Deck 18: The Economics of the Environment

Question 1

Economists examine pollution from the perspective of the:

A) preferences of people.
B) intensity and duration of the harm to resources.
C) desires of government bureaucrats.
D) intent of business firms in the maximization of profits.

Answer 1

preferences of people.

Question 2

As the price per unit of pollution emissions _______ , the total quantity demanded of pollution emissions _______ .

A) rises; rises
B) rises; stays the same
C) falls; falls
D) falls; rises

Answer 2

falls; rises

Question 3

Whenever human activity produces a sufficient concentration of a substance in the environment to cause harm to people or to resources valued by people, the result is:

A) market efficiency.
B) gross domestic product.
C) prosperity.
D) pollution.

Answer 3

pollution.

Question 4

Which of the following statements is true?

A) Human greed is the most significant cause of pollution.
B) Pollution is not a result of scarcity.
C) Pollution implies scarcity.
D) Pollution really is not a problem of alternative resource uses if it actually causes harm.

Question 5

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) The efficient solution to pollution problems:

A) maximizes net benefit.
B) maximizes total benefit.
C) maximizes emissions.
D) minimizes emissions.

Question 6

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) The demand for emissions curve is a _______ curve.

A) marginal benefit
B) marginal cost
C) average pollution revenue
D) total benefit

Question 7

Which of the following statements is true?

A) Pollution is unrelated to the concept of scarcity.
B) Pollution is not considered a cost in market capitalist systems.
C) The existence of pollution implies that environmental resources have alternative uses.
D) Activities that create pollution do not generate a benefit from society's perspective.

Question 8

Pollution imposes a cost in the economic sense if it damages plants or animals:

A) valued by people.
B) owned by business firms.
C) considered endangered.
D) that live in close proximity to people.

Question 9

As the quantity of pollution emissions rises, the marginal cost of pollution:

A) remains constant.
B) falls.
C) rises.
D) rises at first, but eventually falls.

Question 10

The efficient rate of emissions occurs where:

A) there is absolutely no damage done to a pristine environment.
B) government forces zero pollution to take place, no matter what the cost.
C) the marginal benefits of pollution exceed the marginal costs of pollution.
D) the change in benefits is equal to the change in costs due to an additional unit of emissions.

Question 11

Pollution is defined as:

A) human activity generating a sufficient concentration of a substance in the environment to cause harm to people and resources valued by people.
B) the generation of waste materials that cannot be returned to the environment.
C) the sum of all the costs of recycling.
D) any byproduct of production processes.

Question 12

As the quantity of pollution emissions per period _______ , the marginal cost of emissions _______.

A) falls; rises
B) rises; falls
C) rises; rises
D) falls; stays the same

Question 13

There are actual benefits resulting indirectly from pollution, because:

A) we obtain goods and services we enjoy even though in the in the process we create pollution.
B) firms pollute the environment only if it allows them to provide people with goods and services they desire at a higher cost.
C) businesses and consumers receive a perverse satisfaction from polluting.
D) it can often be beneficial to wildlife.

Question 14

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) Point _______ represents an efficient solution.

A) A
B) B
C) E
D) F

Question 15

The efficient level of pollution is:

A) the quantity at which its total benefits exceeds its total costs by the greatest possible amount.
B) the quantity at which its total benefits equals its total costs.
C) where the marginal benefit of an additional unit of pollution emission is greater than the marginal cost of the additional unit of pollution.
D) where the marginal benefit of an additional unit of pollution emission is less than the marginal cost of the additional unit of pollution.

Question 16

According to the text, whenever human activity generates a sufficient concentration of a substance in the environment to cause harm to people, it is called:

A) a free good.
B) an external shock.
C) a result of human greed.
D) pollution.

Question 17

Damage to the environment occurs because:

A) most businesses just don't care about the environment.
B) consumers want goods and services at the lowest prices, no matter what other costs may be involved.
C) in the process of obtaining goods and services we enjoy, pollution occurs.
D) pollution occurs naturally, with or without human activity.

Question 18

The emission of pollutants _______ people by _______ other activities to be pursued at_______ costs.

A) benefits; permitting; higher
B) harms; prohibiting; lower
C) are especially beneficial to; forcing; higher
D) benefits; allowing; lower

Question 19

Pollution has _______ and _______ .

A) no benefits; only costs
B) benefits; costs
C) no opposition; only advocates
D) short-term impacts; very little long-term impact

Question 20

As the price per unit of emissions falls, the quantity of emissions demanded:

A) remains constant.
B) falls.
C) rises.
D) rises, but eventually falls.

