Question 1

Two strategies for environmental protection are the alteration of market incentives and regulation.

Accepted Answer

A) True 
 B)False

Question 2

External costs occur because

Accepted Answer

A) Private costs do not reflect the full costs to society. 
B) Government failure increases costs for the firm. 
C) All costs are absorbed by the firm. 
D) Firms make a choice other than the most cost-efficient production method. 
A) Private costs do not reflect the full costs to society. 
B) Government failure increases costs for the firm. 
C) All costs are absorbed by the firm. 
D) Firms make a choice other than the most cost-efficient production method.

Question 3

According to the EPA,using known and available technology,what percentage of the current air and water pollution could be eliminated with current resources?

Accepted Answer

A) 10 percent. 
B) 25 percent. 
C) 75 percent. 
D) 95 percent. 
A) 10 percent. 
B) 25 percent. 
C) 75 percent. 
D) 95 percent.

Question 4

Requiring that a firm engage in pollution abatement tends to reduce the firm's profits.

Accepted Answer

A) True 
 B)False

Question 5

The behavior of profit-maximizing producers is guided by

Accepted Answer

A) Philanthropy. 
B) Self-interest. 
C) Aesthetic concerns. 
D) Social costs. 
A) Philanthropy. 
B) Self-interest. 
C) Aesthetic concerns. 
D) Social costs.

Question 6

Which of the following is not the case when social costs are greater than private costs?

Accepted Answer

A) The market's price signals are flawed. 
B) Resources are allocated efficiently. 
C) There is market failure. 
D) External costs exist. 
A) The market's price signals are flawed. 
B) Resources are allocated efficiently. 
C) There is market failure. 
D) External costs exist.

Question 7

One In the News article titled "Recycling Wastes Money " suggests that the government has decided to intervene by

Accepted Answer

A) Imposing user fees. 
B) Privatizing pollution. 
C) Bypassing the market. 
D) Levying emission charges. 
A) Imposing user fees. 
B) Privatizing pollution. 
C) Bypassing the market. 
D) Levying emission charges.

Question 8

Firms are highly likely to voluntarily engage in an efficient level of pollution abatement.

Accepted Answer

A) True 
 B)False

Question 9

When external costs are present,

Accepted Answer

A) There is market failure. 
B) There is government failure. 
C) Private costs are greater than social costs. 
D) The market conveys the full costs of production. 
A) There is market failure. 
B) There is government failure. 
C) Private costs are greater than social costs. 
D) The market conveys the full costs of production.

Question 10

If the social costs of an economic activity are $120 and the private costs are $75,then the external costs of the activity are ________,and market failure ________.

Accepted Answer

A) $195;does not occur 
B) $45;does not occur 
C) $195;occurs 
D) $45;occurs 
A) $195;does not occur 
B) $45;does not occur 
C) $195;occurs 
D) $45;occurs

Question 11

Table 28.1 $\begin{array}{|c|r|r|}
\hline\begin{array}{c}
\text { Reduction in Emissions } \
\text { (in tons) }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { SteelPlant }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { Paper Plant }
\end{array} \
\hline 1 & \$ 400 & \$ 200 \
\hline 2 & 500 & 280 \
\hline 3 & 600 & 320 \
\hline
\end{array}$
 Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The most efficient transaction would result in

Accepted Answer

A) Zero pollution. 
B) The steel plant reducing its emissions. 
C) The paper plant reducing its emissions. 
D) Both plants reducing their emissions. 
A) Zero pollution. 
B) The steel plant reducing its emissions. 
C) The paper plant reducing its emissions. 
D) Both plants reducing their emissions.

Question 12

The article "A "War on Coal"?" illustrates that

Accepted Answer

A) The costs of pollution abatement must be balanced against the benefits. 
B) The government will subsidize the coal industry to offset the job losses from pollution abatement. 
C) The marginal costs of pollution control are lower than the marginal benefits. 
D) The benefits of pollution control can be achieved with few opportunity costs. 
A) The costs of pollution abatement must be balanced against the benefits. 
B) The government will subsidize the coal industry to offset the job losses from pollution abatement. 
C) The marginal costs of pollution control are lower than the marginal benefits. 
D) The benefits of pollution control can be achieved with few opportunity costs.

