Question 1

Most economists suggest that pollution, a negative externality, be reduced to what level? Explain your answer.

Accepted Answer

The answer of Most economists suggest that pollution, a negative...

Question 2

Timber on property not owned by any individual is an example of a _____ good.

Accepted Answer

A)  private 
B)  public 
C)  common resource 
D)  rival

Question 3

A _____ tax is an example of a corrective tax.

Accepted Answer

A)  property 
B)  solar energy 
C)  wind 
D)  carbon emissions

Question 4

One person's consumption of _____ good diminishes the ability of others to consume the same good.

Accepted Answer

A)  a public 
B)  a nonprivate 
C)  an excludable 
D)  a rival

Question 5

Over-the-air television service is generally a _____ good.

Accepted Answer

A)  private 
B)  public 
C)  common resource 
D)  rival

Question 6

When municipalities enact noise restrictions that prevent aircraft from flying between 11 p.m. and 6

Accepted Answer

A)  environmental 
B)  Communication 
C)  control and communications 
D)  Control

Question 7

An example of a firm's marginal private cost is:

Accepted Answer

A)  noise pollution generated by the production process. 
B)  wages paid to employees. 
C)  government regulations. 
D)  vaccinations.

Question 8

_____ may be applied to activities that generate a positive externality or a smaller negative externality on a comparable activity to encourage businesses to consider of the externality in decision making.

Accepted Answer

A)  A property tax 
B)  A pollution subsidy 
C)  An environmental tax 
D)  A corrective subsidy

Question 9

A government program where permits are issued for a maximum allowable amount of pollution and those permits can be bought and sold is called:

Accepted Answer

A)  a corrective tax. 
B)  a corrective subsidy. 
C)  cap and trade. 
D)  nontradable pollution permits.

Question 10

_____ energy subsidies help make electricity generated by wind and solar competitive with electricity generated by fossil fuels.

Accepted Answer

A)  Green 
B)  Brown 
C)  Yellow 
D)  Red

Question 11

A situation in which free, unregulated markets do not maximize economic efficiency is called:

Accepted Answer

A)  a government failure. 
B)  a market failure. 
C)  an economic failure. 
D)  a social failure.

Question 12

_____ suggests that private individuals are able to negotiate an efficient solution to the problem of external costs or benefits in the presence of clearly defined property rights and low transaction costs.

Accepted Answer

A)  The availability of a government subsidy 
B)  The Coase theorem 
C)  Economic efficiency 
D)  Cap-and-trade

Question 13

_____ is the tendency of society to overuse common resources.

Accepted Answer

A)  The tragedy of the commons 
B)  The free-rider problem 
C)  The Coase theorem 
D)  Social equilibrium

Question 14

Explain why the cost of limiting greenhouse gases is high.

Accepted Answer

The answer of Explain why the cost of limiting greenhouse...

Question 15

Which of the following is an example of a common resource good?

Accepted Answer

A)  fish in the ocean 
B)  concert 
C)  sandwich 
D)  national defense

Question 16

(Figure: Common Resource Goods) This figure illustrates an _____ of a common resource.

Accepted Answer

A)  efficient use 
B)  exclusion 
C)  overuse 
D)  underuse

Question 17

_____ goods are rival in consumption and excludable.

Accepted Answer

A)  Private 
B)  Nonprivate 
C)  Nonrival private 
D)  Rival

Question 18

When too much of a common resource good is consumed, the marginal social cost of the good is greater than the marginal:

Accepted Answer

A)  private benefit. 
B)  private cost. 
C)  social benefit. 
D)  all of the above.

Question 19

_____ are a form of property rights.

Accepted Answer

A)  Government regulations 
B)  Corrective taxes 
C)  Tradable pollution permits 
D)  Green energies

Question 20

Generally, firms that practice environmental sustainability initiatives:

Accepted Answer

A)  suffer a loss in sales. 
B)  increase brand recognition. 
C)  ignore government restrictions on pollution. 
D)  reuse resources.

Exam 8: Externalities, the Environment, and Public Goods