewable resource?

All of the following are sources of negative externalities except one.Which is the exception?

Exhibit 17-1 -In Exhibit 17-1,the socially efficient level of output is

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

Exhibit 17-6 -Exhibit 17-6 illustrates the presence of

Untreated raw sewage is dumped directly into rivers and oceans

In the U.S. ,people tend to discard items rather than repair them because

The optimal level of pollution is

As more pollution is abated,the total social benefit from pollution abatement increases.

When the free market produces less than the socially optimal quantity of a good,

The common pool problem

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

Some companies and celebrities are using a variant of pollution rights to become "carbon neutral."

When using the economic efficiency approach to controlling air and water pollution,the government

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