Question 1

Explain some important situations where direct controls have a clear advantage over taxes.

Accepted Answer

1. Where an emission is so dangerous tha

Question 2

Voluntary programs are dependable ways to protect the environment.

Accepted Answer

A) True 
 B)False

Question 3

When pollution emissions can be measured, taxation will tend to be more effective than any other method of controlling pollution.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following has also been called the command and control approach?

Accepted Answer

A) Direct controls 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Taxes on pollution 
A) Direct controls 
B) Voluntary compliance 
C) Tradable emissions permits 
D) Taxes on pollution

Question 5

Economists use a resource's price as an indicator of its relative scarcity.

Accepted Answer

A) True 
 B)False

Question 6

Environmental quality is

Accepted Answer

A) a public good. 
B) best improved through government's prohibiting externalities. 
C) maximized when costs of pollution are external. 
D) minimized when optimal levels of pollution are produced. 
A) a public good. 
B) best improved through government's prohibiting externalities. 
C) maximized when costs of pollution are external. 
D) minimized when optimal levels of pollution are produced.

Question 7

Many states charge a 10-cent deposit on every can of soda sold. A purchaser pays an extra 10 cents per can and will get his or her money back by returning the empty can to a store. This policy encourages recycling by

Accepted Answer

A) lowering the willingness to pay for recycling materials. 
B) shifting in the demand curve for canned soda. 
C) raising the opportunity cost of discarding empty cans. 
D) taxing the production of canned soda. 
A) lowering the willingness to pay for recycling materials. 
B) shifting in the demand curve for canned soda. 
C) raising the opportunity cost of discarding empty cans. 
D) taxing the production of canned soda.

Question 8

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy. Which of the following statements was probably made by an economist?

Accepted Answer

A) "We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved." 
B) "Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost." 
C) "Pollution is a moral issue that cannot be reduced to dollars and cents." 
D) "Clean air and water are things we can buy-if the price is right." 
A) "We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved." 
B) "Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost." 
C) "Pollution is a moral issue that cannot be reduced to dollars and cents." 
D) "Clean air and water are things we can buy-if the price is right."

Question 9

Empirical evidence indicates that imposing taxes on polluting emissions by firms

Accepted Answer

A) has no effect on the amount of pollution emitted. 
B) does not give the government leeway to regulate more dangerous emissions differently than less dangerous emissions. 
C) does reduce the amount of pollution emitted. 
D) discourages firms from investing in new methods of pollution abatement. 
A) has no effect on the amount of pollution emitted. 
B) does not give the government leeway to regulate more dangerous emissions differently than less dangerous emissions. 
C) does reduce the amount of pollution emitted. 
D) discourages firms from investing in new methods of pollution abatement.

Question 10

Direct controls

Accepted Answer

A) rely on the criminal justice system for enforcement. 
B) will be successful if a penalty is put in place. 
C) can easily be enforced. 
D) is a comparable method to emissions taxes. 
A) rely on the criminal justice system for enforcement. 
B) will be successful if a penalty is put in place. 
C) can easily be enforced. 
D) is a comparable method to emissions taxes.

Question 11

A failure of the pricing system has led to pollution.

Accepted Answer

A) True 
 B)False

Question 12

The worst and most difficult to extract resources are used first.

Accepted Answer

A) True 
 B)False

Question 13

The major problem with direct controls as an environmental protection measure has been

Accepted Answer

A) insufficient enforcement. 
B) special interest legislation. 
C) illegal dumping. 
D) legislation that lack substantial penalties. 
A) insufficient enforcement. 
B) special interest legislation. 
C) illegal dumping. 
D) legislation that lack substantial penalties.

Question 14

Rising prices for a natural resource stimulate

Accepted Answer

A) the development of complements for the resource. 
B) the development of substitutes for the resource. 
C) the development of externalities from the resource. 
D) the tendency to consume before the resource expires. 
A) the development of complements for the resource. 
B) the development of substitutes for the resource. 
C) the development of externalities from the resource. 
D) the tendency to consume before the resource expires.

Question 15

Rising prices of resources leads to inefficient resource use by industry.

Accepted Answer

A) True 
 B)False

Question 16

Based on economic theory, which statement is incorrect regarding the causes of pollution?

Accepted Answer

A) A pricing system failure 
B) The public interest requires that pollution to be reduced below its market level. 
C) A firm pollutes the air and water because it is not charged for their use. 
D) The levels of pollution in former centrally planned economies are better maintained than in market economies. 
A) A pricing system failure 
B) The public interest requires that pollution to be reduced below its market level. 
C) A firm pollutes the air and water because it is not charged for their use. 
D) The levels of pollution in former centrally planned economies are better maintained than in market economies.

Question 17

What is true of depletable resources is that

Accepted Answer

A) increasing scarcity leads to their total disappearance. 
B) they are depleted by gradually using up the supply of homogeneous resources, every unit of which is equally available. 
C) generally the most accessible and cheapest sources are used up so that new supplies become more costly. 
D) their prices must rise at the average rate of inflation. 
A) increasing scarcity leads to their total disappearance. 
B) they are depleted by gradually using up the supply of homogeneous resources, every unit of which is equally available. 
C) generally the most accessible and cheapest sources are used up so that new supplies become more costly. 
D) their prices must rise at the average rate of inflation.

Question 18

Under EPA regulations, a factory

Accepted Answer

A) must pay for the right to pollute. 
B) can increase air pollution from its grinding process if it decreases air pollution from its smelting process. 
C) cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. 
D) can pay off regulators in order to continue operations business as usual. 
A) must pay for the right to pollute. 
B) can increase air pollution from its grinding process if it decreases air pollution from its smelting process. 
C) cannot under any circumstances build a polluting factory in an area where pollution standards are not being met by existing firms. 
D) can pay off regulators in order to continue operations business as usual.

Question 19

Economic theory would suggest that rising oil prices would reduce the amount of oil exploration and extraction.

Accepted Answer

A) True 
 B)False

Question 20

Air quality in most U.S. cities has ____ since World War II.

Accepted Answer

A) worsened 
B) improved 
C) remained unchanged 
D) improved slightly before a recent deterioration 
A) worsened 
B) improved 
C) remained unchanged 
D) improved slightly before a recent deterioration

Exam 16: Externalities, Externaliteis, the Environment, and Natural Resources

Explain some important situations where direct controls have a clear advantage over taxes.

Voluntary programs are dependable ways to protect the environment.

When pollution emissions can be measured, taxation will tend to be more effective than any other method of controlling pollution.

Which of the following has also been called the command and control approach?

Economists use a resource's price as an indicator of its relative scarcity.

Environmental quality is

Many states charge a 10-cent deposit on every can of soda sold. A purchaser pays an extra 10 cents per can and will get his or her money back by returning the empty can to a store. This policy encourages recycling by

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy. Which of the following statements was probably made by an economist?

Empirical evidence indicates that imposing taxes on polluting emissions by firms

Direct controls

A failure of the pricing system has led to pollution.

The worst and most difficult to extract resources are used first.

The major problem with direct controls as an environmental protection measure has been

Rising prices for a natural resource stimulate

Rising prices of resources leads to inefficient resource use by industry.

Based on economic theory, which statement is incorrect regarding the causes of pollution?

What is true of depletable resources is that

Under EPA regulations, a factory

Economic theory would suggest that rising oil prices would reduce the amount of oil exploration and extraction.

Air quality in most U.S. cities has ____ since World War II.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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