Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Marginal external costs are

Accepted Answer

A) additional unpriced costs imposed on society by producing one more unit of a good 
B) the cost of damaged goods 
C) the additional cost of imported goods 
D) the total cost to society of producing a good 
E) the marginal cost divided by the marginal revenue 
A) additional unpriced costs imposed on society by producing one more unit of a good 
B) the cost of damaged goods 
C) the additional cost of imported goods 
D) the total cost to society of producing a good 
E) the marginal cost divided by the marginal revenue

Question 3

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 4

Which of the following can be a renewable resource?

Accepted Answer

A) oil 
B) timber 
C) coal 
D) iron ore 
E) uranium 
A) oil 
B) timber 
C) coal 
D) iron ore 
E) uranium

Question 5

If the marginal social cost of producing a product exceeds the marginal social benefit,producers will produce less of it.

Accepted Answer

A) True 
 B)False

Question 6

By current U.S.law,anyone generating,storing,or transporting hazardous waste must pay to clean it up if it leaks or is otherwise discharged into the environment.This law has been in effect

Accepted Answer

A) since World War II 
B) since 1960 
C) since 1970 
D) since 1980 
E) only since 1990 
A) since World War II 
B) since 1960 
C) since 1970 
D) since 1980 
E) only since 1990

Question 7

As more pollution is abated,the marginal social benefit from further abatement diminishes.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Sailboats and motorboats share Emerson Lake,which nobody owns.The sailors say the motorboats are a hazard; the motorboaters say it is the other way around.Frequent collisions occur,with many injuries and some deaths every year.If the City of Emerson were to buy the lake itself,

Accepted Answer

A) the problem would be solved,because the lake would have an owner 
B) the problem would be solved,because no one could use the lake 
C) the city would still have to assign property rights so that use of the lake would be efficient 
D) the city would give the right to use the lake to the larger group 
E) the city would give the right to use the lake to the richer group 
A) the problem would be solved,because the lake would have an owner 
B) the problem would be solved,because no one could use the lake 
C) the city would still have to assign property rights so that use of the lake would be efficient 
D) the city would give the right to use the lake to the larger group 
E) the city would give the right to use the lake to the richer group

Question 10

Coase argued that the free market should be able to solve the externality problem without assigning property rights.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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.

Question 13

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 14

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 15

If tuna in the sea are open-access resources,they will be used until the marginal value of additional use equals

Accepted Answer

A) the marginal product of the resource 
B) the marginal revenue of the resource 
C) infinity 
D) negative infinity 
E) zero 
A) the marginal product of the resource 
B) the marginal revenue of the resource 
C) infinity 
D) negative infinity 
E) zero

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

Other things equal,if the government increased the quantity of pollution rights to be sold,

Accepted Answer

A) pollution would not be affected 
B) the price of pollution rights would rise,and the amount of pollution would decrease 
C) the price of pollution rights would fall,and the amount of pollution would decrease 
D) the price of pollution rights would fall,and the amount of pollution would increase 
E) the price of pollution rights would rise,and the amount of pollution would increase 
A) pollution would not be affected 
B) the price of pollution rights would rise,and the amount of pollution would decrease 
C) the price of pollution rights would fall,and the amount of pollution would decrease 
D) the price of pollution rights would fall,and the amount of pollution would increase 
E) the price of pollution rights would rise,and the amount of pollution would increase

Exam 19: Externalities and the Environment

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

Marginal external costs are

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

Which of the following can be a renewable resource?

If the marginal social cost of producing a product exceeds the marginal social benefit,producers will produce less of it.

By current U.S.law,anyone generating,storing,or transporting hazardous waste must pay to clean it up if it leaks or is otherwise discharged into the environment.This law has been in effect

As more pollution is abated,the marginal social benefit from further abatement diminishes.

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

Sailboats and motorboats share Emerson Lake,which nobody owns.The sailors say the motorboats are a hazard; the motorboaters say it is the other way around.Frequent collisions occur,with many injuries and some deaths every year.If the City of Emerson were to buy the lake itself,

Coase argued that the free market should be able to solve the externality problem without assigning property rights.

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

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?

Renewable resources are those for which

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?

If tuna in the sea are open-access resources,they will be used until the marginal value of additional use equals

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

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

The optimal level of air quality will increase if

The price of a pollution right is

Other things equal,if the government increased the quantity of pollution rights to be sold,

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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