Question 1

When consuming a good creates positive externalities,

Accepted Answer

A)  private demand increases 
B)  private demand decreases 
C)  the private demand curve overstates the marginal social benefit of the good 
D)  the private demand curve understates the marginal social benefit of the good 
E)  the equilibrium quantity increases without government intervention 
A)  private demand increases 
B)  private demand decreases 
C)  the private demand curve overstates the marginal social benefit of the good 
D)  the private demand curve understates the marginal social benefit of the good 
E)  the equilibrium quantity increases without government intervention

Question 2

A person can cause a negative externality by

Accepted Answer

A)  becoming immunized 
B)  talking loudly in a restaurant 
C)  landscaping her lawn 
D)  paying taxes 
E)  attending school 
A)  becoming immunized 
B)  talking loudly in a restaurant 
C)  landscaping her lawn 
D)  paying taxes 
E)  attending school

Question 3

Oil is an example of a renewable resource.

Accepted Answer

A) True 
 B)False

Question 4

If education creates positive externalities,

Accepted Answer

A)  private markets provide less than the socially optimal quantity of education 
B)  private markets provide more than the socially optimal quantity of education 
C)  the marginal private benefit curve is higher than the marginal social benefit curve 
D)  the marginal private cost curve is higher than the marginal social cost curve 
E)  the government should impose a depletion tax 
A)  private markets provide less than the socially optimal quantity of education 
B)  private markets provide more than the socially optimal quantity of education 
C)  the marginal private benefit curve is higher than the marginal social benefit curve 
D)  the marginal private cost curve is higher than the marginal social cost curve 
E)  the government should impose a depletion tax

Question 5

Renewable resources are those for which

Accepted Answer

A)  additional units can be purchased in the market 
B)  additional units can be purchased in the market or provided by government 
C)  worn-out units can be repaired for further use 
D)  periodic use can be continued indefinitely 
E)  additional sources are constantly being discovered 
A)  additional units can be purchased in the market 
B)  additional units can be purchased in the market or provided by government 
C)  worn-out units can be repaired for further use 
D)  periodic use can be continued indefinitely 
E)  additional sources are constantly being discovered

Question 6

In Japan,recycling is prevalent and landfill use is small relative to the United States because

Accepted Answer

A)  the Japanese are more conscientious 
B)  there is no externality problem there 
C)  land is relatively more scarce in Japan 
D)  the Japanese have better recycling technology 
E)  littering is illegal there 
A)  the Japanese are more conscientious 
B)  there is no externality problem there 
C)  land is relatively more scarce in Japan 
D)  the Japanese have better recycling technology 
E)  littering is illegal there

Question 7

If a private market determines the quantity of smallpox vaccinations,which of the following is true?

Accepted Answer

A)  The equilibrium quantity is too low for efficiency. 
B)  The equilibrium price and quantity are too high for efficiency. 
C)  The equilibrium price is efficient. 
D)  The equilibrium quantity is too high for efficiency. 
E)  The equilibrium price and quantity are efficient. 
A)  The equilibrium quantity is too low for efficiency. 
B)  The equilibrium price and quantity are too high for efficiency. 
C)  The equilibrium price is efficient. 
D)  The equilibrium quantity is too high for efficiency. 
E)  The equilibrium price and quantity are efficient.

Question 8

Exhibit 17-4
  
-In Exhibit 17-4,the shift of the demand curve from D to D' indicates that

Accepted Answer

A)  producers want to discharge more pollution into the river 
B)  producers want to use more of the river in a nonpolluting way 
C)  consumers want producers to clean up the polluted river 
D)  consumers want to buy goods that use technology that does not pollute 
E)  consumers want to buy the river from the polluter 
A)  producers want to discharge more pollution into the river 
B)  producers want to use more of the river in a nonpolluting way 
C)  consumers want producers to clean up the polluted river 
D)  consumers want to buy goods that use technology that does not pollute 
E)  consumers want to buy the river from the polluter

