Question 1

Exhibit 17-4
  
-The supply curve in Exhibit 17-4 represents the amount of

Accepted Answer

A)  pollution individuals and firms want to dump into the river 
B)  the river that can still serve as a resource 
C)  pollution the river can accept 
D)  pollution the owner or manager of the resource is willing to clean up 
E)  the pollution-causing good supplied by the industry 
A)  pollution individuals and firms want to dump into the river 
B)  the river that can still serve as a resource 
C)  pollution the river can accept 
D)  pollution the owner or manager of the resource is willing to clean up 
E)  the pollution-causing good supplied by the industry

Question 2

A removal or depletion 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 product 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 product of the resource 
D)  the average private cost of using the resource 
E)  the average social cost of using the resource

Question 3

The marginal social benefit of air quality

Accepted Answer

A)  declines as air quality increases 
B)  rises as air quality increases 
C)  remains constant as air quality increases 
D)  first falls then rises as air quality increases 
E)  is always negative 
A)  declines as air quality increases 
B)  rises as air quality increases 
C)  remains constant as air quality increases 
D)  first falls then rises as air quality increases 
E)  is always negative

Question 4

The Coase theorem says that,if the appropriate property right is assigned to _____,an efficient solution to an externality problem will be achieved.

Accepted Answer

A)  the party causing the externality 
B)  the victim of the externality 
C)  the party that can avoid the externality at the higher cost 
D)  the party that can avoid the externality at the lower cost 
E)  either one of the parties involved 
A)  the party causing the externality 
B)  the victim of the externality 
C)  the party that can avoid the externality at the higher cost 
D)  the party that can avoid the externality at the lower cost 
E)  either one of the parties involved

Question 5

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 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 6

The optimal level of air quality will increase if

Accepted Answer

A)  the cost of polluting increases 
B)  pollution is found to be self-absorbing 
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)  pollution is found to be self-absorbing 
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 7

Unpriced by-products of production or consumption that provide benefits to other consumers or other firms are known as

Accepted Answer

A)  negative externalities 
B)  common pool benefits 
C)  positive externalities 
D)  private benefits 
E)  Coase by-products 
A)  negative externalities 
B)  common pool benefits 
C)  positive externalities 
D)  private benefits 
E)  Coase by-products

Question 8

Pollution taxes are paid out of the EPA Superfund in order to reduce automobile emissions.

Accepted Answer

A) True 
 B)False

Question 9

Which state manufactures the most toxic chemicals and has the worst toxic waste burden?

Accepted Answer

A)  California 
B)  Louisiana 
C)  New York 
D)  New Jersey 
E)  West Virginia 
A)  California 
B)  Louisiana 
C)  New York 
D)  New Jersey 
E)  West Virginia

Question 10

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

Accepted Answer

A)  positive externalities 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 great 
D)  any type of market failure 
E)  any type of market failure that involves high transaction costs 
A)  positive externalities 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 great 
D)  any type of market failure 
E)  any type of market failure that involves high transaction costs

Question 11

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;it would cost $1 million for the day care center to move.Sound insulation for the factory costs $1 million;insulation for the day care center costs $200,000.The court determines that the day care center has the property right.What would be the optimal solution to this problem?

Accepted Answer

A)  The factory should install sound insulation because that is cheaper than moving. 
B)  The factory should pay the day care center to move. 
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 move. 
A)  The factory should install sound insulation because that is cheaper than moving. 
B)  The factory should pay the day care center to move. 
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 move.

Question 12

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

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)  in time the product will not be produced 
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)  in time the product will not be produced

Question 13

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.Which of the following best explains why the negative externality faced by the class arises?

Accepted Answer

A)  The class has no property right to a quiet environment. 
B)  The club has a property right on the ground floor. 
C)  The class has a property right on the second floor. 
D)  The club uses an inappropriate technology (i.e. ,no soundproofing). 
E)  Both the club and class are profitable. 
A)  The class has no property right to a quiet environment. 
B)  The club has a property right on the ground floor. 
C)  The class has a property right on the second floor. 
D)  The club uses an inappropriate technology (i.e. ,no soundproofing). 
E)  Both the club and class are profitable.

Question 14

Exhibit 17-1
  
-If technology is fixed,the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by

Accepted Answer

A)  subsidizing the production of the good by $10 per unit 
B)  taxing the firm producing the good by $10 per unit 
C)  using a quota system to encourage production of at least 160 units of the good 
D)  using a quota system to restrict production of the good to no more than 160 units 
E)  letting the private market operate freely to determine output at equilibrium 
A)  subsidizing the production of the good by $10 per unit 
B)  taxing the firm producing the good by $10 per unit 
C)  using a quota system to encourage production of at least 160 units of the good 
D)  using a quota system to restrict production of the good to no more than 160 units 
E)  letting the private market operate freely to determine output at equilibrium

Question 15

Air pollution is more dangerous to the public,but toxic waste generates more public uproar.Why?