Question 13

An emission charge is

Accepted Answer

A) A subsidy to the consumers who are hurt by pollution. 
B) A charge on consumers who buy goods made by firms that pollute. 
C) An attempt to change consumers' behavior by direct government intervention. 
D) A fee imposed on polluters based on the quantity of pollution they generate. 
A) A subsidy to the consumers who are hurt by pollution. 
B) A charge on consumers who buy goods made by firms that pollute. 
C) An attempt to change consumers' behavior by direct government intervention. 
D) A fee imposed on polluters based on the quantity of pollution they generate.

Question 14

Graphically depict market failure in the case where social costs exceed private costs,and show where social welfare is maximized.

Accepted Answer

See Figure 28.2 in your text.Production

Question 15

The reason pollution occurs is because people tend to

Accepted Answer

A) Consider the impact of their activities on society first. 
B) Maximize their personal welfare,balancing private benefits against private costs. 
C) Maximize their personal welfare,balancing social benefits against social costs. 
D) Maximize society's welfare,balancing private benefits against private costs. 
A) Consider the impact of their activities on society first. 
B) Maximize their personal welfare,balancing private benefits against private costs. 
C) Maximize their personal welfare,balancing social benefits against social costs. 
D) Maximize society's welfare,balancing private benefits against private costs.

Question 16

If firms were charged the full social opportunity cost of the resources they used,there would be

Accepted Answer

A) No external costs. 
B) Government failure. 
C) Market failure. 
D) A need for government intervention. 
A) No external costs. 
B) Government failure. 
C) Market failure. 
D) A need for government intervention.

Question 17

When environmental regulations continue long after they are obsolete,there is

Accepted Answer

A) Privatization. 
B) Deregulation. 
C) Government failure. 
D) Market failure. 
A) Privatization. 
B) Deregulation. 
C) Government failure. 
D) Market failure.

Question 18

Table 28.1 $\begin{array}{|c|r|r|}
\hline\begin{array}{c}
\text { Reduction in Emissions } \
\text { (in tons) }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { SteelPlant }
\end{array} & \begin{array}{c}
\text { MC to Reduce Emissions by } \
\text { Paper Plant }
\end{array} \
\hline 1 & \$ 400 & \$ 200 \
\hline 2 & 500 & 280 \
\hline 3 & 600 & 320 \
\hline
\end{array}$
 Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The total cost to reduce emissions by a total of two tons could be as low as

Accepted Answer

A) $0. 
B) $480. 
C) $900. 
D) $600. 
A) $0. 
B) $480. 
C) $900. 
D) $600.

Question 19

Direct government regulation is generally preferable to altering market incentives for correcting pollution problems.

Accepted Answer

A) True 
 B)False

Question 20

Electric power plants account for over ________ percent of all thermal discharges.

Accepted Answer

A) 80 
B) 60 
C) 40 
D) 20 
A) 80 
B) 60 
C) 40 
D) 20

Exam 28: Environmental Protection

Two strategies for environmental protection are the alteration of market incentives and regulation.

External costs occur because

According to the EPA,using known and available technology,what percentage of the current air and water pollution could be eliminated with current resources?

Requiring that a firm engage in pollution abatement tends to reduce the firm's profits.

The behavior of profit-maximizing producers is guided by

Which of the following is not the case when social costs are greater than private costs?

One In the News article titled "Recycling Wastes Money " suggests that the government has decided to intervene by

Firms are highly likely to voluntarily engage in an efficient level of pollution abatement.

When external costs are present,

If the social costs of an economic activity are $120 and the private costs are $75,then the external costs of the activity are ________,and market failure ________.

Table 28.1 Reduction in Emissions (in tons) MC to Reduce Emissions by SteelPlant MC to Reduce Emissions by Paper Plant 1 \ 400 \ 200 2 500 280 3 600 320 Refer to Table 28.1.Suppose the government allows these two firms to trade pollution permits.The most efficient transaction would result in

The article "A "War on Coal"?" illustrates that

An emission charge is

Graphically depict market failure in the case where social costs exceed private costs,and show where social welfare is maximized.

The reason pollution occurs is because people tend to

If firms were charged the full social opportunity cost of the resources they used,there would be

When environmental regulations continue long after they are obsolete,there is

Direct government regulation is generally preferable to altering market incentives for correcting pollution problems.

Electric power plants account for over ________ percent of all thermal discharges.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

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Global Poverty

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If the social costs of an economic activity are $120 and the private costs are $75,then the external costs of the activity are ,and market failure .