Question 1

In the United States,federal efforts to clean up the environment are coordinated by the

Accepted Answer

A)  Environmental Protection Agency 
B)  Department of the Interior 
C)  State Department 
D)  Department of Agriculture 
E)  Department of Justice 
A)  Environmental Protection Agency 
B)  Department of the Interior 
C)  State Department 
D)  Department of Agriculture 
E)  Department of Justice

Question 2

The price of a pollution right is

Accepted Answer

A)  determined by consumers 
B)  determined by government 
C)  a user charge 
D)  determined by supply and demand 
E)  a subsidy 
A)  determined by consumers 
B)  determined by government 
C)  a user charge 
D)  determined by supply and demand 
E)  a subsidy

Question 3

Exhibit 17-2
  
-In Exhibit 17-2,the market equilibrium price and output (determined exclusively by private decisions) are

Accepted Answer

A)  $6 and 50 units,respectively 
B)  $12 and 50 units,respectively 
C)  $12 and 40 units,respectively 
D)  $6 and 40 units,respectively 
E)  not indicated 
A)  $6 and 50 units,respectively 
B)  $12 and 50 units,respectively 
C)  $12 and 40 units,respectively 
D)  $6 and 40 units,respectively 
E)  not indicated

Question 4

Mountain bikers and rollerbladers share the only trail in a city park.The city allows everybody into the park and onto the trail.The mountain bikers say the rollerbladers are a hazard to them;the rollerbladers say it's the other way around.Frequently there are collisions and many injuries occur.Which of the following ways of dealing with the problem does not implicitly grant someone a property right?

Accepted Answer

A)  Allow bikers to use the trail on odd-numbered days and rollerbladers to use it on even-numbered days. 
B)  Allow bikers to use the trail in the morning and rollerbladers to use it in the afternoon. 
C)  Allow only bikers in the park because they have invested in the more expensive sports equipment. 
D)  Kick everybody out of the park. 
E)  Build another trail,put rollerbladers on one and bikers on the other,and give bikers the right-of-way at intersections. 
A)  Allow bikers to use the trail on odd-numbered days and rollerbladers to use it on even-numbered days. 
B)  Allow bikers to use the trail in the morning and rollerbladers to use it in the afternoon. 
C)  Allow only bikers in the park because they have invested in the more expensive sports equipment. 
D)  Kick everybody out of the park. 
E)  Build another trail,put rollerbladers on one and bikers on the other,and give bikers the right-of-way at intersections.

Question 5

If the benefits to society of students attending college exceed benefits to the students,

Accepted Answer

A)  higher education should be strictly regulated 
B)  higher education should be taxed 
C)  higher education provides a positive externality 
D)  higher education is overproduced at the privately determined equilibrium 
E)  in time,no higher education will be produced 
A)  higher education should be strictly regulated 
B)  higher education should be taxed 
C)  higher education provides a positive externality 
D)  higher education is overproduced at the privately determined equilibrium 
E)  in time,no higher education will be produced

Question 6

If consumption of education creates a positive externality,then in order to increase efficiency relative to the outcome determined by private decisions,

Accepted Answer

A)  more education must be produced 
B)  the same amount of education must be produced,and the price should be lower 
C)  less education must be produced,and the price should be higher 
D)  less education must be produced,and the price should be lower 
E)  less education must be produced at the same price 
A)  more education must be produced 
B)  the same amount of education must be produced,and the price should be lower 
C)  less education must be produced,and the price should be higher 
D)  less education must be produced,and the price should be lower 
E)  less education must be produced at the same price

Question 7

The optimal level of air quality

Accepted Answer

A)  is 100 percent,which creates a pollution-free environment 
B)  is smaller the lower the marginal social cost of air quality 
C)  is greater the lower the marginal social benefit of air quality 
D)  is greater the lower the marginal social cost of air quality 
E)  is smaller the greater the marginal social benefit of air quality 
A)  is 100 percent,which creates a pollution-free environment 
B)  is smaller the lower the marginal social cost of air quality 
C)  is greater the lower the marginal social benefit of air quality 
D)  is greater the lower the marginal social cost of air quality 
E)  is smaller the greater the marginal social benefit of air quality

