Question 1

The marginal benefit from pollution abatement

Accepted Answer

A)  increases as pollution abatement increases because people learn to want an even cleaner environment as the environment gets cleaner. 
B)  decreases as pollution abatement increases because of the law of diminishing marginal product. 
C)  is constant as pollution abatement increases because pollution abatement is valued for its own sake and not for the utility it provides. 
D)  decreases as pollution abatement increases because of the law of diminishing marginal utility. 
A)  increases as pollution abatement increases because people learn to want an even cleaner environment as the environment gets cleaner. 
B)  decreases as pollution abatement increases because of the law of diminishing marginal product. 
C)  is constant as pollution abatement increases because pollution abatement is valued for its own sake and not for the utility it provides. 
D)  decreases as pollution abatement increases because of the law of diminishing marginal utility.

Question 2

John raises bees to pollinate his apple trees. One of the bees just stung him. This is a(n)

Accepted Answer

A)  private cost. 
B)  social cost. 
C)  internality. 
D)  common property. 
A)  private cost. 
B)  social cost. 
C)  internality. 
D)  common property.

Question 3

If the external costs of production are not taken into account, then production will

Accepted Answer

A)  be less than socially desirable. 
B)  be more than socially desirable. 
C)  be the same since only prices are affected by externalities. 
D)  cease. 
A)  be less than socially desirable. 
B)  be more than socially desirable. 
C)  be the same since only prices are affected by externalities. 
D)  cease.

Question 4

The Black Ash Steel Company's plant belches large quantities of noxious fumes and black ash into the air. Residents in the surrounding area have higher medical bills because of Black Ash's pollution. If the firm is forced to pay the social costs of its production,

Accepted Answer

A)  the amount of steel it produces will increase in order to pay the additional costs. 
B)  the price it charges for its steel will decrease. 
C)  its supply curve will shift to the right. 
D)  it will produce less and charge more for its steel. 
A)  the amount of steel it produces will increase in order to pay the additional costs. 
B)  the price it charges for its steel will decrease. 
C)  its supply curve will shift to the right. 
D)  it will produce less and charge more for its steel.

Question 5

Which of the following constitutes an external cost of driving an automobile?

Accepted Answer

A)  insurance 
B)  fuel 
C)  pollution 
D)  wear and tear 
A)  insurance 
B)  fuel 
C)  pollution 
D)  wear and tear

Question 6

All of the following are private costs of operating an automobile EXCEPT

Accepted Answer

A)  gasoline for the car. 
B)  depreciation of the vehicle. 
C)  car insurance. 
D)  harm to the environment from emissions. 
A)  gasoline for the car. 
B)  depreciation of the vehicle. 
C)  car insurance. 
D)  harm to the environment from emissions.

Question 7

Which of the following statements concerning pollution is correct?

Accepted Answer

A)  Economic efficiency requires that pollution be completely eliminated. 
B)  Economic efficiency dictates that the optimal amount of pollution arises at the point at which price equals private marginal cost. 
C)  Pollution should be reduced to the point at which the marginal benefit from further reduction equals the marginal cost of further reduction. 
D)  Pollution should be reduced to the extent necessary to return production to the production possibilities frontier. 
A)  Economic efficiency requires that pollution be completely eliminated. 
B)  Economic efficiency dictates that the optimal amount of pollution arises at the point at which price equals private marginal cost. 
C)  Pollution should be reduced to the point at which the marginal benefit from further reduction equals the marginal cost of further reduction. 
D)  Pollution should be reduced to the extent necessary to return production to the production possibilities frontier.

Question 8

The problem associated with endangered populations of migratory birds is the

Accepted Answer

A)  common property problem. 
B)  free rider problem. 
C)  deadweight loss problem. 
D)  inefficient production problem. 
A)  common property problem. 
B)  free rider problem. 
C)  deadweight loss problem. 
D)  inefficient production problem.

Question 9

An externality that is not fully paid by the individual using an automobile is

Accepted Answer

A)  insurance for the vehicle. 
B)  gasoline for the vehicle. 
C)  air pollution from the vehicle. 
D)  operation of the vehicle. 
A)  insurance for the vehicle. 
B)  gasoline for the vehicle. 
C)  air pollution from the vehicle. 
D)  operation of the vehicle.

Question 10

Which of the following is NOT a possible solution to the problem of pollution?

Accepted Answer

A)  Converting a resource that is communally owned into a privately owned resource. 
B)  Imposing a tax on polluters that is related to the amount of pollution. 
C)  Regulating the amount of pollution that a firm can produce. 
D)  Subsidizing the costs of production of activities that generate pollution. 
A)  Converting a resource that is communally owned into a privately owned resource. 
B)  Imposing a tax on polluters that is related to the amount of pollution. 
C)  Regulating the amount of pollution that a firm can produce. 
D)  Subsidizing the costs of production of activities that generate pollution.

