Question 1

Figure 8B
 
-Refer to Figure 8B. Suppose point N on the production possibility frontier represents the status quo. Recently, a relaxation of environmental standards allows a country to move to point K. Which of the following best described the results from this move?

Accepted Answer

A)   No one is made worse off.
B)   Everyone is made worse off.
C)   Pareto improvement occurs.
D)   This situation can never occur in reality.
E)   None of the above. E

Question 2

The use of a very high positive discount rate indicates that the project under
 consideration is very important.

Accepted Answer

A) True 
 B)False  False

Question 3

If a CBA has a cost-to-benefit ratio of 1.5, then…

Accepted Answer

A)   The project should not be implemented.
B)   The project should be implemented.
C)   One should use positive time discounting.
D)   None of the above are correct. A

Question 4

The advantage of a CBA is that it carries no subjectivity.

Accepted Answer

A) True 
 B)False

Question 5

A new pollution regulation allows for an interest subsidy to firms that borrow funds to
Install pollution control devices. Thus, borrowing costs are zero for the firms. In addition, the new regulation also allows for a waiver in the sales tax to firms that purchase
Pollution control devices. In his calculation, should an economist include sales tax and interest cost in the cost of the regulation?

Accepted Answer

A)   Include both.
B)   Exclude both.
C)   Include sales tax, but exclude interest cost.
D)   Include interest cost, but exclude sales tax.

Question 6

Despite scientific uncertainty about the outcomes of future damages, the
 precautionary principles can and should be the optimal course of action.

Accepted Answer

A) True 
 B)False

Question 7

Any Pareto improvement implies that no one is made worse off.

Accepted Answer

A) True 
 B)False

Question 8

The rate at which future money is discounted in a cost-benefit analysis is referred to as
The…

Accepted Answer

A)   Real rate
B)   Nominal inflation rate
C)   Discount rate
D)   Time preference rate
E)   Social rate

Question 9

The procedure of converting future benefits to their present values is called…

Accepted Answer

A)   An externality.
B)   Compounding.
C)   Discounting.
D)   Contingent valuation procedure.

Question 10

Waste facilities are often located in communities that have high percentages of
 poor, elderly, young and minority residents.

Accepted Answer

A) True 
 B)False

Question 11

Which best describes the decision criterion for implementing either a private or public
Project?

Accepted Answer

A)   Costs should not exceed benefits.
B)   A cost-to-benefit ratio should be less than unity.
C)   Benefits should exceed costs.
D)   All of the above.
E)   None of the above.

Question 12

Given that cost-effectiveness analysis (CEA) deals with least-cost method of
 achieving a stated environmental goal, it is assumed that the benefits are not
 important.

Accepted Answer

A) True 
 B)False

Question 13

When the time horizon of a project under consideration is fairly long, the
 difference between private and social discount rates that are within the range of 3 to 5 percent makes an important different.

Accepted Answer

A) True 
 B)False

Question 14

If a decrease in the price of natural gas leads to a decline in coal use for electricity
 generation, one would refer to this as secondary effect.

Accepted Answer

A) True 
 B)False

Question 15

Figure 8A
 
-Refer to Figure 8A. In a CBA, the objective is to move from state B to state C implies which of the following?

Accepted Answer

A)   Status quo to status quo.
B)   A move that results in no difference in environmental quality because the price has not changed.
C)   A change in position to "better" that is attained after implementation of sulfur emission control technology.
D)   A change in position to "worse" that is attained after implementation of sulfur emission control technology.
E)   None of the above.

Question 16

There seems to be a reverse in the trend of companies from developed nations
 preferring to locate parts of their industrial operations in pollution havens.

Accepted Answer

A) True 
 B)False

Question 17

As part of a CBA, risk should…

Accepted Answer

A)   Always be considered.
B)   Never considered.
C)   Be calculated only as part of social, but not private projects.
D)   Only be used in private projects because it is difficult to calculate.
E)   None of the above.

Question 18

In general, the social discount rate is lower than the private discount rate.

Accepted Answer

A) True 
 B)False

Question 19

When noting the location of waste sites and other noxious facilities, one can
 clearly see that they are randomly located.

Accepted Answer

A) True 
 B)False

Question 20

The fundamental welfare criterion of CBA is based on "potential" Pareto
 improvement.

Accepted Answer

A) True 
 B)False

Exam 8: Frameworks for Assessing the Worthiness of Environmental Projects

Figure 8B -Refer to Figure 8B. Suppose point N on the production possibility frontier represents the status quo. Recently, a relaxation of environmental standards allows a country to move to point K. Which of the following best described the results from this move?

The use of a very high positive discount rate indicates that the project under consideration is very important.

If a CBA has a cost-to-benefit ratio of 1.5, then…

The advantage of a CBA is that it carries no subjectivity.

Despite scientific uncertainty about the outcomes of future damages, the precautionary principles can and should be the optimal course of action.

Any Pareto improvement implies that no one is made worse off.

The rate at which future money is discounted in a cost-benefit analysis is referred to as The…

The procedure of converting future benefits to their present values is called…

Waste facilities are often located in communities that have high percentages of poor, elderly, young and minority residents.

Which best describes the decision criterion for implementing either a private or public Project?

Given that cost-effectiveness analysis (CEA) deals with least-cost method of achieving a stated environmental goal, it is assumed that the benefits are not important.

When the time horizon of a project under consideration is fairly long, the difference between private and social discount rates that are within the range of 3 to 5 percent makes an important different.

If a decrease in the price of natural gas leads to a decline in coal use for electricity generation, one would refer to this as secondary effect.

Figure 8A -Refer to Figure 8A. In a CBA, the objective is to move from state B to state C implies which of the following?

There seems to be a reverse in the trend of companies from developed nations preferring to locate parts of their industrial operations in pollution havens.

As part of a CBA, risk should…

In general, the social discount rate is lower than the private discount rate.

When noting the location of waste sites and other noxious facilities, one can clearly see that they are randomly located.

The fundamental welfare criterion of CBA is based on "potential" Pareto improvement.