Accepted Answer

A)  Those exposed to the health hazard posed by the toxic waste site are usually less sure that exposure has occurred. 
B)  Those exposed to the health hazard posed by the toxic waste site are usually more sure that exposure has occurred. 
C)  Fewer people cause air pollution than toxic waste. 
D)  Fewer people are affected by air pollution than by toxic waste. 
E)  Toxic waste causes more illness and death than air pollution does. 
A)  Those exposed to the health hazard posed by the toxic waste site are usually less sure that exposure has occurred. 
B)  Those exposed to the health hazard posed by the toxic waste site are usually more sure that exposure has occurred. 
C)  Fewer people cause air pollution than toxic waste. 
D)  Fewer people are affected by air pollution than by toxic waste. 
E)  Toxic waste causes more illness and death than air pollution does.

Question 16

The most likely reason why Los Angeles has so much smog is that residents

Accepted Answer

A)  do not have strong,enforceable property rights to rapid transit 
B)  do not have strong,enforceable property rights to clean air 
C)  prefer dirty air to the inconvenience of rapid transit 
D)  prefer dirty air to the inconvenience of carpools 
E)  prefer dirty air to the inconvenience of eliminating smog 
A)  do not have strong,enforceable property rights to rapid transit 
B)  do not have strong,enforceable property rights to clean air 
C)  prefer dirty air to the inconvenience of rapid transit 
D)  prefer dirty air to the inconvenience of carpools 
E)  prefer dirty air to the inconvenience of eliminating smog

Question 17

The socially optimal amount of pollution abatement may be less than 100 percent.

Accepted Answer

A) True 
 B)False

Question 18

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 19

What kind of garbage tends to be recycled in the United States?

Accepted Answer

A)  hazardous materials that must be transformed chemically into less dangerous substances 
B)  biodegradable materials 
C)  foodstuffs 
D)  aluminum,paper,and other materials that have high commercial value 
E)  appliances that can be salvaged from dumps and repaired 
A)  hazardous materials that must be transformed chemically into less dangerous substances 
B)  biodegradable materials 
C)  foodstuffs 
D)  aluminum,paper,and other materials that have high commercial value 
E)  appliances that can be salvaged from dumps and repaired

Question 20

The optimal level of pollution occurs where the marginal social benefit is equal to

Accepted Answer

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

Exhibit 17-4 -The supply curve in Exhibit 17-4 represents the amount of

A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by

The marginal social benefit of air quality

The Coase theorem says that,if the appropriate property right is assigned to _____,an efficient solution to an externality problem will be achieved.

The optimal level of air quality will increase if

Unpriced by-products of production or consumption that provide benefits to other consumers or other firms are known as

Pollution taxes are paid out of the EPA Superfund in order to reduce automobile emissions.

Which state manufactures the most toxic chemicals and has the worst toxic waste burden?

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

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

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.Which of the following best explains why the negative externality faced by the class arises?

Exhibit 17-1 -If technology is fixed,the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by

Air pollution is more dangerous to the public,but toxic waste generates more public uproar.Why?

The most likely reason why Los Angeles has so much smog is that residents

The socially optimal amount of pollution abatement may be less than 100 percent.

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

What kind of garbage tends to be recycled in the United States?

The optimal level of pollution occurs where the marginal social benefit is equal to

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

Exhibit 17-4 -The supply curve in Exhibit 17-4 represents the amount of

A removal or depletion tax on an open-access resource increases the marginal private cost of using the resource by

The marginal social benefit of air quality

The Coase theorem says that,if the appropriate property right is assigned to _____,an efficient solution to an externality problem will be achieved.

The optimal level of air quality will increase if

Unpriced by-products of production or consumption that provide benefits to other consumers or other firms are known as

Pollution taxes are paid out of the EPA Superfund in order to reduce automobile emissions.

Which state manufactures the most toxic chemicals and has the worst toxic waste burden?

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

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

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.Which of the following best explains why the negative externality faced by the class arises?

Exhibit 17-1 -If technology is fixed,the discrepancy between the private equilibrium and the efficient level of output in Exhibit 17-1 is best eliminated by

Air pollution is more dangerous to the public,but toxic waste generates more public uproar.Why?

The most likely reason why Los Angeles has so much smog is that residents

The socially optimal amount of pollution abatement may be less than 100 percent.

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

What kind of garbage tends to be recycled in the United States?

The optimal level of pollution occurs where the marginal social benefit is equal to

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