Question 1

An increase in the marginal cost of reducing greenhouse gas emissions will lead to lower air quality.​

Accepted Answer

A) True 
 B)False

Question 2

Pollution arises because:​

Accepted Answer

A) the atmosphere is a nonrenewable resource. 
B) the atmosphere is a renewable resource. 
C) private property rights can be enforced on the atmosphere. 
D) the atmosphere is an open-access resource. 
E) the atmosphere is a private property. 
A) the atmosphere is a nonrenewable resource. 
B) the atmosphere is a renewable resource. 
C) private property rights can be enforced on the atmosphere. 
D) the atmosphere is an open-access resource. 
E) the atmosphere is a private property.

Question 3

According to the Coase theorem, _____.​

Accepted Answer

A) government regulation is necessary to eliminate negative externalities 
B) externality problems can be solved efficiently by the assignment of property rights if transaction costs are low​ 
C) it is necessary to assign property rights when bargaining costs are high​ 
D) the assignment of property rights lead to equitable but inefficient solutions to externality problems​ 
E) externality problems can be solved efficiently by the assignment of property rights if transaction costs are high​ 
A) government regulation is necessary to eliminate negative externalities 
B) externality problems can be solved efficiently by the assignment of property rights if transaction costs are low​ 
C) it is necessary to assign property rights when bargaining costs are high​ 
D) the assignment of property rights lead to equitable but inefficient solutions to externality problems​ 
E) externality problems can be solved efficiently by the assignment of property rights if transaction costs are high​

Question 4

The following graph shows the market for pollution rights. Which of the following could not have caused an increase in the demand for pollution rights?​ ​
Figure 17.4
​

Accepted Answer

A) An increase in the number of polluting firms 
B) An increase in the ability of the firm to absorb pollutants​ 
C) A decrease in the cost of pollution abatement equipment​ 
D) The ability of existing firms to sell pollution rights at a price lower than the market price. 
E) The subsidy provided by the government on the price of pollution rights 
A) An increase in the number of polluting firms 
B) An increase in the ability of the firm to absorb pollutants​ 
C) A decrease in the cost of pollution abatement equipment​ 
D) The ability of existing firms to sell pollution rights at a price lower than the market price. 
E) The subsidy provided by the government on the price of pollution rights

Question 5

In order to increase society's well-being, a production process that generates a positive externality 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) continued without government intervention. 
A) taxed to discourage production. 
B) subsidized to encourage production. 
C) taxed to encourage production. 
D) subsidized to discourage production. 
E) continued without government intervention.

Question 6

A major source of water pollution in the United States is _____.​

Accepted Answer

A) factories 
B) sulfur dioxide (i.e., acid rain)​ 
C) cars 
D) chemicals (used in pesticides and fertilizers) and sewage​ 
E) garbage​ 
A) factories 
B) sulfur dioxide (i.e., acid rain)​ 
C) cars 
D) chemicals (used in pesticides and fertilizers) and sewage​ 
E) garbage​

Question 7

Education confers positive externalities because:​

Accepted Answer

A) some education is done outside the market. 
B) curricula are regulated by the government, even in private schools. 
C) an educated person consuming education gains many personal benefits. 
D) an educated person 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. 
B) curricula are regulated by the government, even in private schools. 
C) an educated person consuming education gains many personal benefits. 
D) an educated person behaves in a way that benefits others. 
E) education gives benefits to individuals in excess of the costs they pay to get it.

Question 8

Negative externalities of open resources arise because:​

Accepted Answer

A) there are no enforceable property rights to open-access resources. 
B) these are private goods and government enforces property rights. 
C) consumers have to pay for each unit of production. 
D) the government undertakes the distribution of these resources. 
E) these are available in finite amounts. 
A) there are no enforceable property rights to open-access resources. 
B) these are private goods and government enforces property rights. 
C) consumers have to pay for each unit of production. 
D) the government undertakes the distribution of these resources. 
E) these are available in finite amounts.

Question 9

When a system of pollution rights is in effect, polluters have no economic incentive to reduce the amount of pollution they generate.​

Accepted Answer

A) True 
 B)False

Question 10

The optimal air quality is determined where the marginal social cost of improving air quality is equal to the marginal social benefit from cleaner air.​

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a source of a positive externality?​

Accepted Answer

A) A factory that pollutes a river 
B) A person who litters the street​ 
C) A car that emits carbon monoxide 
D) A company that engages in research and development 
E) A product that contributes to the greenhouse effect 
A) A factory that pollutes a river 
B) A person who litters the street​ 
C) A car that emits carbon monoxide 
D) A company that engages in research and development 
E) A product that contributes to the greenhouse effect

Question 12

The following graph shows market equilibrium in the presence of an externality in an economy. The socially efficient level of output is _____.​ ​
Figure 17.1
​

Accepted Answer

A) 0 units 
B) 100 units 
C) between 0 and 100 units 
D) 160 units 
E) between 100 and 160 units 
A) 0 units 
B) 100 units 
C) between 0 and 100 units 
D) 160 units 
E) between 100 and 160 units

Question 13

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

Accepted Answer

A) the marginal social cost of production is negative 
B) the marginal social cost of production exceeds the marginal social benefit of production​ 
C) the marginal private cost of production equals the marginal private benefit of production​ 
D) the marginal social benefit of production equals the marginal social cost of production​ 
E) the marginal social benefit of production exceeds the marginal private cost of production​ 
A) the marginal social cost of production is negative 
B) the marginal social cost of production exceeds the marginal social benefit of production​ 
C) the marginal private cost of production equals the marginal private benefit of production​ 
D) the marginal social benefit of production equals the marginal social cost of production​ 
E) the marginal social benefit of production exceeds the marginal private cost of production​

Question 14

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

Accepted Answer

A) leisure is valued more than work. 
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 discourage repairs. 
E) of the low opportunity cost of time. 
A) leisure is valued more than work. 
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 discourage repairs. 
E) of the low opportunity cost of time.