Question 21

If the marginal benefit received from pollution is greater than its marginal cost, then:

A) society's well-being can be improved if the quantity of pollution decreases.
B) society's well-being cannot be improved by changing the quantity of pollution.
C) the market is producing too much pollution.
D) the market is producing too little pollution.

Question 22

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) An efficient solution is where:

A) MB < MC.
B) MC < MB.
C) total cost = total benefit.
D) MC = MB.

Question 23

Use the following to answer question(s): A Market for Pollution

(Exhibit: A Market for Pollution) If there is neither too little nor too much pollution, the level of emissions per period will be _______ , and the market is _______ .

A) greater than Q; inefficient
B) Q; inefficient
C) less than Q; efficient
D) Q; efficient

Question 24

If the marginal benefit received from pollution is equal to its marginal cost, then:

A) society's well-being can be improved if the quantity of pollution increases.
B) society's well-being can be improved if the quantity of pollution decreases.
C) society's well-being cannot be improved by changing the quantity of pollution.
D) the market is producing too much pollution.

Question 25

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) If there is too much pollution in this market, the result is most likely at a point such as:

A) A.
B) B.
C) C.
D) E.

Question 26

Use the following to answer question(s): A Market for Pollution

(Exhibit: A Market for Pollution) If there is an efficient level of emissions, it will occur where:

A) price is P and quantity is = Q.
B) MB > MC.
C) there is excess supply of emissions.
D) there is an excess demand for pollution.

Question 27

If the marginal benefit received from pollution is less than its marginal cost, then:

A) the market is producing an efficient quantity of pollution.
B) society's well-being cannot be improved by changing the quantity of pollution.
C) the market is producing too much pollution.
D) the market is producing too little pollution.

Question 28

The Coase theorem emphasizes the importance of _______ in the efficient allocation of resources when external costs are present.

A) enforcement of contracts
B) marketable pollution permits
C) regulation and appropriate environmental standards
D) well-defined property rights

Question 29

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) A situation where there is too much pollution in this market may be illustrated when the price is _______ and the quantity is _______ .

A) $5; 15
B) $5; 40
C) $25; 20
D) $5; 30

Question 30

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) Curve A can be read from right to left as the marginal cost of:

A) resources curve.
B) opportunities curve.
C) pollution curve.
D) abatement curve.

Question 31

Use the following to answer question(s): A Market for Pollution

(Exhibit: A Market for Pollution) If there is too much pollution:

A) output will be at Q.
B) resources will be under allocated to the production of the good that is associated with the generation of the pollution.
C) resources will be overallocated to the production of the good that is associated with the generation of the pollution.
D) MC < MB.

Question 32

The marginal benefit of pollution emissions _______ as the quantity of pollution emissions _______ .

A) decreases; increases
B) increases; increases
C) decreases; decreases
D) remains unchanged; goes up or down

Question 33

If the marginal benefit received from pollution is less than its marginal cost, then:

A) society's well-being can be improved if the quantity of pollution increases.
B) society's well-being can be improved if the quantity of pollution decreases.
C) society's well-being cannot be improved by changing the quantity of pollution.
D) the market is producing too little pollution.

Question 34

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) An efficient solution takes place at a price of _______ and a quantity of _______ .

A) $5; 40
B) $15; 30
C) $25; 30
D) $15; 15

Question 35

The proposition that if property rights are well defined and if bargaining is costless, then the private market can achieve an efficient outcome regardless of which of the affected parties hold the property rights is known as the:

A) Coase theorem.
B) property rights paradigm.
C) market rights theorem.
D) green environment paradigm.

Question 36

According to the Coase theorem, the private market can achieve an efficient outcome:

A) as long as the enforcement of property rights costs less than the marginal benefit of emissions.
B) only if the property right to clean air is assigned to the polluter.
C) only if the property right to clean air is assigned to the party harmed by pollution.
D) if property rights are well defined and bargaining is costless.

Question 37

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) If this market produced _______ units, then _______.

A) 30; it would be efficient
B) 30; MB > MC
C) 45; total cost would equal total benefits
D) 45; MC = 0

Question 38

Use the following to answer question(s): Efficiency and Pollution

(Exhibit: Efficiency and Pollution) If this market produced _______ units, then _______.

A) 40; MB = MC
B) 30; MB < MC
C) 40; MB < MC
D) 30; MC < MB

Question 39

The marginal benefit from pollution _______ as the quantity of pollution emissions _______.

A) remains constant; increases
B) decreases; increases
C) increases; increases
D) remains constant; decreases

Question 40

If the marginal benefit received from pollution is equal to its marginal cost, then:

A) society's well-being can be improved if the quantity of pollution decreases.
B) the market is producing too much pollution.
C) the market is producing too little pollution.
D) the market is producing an efficient quantity of pollution.

Question 41

The marginal cost curve for increased pollution emission levels can be read from ________ to ________ as the ________ curve for improved environmental ________.

A) right; left; supply; quantity
B) right; left; demand; quality
C) left; right; demand; quality
D) left; right; supply; quantity

Question 42

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of pollution is at 0, the marginal cost of:

A) emissions is zero.
B) abatement is zero.
C) abatement is equal to the marginal cost of emissions.
D) emissions is greater than the marginal cost of abatement.

Question 43

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of emissions is T, then the marginal cost of:

A) abatement is less than the marginal cost of emissions.
B) emissions is less than the marginal cost of abatement.
C) abatement is too high to be efficient.
D) emissions is zero.

Question 44

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of emissions is R, then efficiency is achieved by:

A) not changing the level of emissions.
B) decreasing abatement efforts.
C) increasing abatement efforts.
D) decreasing the level of emissions.

Question 45

When the amount of pollution is reduced through abatement programs:

A) it increases benefits to some people with no cost imposed on anyone else.
B) benefits and costs may both be increased.
C) it results only in cost increases.
D) there is no way to estimate the costs and benefits of such activity.

Question 46

The marginal benefit curve for emitting pollutants can be read from _______ to________ as the ________ of ________ pollution.

A) right; left; opportunity cost; incremental
B) left; right; marginal cost; abating
C) right; left; marginal cost; abating
D) left to right; result; exponentially increasing

Question 47

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of emissions is U, then the marginal cost of:

A) abatement is zero.
B) emissions is zero.
C) abatement is greater than the marginal cost of emissions.
D) abatement and emissions are equal.

Question 48

The marginal cost of pollution _______ as the quantity of pollution emissions _______ .

A) remains constant; increases
B) decreases; increases
C) increases; increases
D) remains constant; decreases

Question 49

If it costs motorists $1 to reduce carbon monoxide emissions from 10 pounds to 9 pounds and $3 to reduce them from 9 pounds to 8 pounds, the marginal benefit of the 9th pound of carbon monoxide is:

A) $1.
B) $3.
C) $8.
D) $9.

Question 50

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) The level of emissions in a market for which none of the costs of pollution were faced by producers would be closest to

A) R.
B) S.
C) T.
D) U.

Question 51

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of emissions is S, then the marginal cost of:

A) abatement is greater than the marginal cost of emissions.
B) abatement and the marginal benefit of abatement are equal.
C) abatement is less than the marginal cost of emissions.
D) emissions is zero.

Question 52

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) Curve B is the marginal cost of:

A) emissions curve.
B) abatement curve.
C) resources curve.
D) opportunities curve.

Question 53

If motorists gain $8 in benefits when carbon monoxide emissions are reduced from 10 pounds to 9 pounds and $5 when they are reduced from 9 pounds to 8 pounds, the marginal cost of the 10th pound of carbon monoxide is:

A) $3.
B) $5.
C) $8.
D) $9.

Question 54

The marginal cost of pollution emissions _______ as the quantity of pollution emissions _______ .

A) decreases; increases
B) increases; increases
C) increases; decreases
D) remains constant; decreases

Question 55

If motorists gain $8 in benefits when carbon monoxide emissions are reduced from 10 pounds to 9 pounds and $5 when they are reduced from 9 pounds to 8 pounds, the marginal cost of the 9th pound of carbon monoxide is:

A) $3.
B) $5.
C) $8.
D) $9.

Question 56

If it costs motorists $1 to reduce carbon monoxide emissions from 10 pounds to 9 pounds and $3 to reduce them from 9 pounds to 8 pounds, the marginal benefit of the 10th pound of carbon monoxide is:

A) $1.
B) $3.
C) $8.
D) $9.

Question 57

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of emissions is S, then efficiency is achieved by:

A) increasing the level of emissions.
B) decreasing the level of emissions.
C) increasing abatement efforts.
D) keeping the level of emissions the same.

Question 58

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) An efficient level of pollution emissions:

A) is simply nonsense.
B) is at level S.
C) is at level U.
D) is at level 0.

Question 59

Use the following to answer question(s): Pollution Abatement and Emissions

(Exhibit: Pollution Abatement and Emissions) If the level of pollution were at 0:

A) efficiency is achieved.
B) efficiency is achieved by increasing the level of pollution.
C) efficiency is achieved by decreasing the level of pollution.
D) the economic problems associated with pollution disappear.

Question 60

Which of the following statements is true?

A) Surveys are not used to measure the marginal benefit curves for emissions.
B) Surveys are used to measure the marginal benefit curves for emissions.
C) Surveys are not used to measure the marginal cost curves for emissions.
D) Economists rely exclusively on engineers to provide accurate estimates of the benefits and costs of pollution.