Question 8

The Coase solution to the problem of externalities

Accepted Answer

A)  applies in every situation where externalities are present 
B)  only applies to activities that generate positive externalities 
C)  only works under perfect competition 
D)  only works when bargaining costs are low 
E)  can lead to an increase in the common pool problem 
A)  applies in every situation where externalities are present 
B)  only applies to activities that generate positive externalities 
C)  only works under perfect competition 
D)  only works when bargaining costs are low 
E)  can lead to an increase in the common pool problem

Question 9

The Clean Air Act of 1970 has

Accepted Answer

A)  been ineffective in reducing lead emissions in automobiles 
B)  actually caused an increase in auto emissions 
C)  been fairly successful in reducing auto emissions,especially lead 
D)  been unsuccessful in reducing auto emissions,especially sulfur oxides 
E)  been ineffective in reducing carbon monoxide emissions from autos 
A)  been ineffective in reducing lead emissions in automobiles 
B)  actually caused an increase in auto emissions 
C)  been fairly successful in reducing auto emissions,especially lead 
D)  been unsuccessful in reducing auto emissions,especially sulfur oxides 
E)  been ineffective in reducing carbon monoxide emissions from autos

Question 10

Exhibit 17-5
  
-In Exhibit 17-5,if the government does not charge firms for emitting pollutants into a river,

Accepted Answer

A)  firms will emit Q1 units of pollutant at a price of P0 each 
B)  firms will emit Q2 units of pollutant at a price of P0 each 
C)  firms will emit Q0 units of pollutant at a price of P3 each 
D)  firms will emit Q1 units of pollutant at a price of P1 each 
E)  firms will emit Q2 units of pollutant at a price of P3 each 
A)  firms will emit Q1 units of pollutant at a price of P0 each 
B)  firms will emit Q2 units of pollutant at a price of P0 each 
C)  firms will emit Q0 units of pollutant at a price of P3 each 
D)  firms will emit Q1 units of pollutant at a price of P1 each 
E)  firms will emit Q2 units of pollutant at a price of P3 each

Question 11

Exhibit 17-6
  
-In Exhibit 17-6,the socially efficient production level is

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 12

According to the Coase theorem,if bargaining costs are small,then there will be an efficient solution to the problem of toxic waste

Accepted Answer

A)  if the creator of the toxic waste is assigned the property rights 
B)  if the victim of toxic waste is assigned the property rights 
C)  regardless of which party is assigned the property rights 
D)  if the property rights are shared equally between the creator and the victim of toxic waste 
E)  in the form of a pollution tax 
A)  if the creator of the toxic waste is assigned the property rights 
B)  if the victim of toxic waste is assigned the property rights 
C)  regardless of which party is assigned the property rights 
D)  if the property rights are shared equally between the creator and the victim of toxic waste 
E)  in the form of a pollution tax

Question 13

Exhibit 17-1
  
-In Exhibit 17-1,the equilibrium level of output determined by private decisions 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 14

In the United States,what percentage of smog comes from manufacturing sites?

Accepted Answer

A)  5 percent 
B)  15 percent 
C)  25 percent 
D)  40 percent 
E)  80 percent 
A)  5 percent 
B)  15 percent 
C)  25 percent 
D)  40 percent 
E)  80 percent

Question 15

Economists view pollution as an economic problem that arises because

Accepted Answer

A)  private enterprise always minimizes the amount of pollution produced 
B)  profitable firms rarely pollute 
C)  as the economy grows,the level of pollution declines 
D)  firms that pollute do not pay the full social cost of producing their output 
E)  pollution costs are borne by the consumer 
A)  private enterprise always minimizes the amount of pollution produced 
B)  profitable firms rarely pollute 
C)  as the economy grows,the level of pollution declines 
D)  firms that pollute do not pay the full social cost of producing their output 
E)  pollution costs are borne by the consumer

Question 16

Most of the EPA Superfund expenditures have gone for court costs and legal fees.