Question 15

_____ are usually recycled in the United States.​

Accepted Answer

A) Hazardous chemical materials 
B) Processed wood​ 
C) Natural textiles​ 
D) Newspapers​ 
E) Electronic appliances​ 
A) Hazardous chemical materials 
B) Processed wood​ 
C) Natural textiles​ 
D) Newspapers​ 
E) Electronic appliances​

Question 16

A metal stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to take a nap. Which of the following is likely to be true given the scenario?​

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) Optimal solution cannot be achieved unless the costs are given. 
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) Optimal solution cannot be achieved unless the costs are given.

Question 17

Which of the following is true of renewable resources?​

Accepted Answer

A) Additional units of these resources can be purchased in the market. 
B) Additional units of these resources are provided by the government. 
C) Worn-out units cannot be repaired for further use. 
D) They can be drawn on indefinitely if used conservatively. 
E) They are available in finite amounts. 
A) Additional units of these resources can be purchased in the market. 
B) Additional units of these resources are provided by the government. 
C) Worn-out units cannot be repaired for further use. 
D) They can be drawn on indefinitely if used conservatively. 
E) They are available in finite amounts.

Question 18

Open-access resources are owned by:​

Accepted Answer

A) every individual in society. 
B) large firms. 
C) no one. 
D) the government. 
E) nonprofit agencies. 
A) every individual in society. 
B) large firms. 
C) no one. 
D) the government. 
E) nonprofit agencies.

Question 19

According to the Coase theorem, if the appropriate property right is assigned to __________, an efficient solution to an externality problem will be achieved.​

Accepted Answer

A) the party that has a higher marginal social cost 
B) the party that has a lower marginal social cost​ 
C) the party that has a higher marginal private benefit​ 
D) the party that has a lower marginal private benefit​ 
E) either one of the parties involved​ 
A) the party that has a higher marginal social cost 
B) the party that has a lower marginal social cost​ 
C) the party that has a higher marginal private benefit​ 
D) the party that has a lower marginal private benefit​ 
E) either one of the parties involved​

Question 20

Most water pollution in the United States comes from manufacturing sites.​

Accepted Answer

A) True 
 B)False

Exam 17: Externalities and the Environment

An increase in the marginal cost of reducing greenhouse gas emissions will lead to lower air quality.​

Pollution arises because:​

According to the Coase theorem, _____.​

The following graph shows the market for pollution rights. Which of the following could not have caused an increase in the demand for pollution rights?​ ​ Figure 17.4 ​

In order to increase society's well-being, a production process that generates a positive externality should be:​

A major source of water pollution in the United States is _____.​

Education confers positive externalities because:​

Negative externalities of open resources arise because:​

When a system of pollution rights is in effect, polluters have no economic incentive to reduce the amount of pollution they generate.​

The optimal air quality is determined where the marginal social cost of improving air quality is equal to the marginal social benefit from cleaner air.​

Which of the following is a source of a positive externality?​

The following graph shows market equilibrium in the presence of an externality in an economy. The socially efficient level of output is _____.​ ​ Figure 17.1 ​

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

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

_____ are usually recycled in the United States.​

A metal stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to take a nap. Which of the following is likely to be true given the scenario?​

Which of the following is true of renewable resources?​

Open-access resources are owned by:​

According to the Coase theorem, if the appropriate property right is assigned to __________, an efficient solution to an externality problem will be achieved.​

Most water pollution in the United States comes from manufacturing sites.​

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

An increase in the marginal cost of reducing greenhouse gas emissions will lead to lower air quality.

Pollution arises because:

According to the Coase theorem, _____.

The following graph shows the market for pollution rights. Which of the following could not have caused an increase in the demand for pollution rights? Figure 17.4

In order to increase society's well-being, a production process that generates a positive externality should be:

A major source of water pollution in the United States is _____.

Education confers positive externalities because:

Negative externalities of open resources arise because:

When a system of pollution rights is in effect, polluters have no economic incentive to reduce the amount of pollution they generate.

The optimal air quality is determined where the marginal social cost of improving air quality is equal to the marginal social benefit from cleaner air.

Which of the following is a source of a positive externality?

The following graph shows market equilibrium in the presence of an externality in an economy. The socially efficient level of output is _____. Figure 17.1

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

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

_____ are usually recycled in the United States.

A metal stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to take a nap. Which of the following is likely to be true given the scenario?

Which of the following is true of renewable resources?

Open-access resources are owned by:

According to the Coase theorem, if the appropriate property right is assigned to __________, an efficient solution to an externality problem will be achieved.

Most water pollution in the United States comes from manufacturing sites.