Question 61

If a government determines how much and how a polluter must adjust emissions, it is using:

A) moral suasion.
B) a tax.
C) moral hazard.
D) command and control.

Question 62

The effort to change people's behavior by appealing to their sense of values is:

A) a tax.
B) command and control.
C) moral suasion.
D) a marketable permit.

Question 63

According to the text, the command-and-control approach to pollution abatement is:

A) favored by economists.
B) not favored by economists.
C) favored by economists over taxes, but not over any other approaches.
D) efficient.

Question 64

Which of the following statements is true?

A) The efficient level of pollution is achieved by eliminating all pollution.
B) Pollution occurs any time residuals are returned to the natural environment.
C) Measuring the costs and benefits of pollution is generally more difficult than measuring the prices of marketable goods.
D) There can never be too much or too little pollution.

Question 65

According to the Case in Point titled "Estimating a Demand Curve for Environmental Quantity," economists constructed such a demand curve by analyzing the market for:

A) real estate.
B) automobiles.
C) heavy machinery.
D) agricultural goods.

Question 66

Which of the following statements is true?

A) Unlike other marginal cost curves, the marginal cost curve for pollution emissions is downward sloping.
B) Command and control is the favored approach of economists for eliminating pollution.
C) To be effective, emission taxes need to exceed the marginal cost of emissions.
D) Emissions taxes are an effective way to reduce pollution.

Question 67

In general, if the level of pollution is reduced to zero, then:

A) marginal cost of abatement is less than marginal cost of damages.
B) marginal cost of abatement is equal to marginal cost of damages.
C) economic efficiency is achieved.
D) economic efficiency is not achieved.

Question 68

Command and control is a regulatory approach that:

A) allows the government to own and operate an activity directly.
B) grants a company the legal authority to participate in a given market.
C) attempts to change people's behavior by appealing to their values.
D) states precisely what a polluter must do, including the type of technology to be used.

Question 69

In general, if the level of the marginal cost of pollution damage equals the marginal cost of pollution abatement, then:

A) economic efficiency is achieved.
B) economic efficiency is not achieved.
C) the level of pollution is zero.
D) marginal cost of abatement is greater than marginal cost of damages.

Question 70

Moral suasion can be effectively used to:

A) reduce littering.
B) eliminate any pollution with high compliance costs.
C) correct all pollution problems.
D) achieve the efficient level of automobile emissions.

Question 71

The most widely used regulatory approach to environmental pollution is:

A) moral suasion.
B) market incentives.
C) the command-and-control approach.
D) arbitrary assignment of private property rights.

Question 72

Marginal benefit of pollution abatement curves may be inferred from other relationships, for example, the relationship between _______ and _______ .

A) pollution; accounting costs
B) pollution; economies of scale
C) the demand for houses; air quality
D) the speeches at environmental rallies; number of nuclear generating plants

Question 73

If a copper mining operation discharges waste products into a river and causes higher costs and discomfort to downstream users of the water for which they are not compensated, then:

A) too few of society's resources are being used to produce copper.
B) too many of society's resources are being used to produce copper.
C) the ideal amount of society's resources is being used to produce copper.
D) there is an external benefit to society from copper production.

Question 74

The intersection of the demand curve for pollution emissions and the marginal cost curve for pollution is:

A) the efficient level of pollution emissions.
B) greater than the efficient level of pollution emissions.
C) less than the efficient level of pollution emissions.
D) could be greater or less than the efficient level of pollution emissions.

Question 75

A regulatory approach that states precisely what a business must do, including the type of technology to be used, is:

A) moral suasion.
B) a marketable permit.
C) command and control.
D) a tax.

Question 76

The government attempts to reduce the noise from airplanes by restricting the noise level from a jet engine to less than 50 decibels.The regulatory approach used in this action is:

A) adverse selection.
B) moral suasion.
C) a marketable permit.
D) command and control.

Question 77

Moral suasion is:

A) directly controlling the behavior of people.
B) appealing to a sense of moral values to change peoples' behavior.
C) providing an incentive to people to change their behavior.
D) a powerful tool in abating air pollution.

Question 78

Efforts made to influence the choices of people by appealing to their sense of values are called:

A) incentives.
B) an invasion of privacy.
C) direct controls.
D) moral suasion.

Question 79

Efforts to persuade people not to pollute have been relatively successful in:

A) campaigns against littering.
B) reducing activities that pollute the air and water, especially where compliance costs are high.
C) pleas to people to refrain from driving on certain days.
D) reducing emissions of pollutants.

Question 80

A regulatory approach that establishes a level of output or activity that a business must either meet or not exceed is:

A) a tax.
B) a marketable permit.
C) moral suasion.
D) command and control.