Question 1

Reductions in pollution from a specific starting level of existing pollution is called:

Accepted Answer

A) abatement. 
B) the EPA. 
C) command and control. 
D) usage tax. 
A) abatement. 
B) the EPA. 
C) command and control. 
D) usage tax.

Question 2

How is the price of a marketable pollution permit determined?

Accepted Answer

The price of a marketable poll

Question 3

In most cases pollution taxes are more efficient than command-and-control policies at achieving a desired reduction in the level of pollution because:

Accepted Answer

A) they can reduce the level of pollution at a lower cost to society. 
B) the market price and quantity are not affected. 
C) they make the firm pay for the pollution that they generate. 
D) all of the above. 
A) they can reduce the level of pollution at a lower cost to society. 
B) the market price and quantity are not affected. 
C) they make the firm pay for the pollution that they generate. 
D) all of the above.

Question 4

One advantage that a command-and-control policy has over a pollution tax is that:

Accepted Answer

A) we will be able to accurately predict the amount of pollution that will occur. 
B) it generates a lower level of pollution at a lower cost. 
C) it encourages firms to use the most efficient abatement methods possible. 
D) it will lower the prices of products produced by polluting firms. 
A) we will be able to accurately predict the amount of pollution that will occur. 
B) it generates a lower level of pollution at a lower cost. 
C) it encourages firms to use the most efficient abatement methods possible. 
D) it will lower the prices of products produced by polluting firms.

Question 5

The idea behind the pollution tax equal to the external cost per unit of pollution is to:

Accepted Answer

A) increase the social benefit to be above the marginal cost. 
B) internalize the externality. 
C) allow the firm to evade external costs. 
D) drive polluting firms out of developed countries. 
A) increase the social benefit to be above the marginal cost. 
B) internalize the externality. 
C) allow the firm to evade external costs. 
D) drive polluting firms out of developed countries.

Question 6

Additional Application
For the first seven months of 2006 Stockholm,Sweden has been testing a possible solution to the city's traffic congestion.It is called "congestion pricing" and their system includes "small transponder boxes,laser detectors and a network of cameras to track the path of every car…" They want to reduce problems associated with smog and gridlock and,in turn,improve the quality of life.
The experiment recorded each car's registration,the date and time of day,as it passed through specific electronic tolls and calculated a fee that was charged to the car's owner.During the rush hour the fee could be as high as $2.75.But in the evenings the toll would be zero.The expectation is that people will respond to these varying tolls,change their driving habits to be more efficient,and take more public transportation.
The next step is to put a referendum to the voters to decide whether this system will become a permanent feature in the life of Stockholm drivers.
Leila Abboud and Jenny Clevstrom,"Stockholm's Syndrome: Hostages to Traffic,Swedes Will Vote on High-Tech Plan To Untangle Snarls With Tolls," Wall Street Journal,August 29,2006,http://infoweb.newsbank.com,accessed 11/22/06.
-The gridlock and smog that are associated with the traffic in Stockholm,Sweden are known as:

Accepted Answer

A) direct costs. 
B) business costs. 
C) external costs. 
D) equilibrium costs. 
A) direct costs. 
B) business costs. 
C) external costs. 
D) equilibrium costs.

Question 7

The primary source of smog-causing pollutants is papermill plants.

Accepted Answer

A) True 
 B)False

Question 8

Command and control policies are more effective than pollution taxes.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a more efficient way to lower pollution than a command-and-control policy?

Accepted Answer

A) production subsidies 
B) antitrust policy 
C) marketable pollution permits 
D) cost regulation 
A) production subsidies 
B) antitrust policy 
C) marketable pollution permits 
D) cost regulation

Reductions in pollution from a specific starting level of existing pollution is called:

How is the price of a marketable pollution permit determined?

In most cases pollution taxes are more efficient than command-and-control policies at achieving a desired reduction in the level of pollution because:

One advantage that a command-and-control policy has over a pollution tax is that:

The idea behind the pollution tax equal to the external cost per unit of pollution is to:

The primary source of smog-causing pollutants is papermill plants.

Command and control policies are more effective than pollution taxes.

Which of the following is a more efficient way to lower pollution than a command-and-control policy?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 16: External Costs and Environmental Policy

Reductions in pollution from a specific starting level of existing pollution is called:

How is the price of a marketable pollution permit determined?

In most cases pollution taxes are more efficient than command-and-control policies at achieving a desired reduction in the level of pollution because:

One advantage that a command-and-control policy has over a pollution tax is that:

The idea behind the pollution tax equal to the external cost per unit of pollution is to:

The primary source of smog-causing pollutants is papermill plants.

Command and control policies are more effective than pollution taxes.

Which of the following is a more efficient way to lower pollution than a command-and-control policy?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters