Question 1

Which of the following is more likely to result in better pollution reduction technologies?

Accepted Answer

A)  environmental subsidies to nonpolluters 
B)  transferable pollution rights 
C)  media attention directed at the worst polluters 
D)  pollution tax 
A)  environmental subsidies to nonpolluters 
B)  transferable pollution rights 
C)  media attention directed at the worst polluters 
D)  pollution tax B

Question 2

Which of the following is NOT one of the three objectives of a pollution control policy?

Accepted Answer

A)  motivating advances in abatement technology 
B)  requiring polluting firms to bear all the costs of pollution abatement 
C)  achieving the efficient level of pollution 
D)  achieving pollution reduction at least cost 
A)  motivating advances in abatement technology 
B)  requiring polluting firms to bear all the costs of pollution abatement 
C)  achieving the efficient level of pollution 
D)  achieving pollution reduction at least cost B

Question 3

FIGURE 12-3
  
-Refer to Figure 12-3, which represents the market for pulp, the production of which creates dioxin emissions. Suppose the market is currently producing at the profit maximizing point and the government wishes to impose a tax to correct the overallocation of resources caused by the externality. What per unit tax would accomplish this goal?

Accepted Answer

A)  $15 
B)  $25 
C)  $40 
D)  $190 
A)  $15 
B)  $25 
C)  $40 
D)  $190 C

Question 4

FIGURE 12-2
  
-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What is the optimal amount of pollution control?

Accepted Answer

A)  0 
B)  Q1 
C)  Q2 
D)  Q3 
A)  0 
B)  Q1 
C)  Q2 
D)  Q3

Question 5

Which of the following is NOT an externality associated with the production of steel?

Accepted Answer

A)  soot that is deposited on the cars of nearby homeowners 
B)  dead fish as a result of chemical discharge into river systems 
C)  respiratory disease caused by air pollution 
D)  higher wages as a result of the increase in demand for labour 
A)  soot that is deposited on the cars of nearby homeowners 
B)  dead fish as a result of chemical discharge into river systems 
C)  respiratory disease caused by air pollution 
D)  higher wages as a result of the increase in demand for labour

Question 6

FIGURE 12-1
  
-Refer to Figure 12-1, which represents a hypothetical market for steel. What represents the socially optimal price and output combination?

Accepted Answer

A)  OG; OD 
B)  OG; OE 
C)  OH; OD 
D)  OF; OD 
A)  OG; OD 
B)  OG; OE 
C)  OH; OD 
D)  OF; OD

Question 7

In a cap and trade system, who has the most incentive to develop pollution abatement technologies?

Accepted Answer

A)  The polluters, since they will have to buy permits to pollute over a certain amount. 
B)  The government, since they are responsible for setting up the system. 
C)  The people that directly suffer from the pollution, since they are the ones who are negatively affected. 
D)  The consumers, since they are the final users of the product. 
A)  The polluters, since they will have to buy permits to pollute over a certain amount. 
B)  The government, since they are responsible for setting up the system. 
C)  The people that directly suffer from the pollution, since they are the ones who are negatively affected. 
D)  The consumers, since they are the final users of the product.

Question 8

Suppose that your neighbour's dog barks every morning and wakes you up. The marginal benefit of the sleep that you lost is $100. Your neighbour's marginal benefit from owning the dog is $120. Suggest how a private transaction might make you both better off. What if the marginal benefit of your sleep was $120 and your neighbour's marginal benefit from owning the dog was $100.

Accepted Answer

In the first scenario, you neighbour cou

Question 9

FIGURE 12-2
  
-Refer to Figure 12-2, which represents the costs and benefits of pollution control. What might overly stringent pollution-control legislation result in the marginal social benefit being equal to?

Accepted Answer

A)  0 
B)  P1 
C)  P2 
D)  P3 
A)  0 
B)  P1 
C)  P2 
D)  P3

Question 10

Why are negative externalities difficult to internalize in practice?

Accepted Answer

A)  because the cost of cleaning up the effects of pollution is overstated 
B)  because the marginal cost of socially owned resources is zero 
C)  because no markets exist to measure the cost of the externality 
D)  because the deadweight loss is subjective in nature 
A)  because the cost of cleaning up the effects of pollution is overstated 
B)  because the marginal cost of socially owned resources is zero 
C)  because no markets exist to measure the cost of the externality 
D)  because the deadweight loss is subjective in nature

Question 11

An externality exists when an individual other than the demander receives part of the benefits.

Accepted Answer

A) True 
 B)False

Question 12

Your neighbour's dog barks and disturbs your sleep. According to the Coase theorem, in which of the following scenarios can you and your neighbour NOT come to a resolution?

Accepted Answer

A)  when your marginal benefit of sleep is exactly equal to your neighbour's marginal benefit of owning a dog 
B)  when your marginal benefit of sleep is greater than your neighbour's marginal benefit of owning a dog 
C)  when your marginal benefit of sleep is greater than your neighbour's marginal cost of owning a dog 
D)  when your marginal benefit of sleep is less than your neighbour's marginal benefit of owning a dog 
A)  when your marginal benefit of sleep is exactly equal to your neighbour's marginal benefit of owning a dog 
B)  when your marginal benefit of sleep is greater than your neighbour's marginal benefit of owning a dog 
C)  when your marginal benefit of sleep is greater than your neighbour's marginal cost of owning a dog 
D)  when your marginal benefit of sleep is less than your neighbour's marginal benefit of owning a dog

Question 13

FIGURE 12-1
  
-Refer to Figure 12-1, which represents a hypothetical market for steel. To internalize the externality, what is the total amount that the firms have to pay society equal to?

