Question 1

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

Accepted Answer

A) True 
 B)False

Question 2

In retaliation for U.S.support for Israel during the Arab-Israeli War, OPEC countries stopped selling oil to the United States.For the United States, this embargo caused the

Accepted Answer

A) demand curve for oil to shift out. 
B) demand curve for oil to shift in. 
C) supply curve of oil to shift out. 
D) supply curve of oil to shift in.

Question 3

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Accepted Answer

A) True 
 B)False

Question 4

The position of the supply curve in the market for garbage removal

Accepted Answer

A) is irrelevant since the cost is fixed. 
B) depends on the marginal cost of garbage removal. 
C) depends on the demand for garbage removal services. 
D) is unaffected by taxes levied per household amount of garbage.

Question 5

Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Accepted Answer

A) True 
 B)False

Question 6

Individuals and government have been contributors in harming the environment.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following has also been called the command and control approach?

Accepted Answer

A) Direct controls 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Taxes on pollution

Question 8

Direct controls do not have a clear advantage where

Accepted Answer

A) an emission is so dangerous that it is prohibited altogether. 
B) the cost of implementing new methods of reducing emissions varies from firm to firm. 
C) effective and dependable metering devices have not been invented or are prohibitively costly to install and operate. 
D) a sudden change in circumstances calls for prompt and substantial change in conduct.

Question 9

How do rising prices slow resource depletion?

Accepted Answer

The answer of How do rising prices slow resource depletion?...

Question 10

The worst and most difficult to extract resources are used first.

Accepted Answer

A) True 
 B)False

Question 11

The effectiveness of direct controls on pollution depends on: (i) the budgets and enthusiasm of the regulatory bodies; (ii) sufficiently strong statutory penalties.

Accepted Answer

A) i and ii 
B) i but not ii 
C) ii but not i 
D) neither i nor ii

Question 12

Taxing firms that emit pollutants is one way to reduce pollution.

Accepted Answer

A) True 
 B)False

Question 13

The tax approach may be favorable over a direct controls approach to pollution cleanup because

Accepted Answer

A) all firms face identical costs. 
B) large firms are the most likely to reduce their pollution and therefore, have the greatest impact. 
C) small firms are most likely to reduce their pollution since they are most efficient at it. 
D) firms that have the ability to reduce pollution at the lowest cost do so, while others do not.

Question 14

One of the conclusions of A.C.Pigou was that

Accepted Answer

A) a system of mandatory controls is the only effective means to control pollution. 
B) a system of charges can be an effective means to control pollution. 
C) pollution will wither away if a socialist system is in place. 
D) pollution cannot be adequately addressed in a price system.

Question 15

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

Accepted Answer

A) Known reserves of the resource were depleted. 
B) The interest rate rose by 15 percent. 
C) Antitrust enforcement broke up a cartel among major suppliers of the resource. 
D) The government imposed an effective price floor.

Question 16

Economists believe it is feasible and desirable to reduce environmental damage to zero.

Accepted Answer

A) True 
 B)False

Question 17

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not part of the pollution problem?

Accepted Answer

A) The absence of markets for goods like clean air and clean water 
B) The lack of well-defined property rights to clean air and clean water 
C) The unreliability of voluntary programs to cut pollution 
D) The willingness of citizens to take steps to reduce detrimental externalities

Question 19

Pollution problems

Accepted Answer

A) have existed for many centuries. 
B) are attributable to modern industrialization. 
C) can be blamed on the profit system. 
D) have worsened in every respect in the past 40 years.

Question 20

An unregulated paper firm that pours waste into a waterway

Accepted Answer

A) is producing at a quantity where marginal social cost is greater than marginal social benefit.. 
B) is producing at a quantity where marginal social benefit is greater than marginal social cost. 
C) is producing the social optimal quantity. 
D) has taken social cost into account.

Exam 16: The Economics of the Environment, and Natural Resources

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

In retaliation for U.S.support for Israel during the Arab-Israeli War, OPEC countries stopped selling oil to the United States.For the United States, this embargo caused the

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

The position of the supply curve in the market for garbage removal

Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Individuals and government have been contributors in harming the environment.

Which of the following has also been called the command and control approach?

Direct controls do not have a clear advantage where

How do rising prices slow resource depletion?

The worst and most difficult to extract resources are used first.

The effectiveness of direct controls on pollution depends on: (i) the budgets and enthusiasm of the regulatory bodies; (ii) sufficiently strong statutory penalties.

Taxing firms that emit pollutants is one way to reduce pollution.

The tax approach may be favorable over a direct controls approach to pollution cleanup because

One of the conclusions of A.C.Pigou was that

Economic theory predicted that the price of a depletable resource would rise by 10 percent.In reality, the price fell by 5 percent.Which of the following events could explain this discrepancy?

Economists believe it is feasible and desirable to reduce environmental damage to zero.

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

Which of the following is not part of the pollution problem?

Pollution problems

An unregulated paper firm that pours waste into a waterway