Question 1

Fish in the sea can be harvested till:​

Accepted Answer

A) the marginal benefit of catching more fish is less than the marginal cost. 
B) the marginal benefit of catching more fish is greater than the marginal cost. 
C) the marginal benefit of catching more fish becomes negative. 
D) the marginal benefit of catching more fish becomes infinity. 
E) the marginal benefit of catching more fish becomes zero. 
A) the marginal benefit of catching more fish is less than the marginal cost. 
B) the marginal benefit of catching more fish is greater than the marginal cost. 
C) the marginal benefit of catching more fish becomes negative. 
D) the marginal benefit of catching more fish becomes infinity. 
E) the marginal benefit of catching more fish becomes zero.

Question 2

A society is better off if the level of education exceeds the private equilibrium.​

Accepted Answer

A) True 
 B)False

Question 3

Most of the Superfund expenditures have been used for court costs and legal fees.​

Accepted Answer

A) True 
 B)False

Question 4

The marginal social benefit of good air:​

Accepted Answer

A) declines as air quality improves. 
B) rises as air quality improves. 
C) remains constant as air quality improves. 
D) initially falls but rises with higher improvement. 
E) initially rises but becomes negative wither greater improvement. 
A) declines as air quality improves. 
B) rises as air quality improves. 
C) remains constant as air quality improves. 
D) initially falls but rises with higher improvement. 
E) initially rises but becomes negative wither greater improvement.

Question 5

The following graph shows equilibrium in a market in the presence of an externality. If technology is fixed, the discrepancy between the market output and the efficient level of output is eliminated by______.​ ​
Figure 17.2

Accepted Answer

A) subsidizing production of the good by $10 per unit 
B) taxing the firm producing the good $10 per unit​ 
C) using a quota system to restrict production to 160 units. 
D) subsidizing production of the good by $5 per unit​ 
E) letting the private market operate freely​ 
A) subsidizing production of the good by $10 per unit 
B) taxing the firm producing the good $10 per unit​ 
C) using a quota system to restrict production to 160 units. 
D) subsidizing production of the good by $5 per unit​ 
E) letting the private market operate freely​

Question 6

_____ resources can be used indefinitely over time.​

Accepted Answer

A) Open-access 
B) Renewable​ 
C) Cyclical​ 
D) Recyclable​ 
E) Exhaustible​ 
A) Open-access 
B) Renewable​ 
C) Cyclical​ 
D) Recyclable​ 
E) Exhaustible​

Question 7

In order to increase society's well-being, education should 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 8

Which of the following responses to a positive externality enhances society's welfare?​

Accepted Answer

A) Taxes 
B) Subsidies​ 
C) Effluent fees​ 
D) Quotas​ 
E) A cut in funding​ 
A) Taxes 
B) Subsidies​ 
C) Effluent fees​ 
D) Quotas​ 
E) A cut in funding​

Question 9

If production is characterized by variable technology and generates pollution, the optimal level of air quality occurs where:​

Accepted Answer

A) the marginal private cost of air quality equals the marginal social benefit. 
B) the marginal social cost of air quality equals the marginal social benefit. 
C) the marginal social cost of air quality equals the marginal private cost of air quality. 
D) government regulators set it. 
E) the average private cost equals the average social cost. 
A) the marginal private cost of air quality equals the marginal social benefit. 
B) the marginal social cost of air quality equals the marginal social benefit. 
C) the marginal social cost of air quality equals the marginal private cost of air quality. 
D) government regulators set it. 
E) the average private cost equals the average social cost.

Question 10

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 11

Smokers and loud talkers help in generating positive externalities.​

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

In Japan, recycling is prevalent and landfill use is relatively smaller than the United States because:​

Accepted Answer

A) the Japanese have less developed technology for landfills. 
B) the externality problem is not present in Japan. 
C) land is relatively more scarce in Japan. 
D) the Japanese have better recycling technology. 
E) littering is illegal there. 
A) the Japanese have less developed technology for landfills. 
B) the externality problem is not present in Japan. 
C) land is relatively more scarce in Japan. 
D) the Japanese have better recycling technology. 
E) littering is illegal there.