Accepted Answer

A)  AC 
B)  ACB 
C)  OHAD 
D)  FHAC 
A)  AC 
B)  ACB 
C)  OHAD 
D)  FHAC

Question 14

Since it is nearly impossible to measure negative externalities, it is better to ignore them and allow the market solution to continue.

Accepted Answer

A) True 
 B)False

Question 15

FIGURE 12-3
  
-Refer to Figure 12-3, which represents the market for pulp, the production of which creates dioxin emissions. What is the externality per tonne of pulp?

Accepted Answer

A)  $15 
B)  $25 
C)  $40 
D)  $190 
A)  $15 
B)  $25 
C)  $40 
D)  $190

Question 16

What is the most likely outcome when trying to eliminate pollution?

Accepted Answer

A)  Abatement will exhibit diminishing returns. 
B)  Abatement will be subject to diminishing average cost. 
C)  Firms will increase output in the short run. 
D)  Public opinion will matter more to firms than profit maximization. 
A)  Abatement will exhibit diminishing returns. 
B)  Abatement will be subject to diminishing average cost. 
C)  Firms will increase output in the short run. 
D)  Public opinion will matter more to firms than profit maximization.

Question 17

The socially optimal level of pollution is none at all.

Accepted Answer

A) True 
 B)False

Question 18

FIGURE 12-2
  
-Refer to Figure 12-2, which represents the costs and benefits of pollution control. In the absence of pollution control legislation, at what point will firms spend on pollution-control measures?

Accepted Answer

A)  P1Q1 
B)  P3Q1 
C)  P3Q3 
D)  P1Q3 
A)  P1Q1 
B)  P3Q1 
C)  P3Q3 
D)  P1Q3

Question 19

Which of the following is an externality associated with owning a dog?

Accepted Answer

A)  the noise your neighbours hear when your dog barks 
B)  protection from burglars 
C)  time spent walking the dog 
D)  dog hair in the carpet 
A)  the noise your neighbours hear when your dog barks 
B)  protection from burglars 
C)  time spent walking the dog 
D)  dog hair in the carpet

Question 20

FIGURE 12-1
  
-Refer to Figure 12-1, which represents a hypothetical market for steel. At the socially optimal output level, what are internal costs equal to?

Accepted Answer

A)  OG 
B)  AC 
C)  OH 
D)  OF 
A)  OG 
B)  AC 
C)  OH 
D)  OF

Which of the following is more likely to result in better pollution reduction technologies?

Which of the following is NOT one of the three objectives of a pollution control policy?

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. What is the optimal amount of pollution control?

Which of the following is NOT an externality associated with the production of steel?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. What represents the socially optimal price and output combination?

In a cap and trade system, who has the most incentive to develop pollution abatement technologies?

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. What might overly stringent pollution-control legislation result in the marginal social benefit being equal to?

Why are negative externalities difficult to internalize in practice?

An externality exists when an individual other than the demander receives part of the benefits.

Your neighbour's dog barks and disturbs your sleep. According to the Coase theorem, in which of the following scenarios can you and your neighbour NOT come to a resolution?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. To internalize the externality, what is the total amount that the firms have to pay society equal to?

Since it is nearly impossible to measure negative externalities, it is better to ignore them and allow the market solution to continue.

FIGURE 12-3 -Refer to Figure 12-3, which represents the market for pulp, the production of which creates dioxin emissions. What is the externality per tonne of pulp?

What is the most likely outcome when trying to eliminate pollution?

The socially optimal level of pollution is none at all.

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. In the absence of pollution control legislation, at what point will firms spend on pollution-control measures?

Which of the following is an externality associated with owning a dog?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. At the socially optimal output level, what are internal costs equal to?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

Filters

Exam 12: The Environment

Which of the following is more likely to result in better pollution reduction technologies?

Which of the following is NOT one of the three objectives of a pollution control policy?

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. What is the optimal amount of pollution control?

Which of the following is NOT an externality associated with the production of steel?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. What represents the socially optimal price and output combination?

In a cap and trade system, who has the most incentive to develop pollution abatement technologies?

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. What might overly stringent pollution-control legislation result in the marginal social benefit being equal to?

Why are negative externalities difficult to internalize in practice?

An externality exists when an individual other than the demander receives part of the benefits.

Your neighbour's dog barks and disturbs your sleep. According to the Coase theorem, in which of the following scenarios can you and your neighbour NOT come to a resolution?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. To internalize the externality, what is the total amount that the firms have to pay society equal to?

Since it is nearly impossible to measure negative externalities, it is better to ignore them and allow the market solution to continue.

FIGURE 12-3 -Refer to Figure 12-3, which represents the market for pulp, the production of which creates dioxin emissions. What is the externality per tonne of pulp?

What is the most likely outcome when trying to eliminate pollution?

The socially optimal level of pollution is none at all.

FIGURE 12-2 -Refer to Figure 12-2, which represents the costs and benefits of pollution control. In the absence of pollution control legislation, at what point will firms spend on pollution-control measures?

Which of the following is an externality associated with owning a dog?

FIGURE 12-1 -Refer to Figure 12-1, which represents a hypothetical market for steel. At the socially optimal output level, what are internal costs equal to?

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Elasticity

Market Efficiency and Market Failure

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labour Markets and the Distribution of Income

Filters