Question 9

If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost,

Accepted Answer

A)  not enough of the product is being produced 
B)  the price charged for the good is too high 
C)  the good produces a positive externality 
D)  the good produces a negative externality 
E)  the government should produce the good 
A)  not enough of the product is being produced 
B)  the price charged for the good is too high 
C)  the good produces a positive externality 
D)  the good produces a negative externality 
E)  the government should produce the good

Question 10

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,a socially optimal solution can be achieved if

Accepted Answer

A)  the local government purchases the building 
B)  the building is torn down 
C)  property rights to be noisy are granted to the nightclub 
D)  property rights to a quiet environment are granted to the meditation class 
E)  both the nightclub and the meditation class relocate 
A)  the local government purchases the building 
B)  the building is torn down 
C)  property rights to be noisy are granted to the nightclub 
D)  property rights to a quiet environment are granted to the meditation class 
E)  both the nightclub and the meditation class relocate

Question 11

At the market output and price for a good whose production causes pollution,

Accepted Answer

A)  pollution is eliminated 
B)  the marginal social cost of production exceeds the marginal social benefit of production 
C)  the private cost of production equals the private benefit of production 
D)  the marginal social benefit of production equals the marginal social cost of production 
E)  too little of the good is produced 
A)  pollution is eliminated 
B)  the marginal social cost of production exceeds the marginal social benefit of production 
C)  the private cost of production equals the private benefit of production 
D)  the marginal social benefit of production equals the marginal social cost of production 
E)  too little of the good is produced

Question 12

If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent,which of the following must be true?

Accepted Answer

A)  The free market will not reduce pollution by less than 85 percent. 
B)  The free market will accomplish 85 percent abatement,but it will be inefficient. 
C)  If only 75 percent of the pollution is abated,the society will be better off than if 85 percent had been abated. 
D)  If only 75 percent of the pollution is abated,the society will be worse off than if 85 percent had been abated. 
E)  If 75 percent of the pollution is abated,then in the next period the government should set the abatement level at 95 percent. 
A)  The free market will not reduce pollution by less than 85 percent. 
B)  The free market will accomplish 85 percent abatement,but it will be inefficient. 
C)  If only 75 percent of the pollution is abated,the society will be better off than if 85 percent had been abated. 
D)  If only 75 percent of the pollution is abated,the society will be worse off than if 85 percent had been abated. 
E)  If 75 percent of the pollution is abated,then in the next period the government should set the abatement level at 95 percent.

Question 13

Robert Iwasaki lives next door to a toxic waste landfill.Katie Cooley lives five miles downstream from a steel plant that dumps waste into Mill Creek.Which person is more likely to press public officials for a cleaner environment?

Accepted Answer

A)  Katie 
B)  Robert 
C)  neither 
D)  both equally 
E)  Economics cannot answer this question 
A)  Katie 
B)  Robert 
C)  neither 
D)  both equally 
E)  Economics cannot answer this question

Question 14

How much of U.S.garbage is disposed of in landfills?

Accepted Answer

A)  25 percent 
B)  40 percent 
C)  60 percent 
D)  75 percent 
E)  100 percent 
A)  25 percent 
B)  40 percent 
C)  60 percent 
D)  75 percent 
E)  100 percent

Question 15

Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed.Therefore,the greater the marginal benefit of reducing greenhouse gases,other things constant,

Accepted Answer

A)  the lower the optimal level of emissions 
B)  the higher the optimal level of emissions 
C)  the likelier that the level of emissions would have no effect 
D)  the lower the optimal level of cleaner air 
E)  None of the answers is correct 
A)  the lower the optimal level of emissions 
B)  the higher the optimal level of emissions 
C)  the likelier that the level of emissions would have no effect 
D)  the lower the optimal level of cleaner air 
E)  None of the answers is correct

Question 16

Exhibit 17-2
  
-In Exhibit 17-2,the total social gain from producing the socially efficient output rather than the private equilibrium output is

Accepted Answer

A)  $60 
B)  $30 
C)  $6 
D)  $480 
E)  $300 
A)  $60 
B)  $30 
C)  $6 
D)  $480 
E)  $300

Question 17

Which of the following is an example of an open-access resource?