Question 14

Which of the following provides a positive externality?​

Accepted Answer

A) Smog 
B) Inoculating children against measles​ 
C) Smoking in public places​ 
D) Littering roads​ 
E) Listening to loud music​ 
A) Smog 
B) Inoculating children against measles​ 
C) Smoking in public places​ 
D) Littering roads​ 
E) Listening to loud music​

Question 15

An externality is:​

Accepted Answer

A) a cost of a transaction that is borne by the government. 
B) a benefit of a transaction that is enjoyed by the firms. 
C) a cost or benefit that arises when market price changes. 
D) any cost or benefit of a transaction that is not accounted for in the market price. 
E) the revenue generated by a firm. 
A) a cost of a transaction that is borne by the government. 
B) a benefit of a transaction that is enjoyed by the firms. 
C) a cost or benefit that arises when market price changes. 
D) any cost or benefit of a transaction that is not accounted for in the market price. 
E) the revenue generated by a firm.

Question 16

The following graph shows market equilibrium in the presence of an externality. The optimal air quality level is 50.​
​
Figure 17.3
​

Accepted Answer

A) True 
 B)False

Question 17

Byproducts of production or consumption that impose costs on other consumers or firms are known as _______.​

Accepted Answer

A) negative externalities 
B) transaction costs​ 
C) sunk costs​ 
D) positive externalities​ 
E) moral hazards​ 
A) negative externalities 
B) transaction costs​ 
C) sunk costs​ 
D) positive externalities​ 
E) moral hazards​

Question 18

Markets for pollution rights:​

Accepted Answer

A) assign property rights to those firms which have high market shares. 
B) assign property rights to those who value them least. 
C) allow the government to assign property rights. 
D) enable those who value them most to pollute. 
E) requires government intervention. 
A) assign property rights to those firms which have high market shares. 
B) assign property rights to those who value them least. 
C) allow the government to assign property rights. 
D) enable those who value them most to pollute. 
E) requires government intervention.

Question 19

The marginal social benefit curve is downward sloping under variable technology.​

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 17: Externalities and the Environment

Fish in the sea can be harvested till:​

A society is better off if the level of education exceeds the private equilibrium.​

Most of the Superfund expenditures have been used for court costs and legal fees.​

The marginal social benefit of good air:​

The following graph shows equilibrium in a market in the presence of an externality. If technology is fixed, the discrepancy between the market output and the efficient level of output is eliminated by______.​ ​ Figure 17.2

_____ resources can be used indefinitely over time.​

In order to increase society's well-being, education should be:​

Which of the following responses to a positive externality enhances society's welfare?​

If production is characterized by variable technology and generates pollution, the optimal level of air quality occurs where:​

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

Smokers and loud talkers help in generating positive externalities.​

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

In Japan, recycling is prevalent and landfill use is relatively smaller than the United States because:​

Which of the following provides a positive externality?​

An externality is:​

The following graph shows market equilibrium in the presence of an externality. The optimal air quality level is 50.​ ​ Figure 17.3 ​

Byproducts of production or consumption that impose costs on other consumers or firms are known as _______.​

Markets for pollution rights:​

The marginal social benefit curve is downward sloping under variable technology.​

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

The Art and Science of Economic Analysis

Economic Tools and Economic 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

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, Entrepreneurship, and Corporate Finance

Transaction Costs, Asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Poverty and Redistribution

International Trade

International Finance

Economic Development

Filters

Fish in the sea can be harvested till:

A society is better off if the level of education exceeds the private equilibrium.

Most of the Superfund expenditures have been used for court costs and legal fees.

The marginal social benefit of good air:

The following graph shows equilibrium in a market in the presence of an externality. If technology is fixed, the discrepancy between the market output and the efficient level of output is eliminated by______. Figure 17.2

_____ resources can be used indefinitely over time.

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

Which of the following responses to a positive externality enhances society's welfare?

If production is characterized by variable technology and generates pollution, the optimal level of air quality occurs where:

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

Smokers and loud talkers help in generating positive externalities.

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

In Japan, recycling is prevalent and landfill use is relatively smaller than the United States because:

Which of the following provides a positive externality?

An externality is:

The following graph shows market equilibrium in the presence of an externality. The optimal air quality level is 50. Figure 17.3

Byproducts of production or consumption that impose costs on other consumers or firms are known as _______.

Markets for pollution rights:

The marginal social benefit curve is downward sloping under variable technology.

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