Question 1

How does pollution lead to economic inefficiency?

Accepted Answer

A) damage is done to the factory, requires more maintenance. 
B) external damage is done to the surrounding environment. 
C) harming the air quality affects society. 
D) all of the above. 
E) none of the above.

Question 2

A market solution to pollution is the use of tradeable emissions permits.

Accepted Answer

A) True 
 B)False

Question 3

The distorting effects of taxes can be diminished by taxing only inputs with price elastic supplies.

Accepted Answer

A) True 
 B)False

Question 4

It is very easy to determine the damage done to the environment and markets by pollution.

Accepted Answer

A) True 
 B)False

Question 5

The charge for the use of the summit of Mt.Everest by a snow cone company (allowing that the sale of snow cones is the only activity the summit is useful for)is an example of:

Accepted Answer

A) external economies. 
B) pure economic rents. 
C) backward-bending supply. 
D) the law of diminishing returns. 
E) none of the above.

Question 6

Which of the following are policies to correct the inefficiencies from externalities?

Accepted Answer

A) government programs, regulations 
B) market solutions, market fees 
C) market solutions, tradeable emissions permits 
D) all of the above 
E) none of the above.

Question 7

Which of the following are renewable resources?

Accepted Answer

A) agricultural land 
B) forests 
C) solar energy 
D) all of the above 
E) none of the above.

Question 8

If a factor of production receives rent, the rent is determined by the:

Accepted Answer

A) price of the final good. 
B) elasticity of the factor's supply. 
C) cost of the factor's inputs. 
D) price of all other factors. 
E) all of the above.

Question 9

A tax on pure economic rent, such as Henry George advocated, would not tend to distort resource use in the short run.

Accepted Answer

A) True 
 B)False

Question 10

Kyoto Protocol was a call for countries to reduce their greenhouse gas emissions.

Accepted Answer

A) True 
 B)False

Question 11

Command-and-control regulations are a tool used by the government to control pollution.

Accepted Answer

A) True 
 B)False

Question 12

How does the government enforce a pollution regulation?

Accepted Answer

A) command and control regulations. 
B) no regulations. 
C) let firms regulate themselves. 
D) provide incentives not to pollute. 
E) none of the above.

Question 13

The basis for Henry George's single-tax program was to tax:

Accepted Answer

A) all implicit and explicit returns so as to prevent any shifting of the tax. 
B) payments to landlords, with no attention to the distorting effects on production. 
C) the earned increment of land value, and then to rebate part of the tax back to the landlord. 
D) the unearned increment of land value without shifting the tax forward to consumers. 
E) all land so as to do away with any neighborhood and externality effects.

Question 14

The supply curve for land is completely inelastic, or vertical.

Accepted Answer

A) True 
 B)False

Question 15

Public goods are ones whose benefits are indivisibly spread among the entire community, whether or not individuals desire to consume the public good.

Accepted Answer

A) True 
 B)False

Question 16

An externality is an activity that imposes involuntary costs or benefits on others, or an activity whose effects are not completely reflected in its market price.

Accepted Answer

A) True 
 B)False

Question 17

If a tax is imposed upon the use of an inelastically supplied input with no alternate uses, then you should expect the price of the product to increase dramatically.

Accepted Answer

A) True 
 B)False

Question 18

Global warming is one of the most worrisome problems facing the world today.

Accepted Answer

A) True 
 B)False

Question 19

The derived demand for a factor tends to be inelastic if the demand for the product tends to be:

Accepted Answer

A) very inelastic. 
B) very elastic. 
C) moderately elastic. 
D) capable of being met by a variety of modes of production. 
E) very capricious and volatile.

Question 20

Pure economic rent on land of fixed supply is a surplus which can be taxed without causing a decline in productive efficiency.

Accepted Answer

A) True 
 B)False

Exam 14: Capital, Interest, and Profits Part Four: Applications of Economic Principles

How does pollution lead to economic inefficiency?

A market solution to pollution is the use of tradeable emissions permits.

The distorting effects of taxes can be diminished by taxing only inputs with price elastic supplies.

It is very easy to determine the damage done to the environment and markets by pollution.

The charge for the use of the summit of Mt.Everest by a snow cone company (allowing that the sale of snow cones is the only activity the summit is useful for) is an example of:

Which of the following are policies to correct the inefficiencies from externalities?

Which of the following are renewable resources?

If a factor of production receives rent, the rent is determined by the:

A tax on pure economic rent, such as Henry George advocated, would not tend to distort resource use in the short run.

Kyoto Protocol was a call for countries to reduce their greenhouse gas emissions.

Command-and-control regulations are a tool used by the government to control pollution.

How does the government enforce a pollution regulation?

The basis for Henry George's single-tax program was to tax:

The supply curve for land is completely inelastic, or vertical.

Public goods are ones whose benefits are indivisibly spread among the entire community, whether or not individuals desire to consume the public good.

An externality is an activity that imposes involuntary costs or benefits on others, or an activity whose effects are not completely reflected in its market price.

If a tax is imposed upon the use of an inelastically supplied input with no alternate uses, then you should expect the price of the product to increase dramatically.

Global warming is one of the most worrisome problems facing the world today.

The derived demand for a factor tends to be inelastic if the demand for the product tends to be:

Pure economic rent on land of fixed supply is a surplus which can be taxed without causing a decline in productive efficiency.