Question 1

The marginal social benefit of air quality

Accepted Answer

A)  declines as air quality increases 
B)  rises as air quality increases 
C)  remains constant as air quality increases 
D)  first falls then rises as air quality increases 
E)  is always negative

Question 2

A person can cause a negative externality by

Accepted Answer

A)  becoming immunized 
B)  talking loudly in a restaurant 
C)  landscaping her lawn 
D)  paying taxes 
E)  attending school

Question 3

The marginal social cost curve is downward sloping under variable technology.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following has not been used by the US government to limit overfishing in US waters?

Accepted Answer

A)  laws to limit the total catch 
B)  laws to limit the size of fish caught 
C)  price floors on fish 
D)  limits to the length of the fishing season 
E)  limits to the types of fishing equipment used

Question 5

A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?

Accepted Answer

A)  The pollution will be created by those least willing and able to pay the damages. 
B)  The pollution will be created by those most willing and able to pay for the right to pollute. 
C)  The funds collected by the government will be enough to compensate any individuals harmed by the pollution. 
D)  Pollution will increase from zero to 1,000 units per day. 
E)  There will be no incentive for polluters to try to sneak emissions past government monitoring devices.

Question 6

All of the following are examples of negative externalities except one. Which is the exception?

Accepted Answer

A)  water pollution 
B)  your roommate going on a diet 
C)  second-hand smoke 
D)  loud conversation in the workplace 
E)  your neighbor building a bomb shelter on her front lawn

Question 7

Some U.S. cities still dump raw sewage directly into rivers or oceans.

Accepted Answer

A) True 
 B)False

Question 8

The equilibrium price and quantity in a free market usually reflect private marginal costs and benefits, not social ones.

Accepted Answer

A) True 
 B)False

Question 9

To enhance social welfare, the government should encourage the production of

Accepted Answer

A)  all goods 
B)  no goods 
C)  goods that provide positive externalities 
D)  goods whose social cost exceeds their private cost 
E)  goods that provide negative externalities

Question 10

Based on 2005 data what country is the worlds leading recycler?

Accepted Answer

A)  Germany 
B)  United States 
C)  Japan 
D)  Ireland 
E)  Canada

Question 11

Among the 25 most developed countries in the world where does the United States rank in terms of recycling?

Accepted Answer

A)  5th 
B)  10th 
C)  18th 
D)  20th 
E)  25th

Question 12

Which of the following is not an example of an open access resource?

Accepted Answer

A)  deer in the forest 
B)  fish in the ocean 
C)  oil deposits 
D)  wild flowers 
E)  King crabs in the Bering Sea

Question 13

If a private market determines the quantity of smallpox vaccinations, which of the following is true?

Accepted Answer

A)  The equilibrium quantity is too low for efficiency. 
B)  The equilibrium price and quantity are too high for efficiency. 
C)  The equilibrium price is efficient. 
D)  The equilibrium quantity is too high for efficiency. 
E)  The equilibrium price and quantity are efficient.

Question 14

Open-access resources tend to be

Accepted Answer

A)  conserved 
B)  taxed 
C)  overused 
D)  efficiently used 
E)  used in an environmentally sound manner

Question 15

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper. On a graph of the optimal level of air quality, the use of the new technology would be represented by

Accepted Answer

A)  a leftward shift of the marginal social cost curve 
B)  a rightward shift of the marginal social cost curve 
C)  movement to the right along the marginal social cost curve 
D)  movement to the left along the marginal social cost curve 
E)  a downward shift of the marginal net benefit curve

Question 16

If the marginal social cost of producing a product exceeds the marginal social benefit, producers will produce less of it.

Accepted Answer

A) True 
 B)False

Question 17

When an activity results in the imposition of external costs, markets will produce more than the socially optimal level of that activity.

Accepted Answer

A) True 
 B)False

Question 18

The Clean Air Act of 1970

Accepted Answer

A)  set up a depletion tax system 
B)  reduced air pollution standards 
C)  recognized air as a resource 
D)  established a system of transferable pollution rights 
E)  forbade producers to emit any pollutants into the air

Question 19

All of the following are sources of negative externalities except one. Which is the exception?

Accepted Answer

A)  a paper mill that pollutes a river 
B)  a person who throws a beer can out the window of a moving car 
C)  cars, which emit carbon monoxide 
D)  a solar water heater which is outside and obscure from view 
E)  products that contribute to the greenhouse effect

Question 20

Most waste generated in the U.S. ends up in landfills because

Accepted Answer

A)  the low opportunity cost of time discourages recycling 
B)  Americans earn low incomes 
C)  the price of land is relatively low 
D)  the low wages in the repair industry encourages repairs 
E)  of low productivity and high wages in the waste disposal industry

Exam 17: Externalities and the Environment

The marginal social benefit of air quality

A person can cause a negative externality by

The marginal social cost curve is downward sloping under variable technology.

Which of the following has not been used by the US government to limit overfishing in US waters?

A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?

All of the following are examples of negative externalities except one. Which is the exception?

Some U.S. cities still dump raw sewage directly into rivers or oceans.

The equilibrium price and quantity in a free market usually reflect private marginal costs and benefits, not social ones.

To enhance social welfare, the government should encourage the production of

Based on 2005 data what country is the worlds leading recycler?

Among the 25 most developed countries in the world where does the United States rank in terms of recycling?

Which of the following is not an example of an open access resource?

If a private market determines the quantity of smallpox vaccinations, which of the following is true?

Open-access resources tend to be

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper. On a graph of the optimal level of air quality, the use of the new technology would be represented by

If the marginal social cost of producing a product exceeds the marginal social benefit, producers will produce less of it.

When an activity results in the imposition of external costs, markets will produce more than the socially optimal level of that activity.

The Clean Air Act of 1970

All of the following are sources of negative externalities except one. Which is the exception?

Most waste generated in the U.S. ends up in landfills because