Accepted Answer

A) True 
 B)False

Question 17

Pollution and other negative externalities arise because

Accepted Answer

A)  there are no enforceable property rights to open-access resources 
B)  legislators cannot agree on what to do about them 
C)  they are the price consumers are willing to pay for production of goods and services 
D)  private property rights to pollute are controlled by businesses 
E)  science cannot decide how to control them 
A)  there are no enforceable property rights to open-access resources 
B)  legislators cannot agree on what to do about them 
C)  they are the price consumers are willing to pay for production of goods and services 
D)  private property rights to pollute are controlled by businesses 
E)  science cannot decide how to control them

Question 18

Exhibit 17-2
  
-In Exhibit 17-2,the socially efficient price and level of output are

Accepted Answer

A)  $6 and 50 units,respectively 
B)  $12 and 50 units,respectively 
C)  $12 and 40 units,respectively 
D)  $6 and 40 units,respectively 
E)  not indicated 
A)  $6 and 50 units,respectively 
B)  $12 and 50 units,respectively 
C)  $12 and 40 units,respectively 
D)  $6 and 40 units,respectively 
E)  not indicated

Question 19

Government allocation of pollution rights cannot be efficient if polluters cannot be easily identified and monitored.

Accepted Answer

A) True 
 B)False

Question 20

A metal-stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.What would be the optimal solution to this problem?

Accepted Answer

A)  The factory should move. 
B)  The day care center should move. 
C)  The factory should install sound insulation. 
D)  The day care center should install sound insulation. 
E)  We cannot determine the solution without more information. 
A)  The factory should move. 
B)  The day care center should move. 
C)  The factory should install sound insulation. 
D)  The day care center should install sound insulation. 
E)  We cannot determine the solution without more information.

In the United States,federal efforts to clean up the environment are coordinated by the

The price of a pollution right is

Exhibit 17-2 -In Exhibit 17-2,the market equilibrium price and output (determined exclusively by private decisions) are

If the benefits to society of students attending college exceed benefits to the students,

If consumption of education creates a positive externality,then in order to increase efficiency relative to the outcome determined by private decisions,

The optimal level of air quality

The Coase solution to the problem of externalities

The Clean Air Act of 1970 has

Exhibit 17-5 -In Exhibit 17-5,if the government does not charge firms for emitting pollutants into a river,

Exhibit 17-6 -In Exhibit 17-6,the socially efficient production level is

According to the Coase theorem,if bargaining costs are small,then there will be an efficient solution to the problem of toxic waste

Exhibit 17-1 -In Exhibit 17-1,the equilibrium level of output determined by private decisions is

In the United States,what percentage of smog comes from manufacturing sites?

Economists view pollution as an economic problem that arises because

Most of the EPA Superfund expenditures have gone for court costs and legal fees.

Pollution and other negative externalities arise because

Exhibit 17-2 -In Exhibit 17-2,the socially efficient price and level of output are

Government allocation of pollution rights cannot be efficient if polluters cannot be easily identified and monitored.

A metal-stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.What would be the optimal solution to this problem?

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

In the United States,federal efforts to clean up the environment are coordinated by the

The price of a pollution right is

Exhibit 17-2 -In Exhibit 17-2,the market equilibrium price and output (determined exclusively by private decisions) are

If the benefits to society of students attending college exceed benefits to the students,

If consumption of education creates a positive externality,then in order to increase efficiency relative to the outcome determined by private decisions,

The optimal level of air quality

The Coase solution to the problem of externalities

The Clean Air Act of 1970 has

Exhibit 17-5 -In Exhibit 17-5,if the government does not charge firms for emitting pollutants into a river,

Exhibit 17-6 -In Exhibit 17-6,the socially efficient production level is

According to the Coase theorem,if bargaining costs are small,then there will be an efficient solution to the problem of toxic waste

Exhibit 17-1 -In Exhibit 17-1,the equilibrium level of output determined by private decisions is

In the United States,what percentage of smog comes from manufacturing sites?

Economists view pollution as an economic problem that arises because

Most of the EPA Superfund expenditures have gone for court costs and legal fees.

Pollution and other negative externalities arise because

Exhibit 17-2 -In Exhibit 17-2,the socially efficient price and level of output are

Government allocation of pollution rights cannot be efficient if polluters cannot be easily identified and monitored.

A metal-stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.What would be the optimal solution to this problem?

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