Accepted Answer

A)  a city subway system 
B)  a college education 
C)  an elementary school education 
D)  whales in the ocean 
E)  pandas in the zoo 
A)  a city subway system 
B)  a college education 
C)  an elementary school education 
D)  whales in the ocean 
E)  pandas in the zoo

Question 18

When society receives more benefits from a good than the individuals who consume the good,

Accepted Answer

A)  the marginal social benefit for the good is less than the marginal social cost 
B)  too much of the good would be produced by a private market 
C)  property rights are assignable and well defined 
D)  the good produces a positive externality 
E)  the good is exhaustible with fixed-production technology 
A)  the marginal social benefit for the good is less than the marginal social cost 
B)  too much of the good would be produced by a private market 
C)  property rights are assignable and well defined 
D)  the good produces a positive externality 
E)  the good is exhaustible with fixed-production technology

Question 19

Dumping raw sewage into Boston Harbor is an example of

Accepted Answer

A)  a negative externality 
B)  a positive externality 
C)  a private cost 
D)  a sunk cost 
E)  an inverse cost 
A)  a negative externality 
B)  a positive externality 
C)  a private cost 
D)  a sunk cost 
E)  an inverse cost

Question 20

The Clean Air Act of 1970

Accepted Answer

A)  set up a depletion tax system 
B)  reduced air pollution standards 
C)  recognized air as a resource 
D)  established a system of transferable pollution rights 
E)  forbade producers to emit any pollutants into the air 
A)  set up a depletion tax system 
B)  reduced air pollution standards 
C)  recognized air as a resource 
D)  established a system of transferable pollution rights 
E)  forbade producers to emit any pollutants into the air

When consuming a good creates positive externalities,

A person can cause a negative externality by

Oil is an example of a renewable resource.

If education creates positive externalities,

Renewable resources are those for which

In Japan,recycling is prevalent and landfill use is small relative to the United States because

If a private market determines the quantity of smallpox vaccinations,which of the following is true?

Exhibit 17-4 -In Exhibit 17-4,the shift of the demand curve from D to D' indicates that

If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost,

At the market output and price for a good whose production causes pollution,

If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent,which of the following must be true?

Robert Iwasaki lives next door to a toxic waste landfill.Katie Cooley lives five miles downstream from a steel plant that dumps waste into Mill Creek.Which person is more likely to press public officials for a cleaner environment?

How much of U.S.garbage is disposed of in landfills?

Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed.Therefore,the greater the marginal benefit of reducing greenhouse gases,other things constant,

Exhibit 17-2 -In Exhibit 17-2,the total social gain from producing the socially efficient output rather than the private equilibrium output is

Which of the following is an example of an open-access resource?

When society receives more benefits from a good than the individuals who consume the good,

Dumping raw sewage into Boston Harbor is an example of

The Clean Air Act of 1970

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

When consuming a good creates positive externalities,

A person can cause a negative externality by

Oil is an example of a renewable resource.

If education creates positive externalities,

Renewable resources are those for which

In Japan,recycling is prevalent and landfill use is small relative to the United States because

If a private market determines the quantity of smallpox vaccinations,which of the following is true?

Exhibit 17-4 -In Exhibit 17-4,the shift of the demand curve from D to D' indicates that

If in market equilibrium the marginal social cost of producing a good exceeds the marginal private cost,

At the market output and price for a good whose production causes pollution,

If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent,which of the following must be true?

Robert Iwasaki lives next door to a toxic waste landfill.Katie Cooley lives five miles downstream from a steel plant that dumps waste into Mill Creek.Which person is more likely to press public officials for a cleaner environment?

How much of U.S.garbage is disposed of in landfills?

Suppose research indicates that the effects of a one degree increase in Earth's average temperature would be much more devastating than previously believed.Therefore,the greater the marginal benefit of reducing greenhouse gases,other things constant,

Exhibit 17-2 -In Exhibit 17-2,the total social gain from producing the socially efficient output rather than the private equilibrium output is

Which of the following is an example of an open-access resource?

When society receives more benefits from a good than the individuals who consume the good,

Dumping raw sewage into Boston Harbor is an example of

The Clean Air Act of 1970

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