Question 1

Externalities are generally reflected in market prices.

Accepted Answer

A) True 
 B)False

Question 2

In Figure 28.1,if the rate of output is 320 units,

Accepted Answer

A) Social costs exceed private costs at this rate of output. 
B) There is government failure. 
C) Pollution costs are internalized. 
D) Output is less than the socially optimal level. 
A) Social costs exceed private costs at this rate of output. 
B) There is government failure. 
C) Pollution costs are internalized. 
D) Output is less than the socially optimal level.

Question 3

Table 28.2 $$\begin{array} { | l | r | r | r | r | } 
\hline &{ \text { Firm A } } & { \text { Firm B } } & { \text { Firm C } } & { \text { Firm D } } \
\hline \text { External Costs } & \$0& \$& 175 & \$\
\hline \text { Private Costs } & 400 & 250 & 175 & 200 \
\hline \text { Social Costs } & & 350 & \$ & 250 \
\hline
\end{array}$$
 In Table 28.2,which firm has the lowest absolute level of costs borne directly by the producer?

Accepted Answer

A) Firm A. 
B) Firm B. 
C) Firm C. 
D) Firm D. 
A) Firm A. 
B) Firm B. 
C) Firm C. 
D) Firm D.

Question 4

The market tends to overproduce goods that have external costs because

Accepted Answer

A) Producers do not take into account those external costs that they don't have to pay. 
B) Producers experience higher costs than society. 
C) The government is not able to produce these goods. 
D) Producers cannot keep the goods from consumers who don't pay,so they produce a greater amount. 
A) Producers do not take into account those external costs that they don't have to pay. 
B) Producers experience higher costs than society. 
C) The government is not able to produce these goods. 
D) Producers cannot keep the goods from consumers who don't pay,so they produce a greater amount.

Question 5

When calculating the costs of environmental cleanup,what factors should be taken into consideration?

Accepted Answer

For a specific environmental cleanup pro

Question 6

Pollution abatement programs result in lower prices being charged for the polluting firm's products.

Accepted Answer

A) True 
 B)False

Question 7

Excessive process regulation may

Accepted Answer

A) Raise the costs of environmental cleanup. 
B) Encourage cost-saving innovation. 
C) Cause market failure. 
D) Reduce pollution most efficiently. 
A) Raise the costs of environmental cleanup. 
B) Encourage cost-saving innovation. 
C) Cause market failure. 
D) Reduce pollution most efficiently.

Question 8

A five-cent container deposit on bottles

Accepted Answer

A) Increases the price of containers that do not use recycled materials. 
B) Has no impact on the price of recycled materials. 
C) Increases the price of recycled materials and thus discourages recycling. 
D) Decreases the price of recycled materials and thus encourages recycling. 
A) Increases the price of containers that do not use recycled materials. 
B) Has no impact on the price of recycled materials. 
C) Increases the price of recycled materials and thus discourages recycling. 
D) Decreases the price of recycled materials and thus encourages recycling.

Question 9

According to EPA studies,the United States generates over ________ billion tons of solid waste each year.

Accepted Answer

A) 50 
B) 100 
C) 5 
D) 25 
A) 50 
B) 100 
C) 5 
D) 25

Question 10

Requiring that a firm engage in pollution abatement will likely do all of the following except

Accepted Answer

A) Reduce profits for the firm. 
B) Reduce the amount of output the firm produces. 
C) Shift the firm's MC curve upward. 
D) Shift the firm's ATC curve downward. 
A) Reduce profits for the firm. 
B) Reduce the amount of output the firm produces. 
C) Shift the firm's MC curve upward. 
D) Shift the firm's ATC curve downward.

Question 11

A market for power plant pollution rights will

Accepted Answer

A) Reduce the total amount of pollution by power plants beyond the required reduction level. 
B) Lower pollution control costs. 
C) Result in all power plants meeting pollution standards at lower costs. 
D) Increase the total amount of pollution by power plants. 
A) Reduce the total amount of pollution by power plants beyond the required reduction level. 
B) Lower pollution control costs. 
C) Result in all power plants meeting pollution standards at lower costs. 
D) Increase the total amount of pollution by power plants.

Question 12

The costs of pollution control will

Accepted Answer

A) Always be borne entirely by the pollution producer. 
B) Always be passed on completely to the consumer. 
C) Be distributed between the producer and the consumer. 
D) Be borne entirely by the taxpayers in the United States. 
A) Always be borne entirely by the pollution producer. 
B) Always be passed on completely to the consumer. 
C) Be distributed between the producer and the consumer. 
D) Be borne entirely by the taxpayers in the United States.

Question 13

External costs occur only with production and not consumption.

Accepted Answer

A) True 
 B)False

Question 14

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.What would be the price of a permit to emit the second ton of pollutants?

Accepted Answer

A) Less than $200. 
B) Between $200 and $280. 
C) Between $280 and $400. 
D) More than $500. 
A) Less than $200. 
B) Between $200 and $280. 
C) Between $280 and $400. 
D) More than $500.

Question 15

If a firm that pollutes wants to maximize profits,it will produce where

Accepted Answer

A) The social value of production equals the social cost of production. 
B) Private and social costs are equal. 
C) Marginal revenue and private marginal cost are equal. 
D) Social benefits exceed social costs. 
A) The social value of production equals the social cost of production. 
B) Private and social costs are equal. 
C) Marginal revenue and private marginal cost are equal. 
D) Social benefits exceed social costs.

Question 16

Pollution will decrease when firms are forced to internalize externalities as a production cost.

Accepted Answer

A) True 
 B)False

Question 17

Assigning prices to environmental damage is relatively

Accepted Answer

A) Easy because of current scientific techniques. 
B) Easy because all items have a market value. 
C) Difficult because many items have intangible benefits and thus do not have a market price. 
D) Easy because the government has the legislative authority to assign prices. 
A) Easy because of current scientific techniques. 
B) Easy because all items have a market value. 
C) Difficult because many items have intangible benefits and thus do not have a market price. 
D) Easy because the government has the legislative authority to assign prices.

Question 18

Markets tend to overproduce goods that generate external costs.

Accepted Answer

A) True 
 B)False

Question 19

External costs occur when people litter.

Accepted Answer

A) True 
 B)False

Question 20

All of the following are negative externalities in production except

Accepted Answer

A) Secondhand smoke in a restaurant. 
B) Acid rain produced by power plants. 
C) Carbon dioxide emissions from the production of steel. 
D) Thermal pollution into a river from an electric power plant. 
A) Secondhand smoke in a restaurant. 
B) Acid rain produced by power plants. 
C) Carbon dioxide emissions from the production of steel. 
D) Thermal pollution into a river from an electric power plant.

Exam 28: Environmental Protection

Externalities are generally reflected in market prices.

In Figure 28.1,if the rate of output is 320 units,

The market tends to overproduce goods that have external costs because

When calculating the costs of environmental cleanup,what factors should be taken into consideration?

Pollution abatement programs result in lower prices being charged for the polluting firm's products.

Excessive process regulation may

A five-cent container deposit on bottles

According to EPA studies,the United States generates over ________ billion tons of solid waste each year.

Requiring that a firm engage in pollution abatement will likely do all of the following except

A market for power plant pollution rights will

The costs of pollution control will

External costs occur only with production and not consumption.

If a firm that pollutes wants to maximize profits,it will produce where

Pollution will decrease when firms are forced to internalize externalities as a production cost.

Assigning prices to environmental damage is relatively

Markets tend to overproduce goods that generate external costs.

External costs occur when people litter.

All of the following are negative externalities in production except

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

International Finance

Global Poverty

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