Question 11

To find the social cost of an action, add together

Accepted Answer

A)  the external and accounting costs. 
B)  the private costs and the internal costs. 
C)  the external costs and the internal costs. 
D)  the internal costs and the private opportunity costs. 
A)  the external and accounting costs. 
B)  the private costs and the internal costs. 
C)  the external costs and the internal costs. 
D)  the internal costs and the private opportunity costs.

Question 12

It is assumed that the marginal benefit of air cleanliness falls with the degree of cleanliness since

Accepted Answer

A)  the marginal cost of air cleanliness increases. 
B)  air cleanliness is a public good and not a private good. 
C)  the marginal utility of air cleanliness falls with the degree of cleanliness. 
D)  the generation of pollution should be considered an externality. 
A)  the marginal cost of air cleanliness increases. 
B)  air cleanliness is a public good and not a private good. 
C)  the marginal utility of air cleanliness falls with the degree of cleanliness. 
D)  the generation of pollution should be considered an externality.

Question 13

What are the private costs of driving an automobile? What are the external costs?

Accepted Answer

The private costs include gas, maintenan

Question 14

The Kyoto Protocol was signed by participating nations in

Accepted Answer

A)  1872. 
B)  1972. 
C)  1997. 
D)  2007. 
A)  1872. 
B)  1972. 
C)  1997. 
D)  2007.

Question 15

John raises bees to pollinate his orchard. A couple of bees which escaped ended up pollinating his neighbor's orchard, so

Accepted Answer

A)  John's neighbor has received an internal cost of John's bee-keeping. 
B)  John's neighbor has received an external cost of John's bee-keeping. 
C)  John's neighbor has received an external benefit of John's bee-keeping. 
D)  None of the above is correct. 
A)  John's neighbor has received an internal cost of John's bee-keeping. 
B)  John's neighbor has received an external cost of John's bee-keeping. 
C)  John's neighbor has received an external benefit of John's bee-keeping. 
D)  None of the above is correct.

Question 16

In economic analysis, air pollution, water pollution, and scenery destruction are considered to be

Accepted Answer

A)  externalities. 
B)  internalities. 
C)  private costs. 
D)  marginal benefits. 
A)  externalities. 
B)  internalities. 
C)  private costs. 
D)  marginal benefits.

Question 17

-Refer to the above figure.   is the supply curve that includes only private costs.   is the supply curve that includes social costs. From this figure we know that

Accepted Answer

A)  an external benefit exists. 
B)  private costs are less than social costs. 
C)  private costs equal social costs. 
D)  private costs are greater than social costs. 
A)  an external benefit exists. 
B)  private costs are less than social costs. 
C)  private costs equal social costs. 
D)  private costs are greater than social costs.

Question 18

Suppose cars are taxed according to the amount of pollution they emit per gallon of gasoline consumed. We would expect to observe all of the following EXCEPT

Accepted Answer

A)  an increase in quantity demanded of less-polluting automobiles and a reduction in quantity demanded of more-polluting automobiles. 
B)  an increase in quantity demanded of more fuel-efficient cars. 
C)  an increase in production of automobiles that were less polluting. 
D)  an increase in the miles driven. 
A)  an increase in quantity demanded of less-polluting automobiles and a reduction in quantity demanded of more-polluting automobiles. 
B)  an increase in quantity demanded of more fuel-efficient cars. 
C)  an increase in production of automobiles that were less polluting. 
D)  an increase in the miles driven.

Question 19

When social and private costs differ, economists state that

Accepted Answer

A)  there will be economic profit in the society. 
B)  the society will produce inside the production possibilities frontier. 
C)  there is an externality. 
D)  there is not an efficiency problem but an equity problem. 
A)  there will be economic profit in the society. 
B)  the society will produce inside the production possibilities frontier. 
C)  there is an externality. 
D)  there is not an efficiency problem but an equity problem.

Question 20

Explain how a market for pollutant emission allowances can induce firms to reduce the amount of emissions.

Accepted Answer

In the market for emission allowances, f

Exam 31: Environmental Economics

The marginal benefit from pollution abatement

John raises bees to pollinate his apple trees. One of the bees just stung him. This is a(n)

If the external costs of production are not taken into account, then production will

The Black Ash Steel Company's plant belches large quantities of noxious fumes and black ash into the air. Residents in the surrounding area have higher medical bills because of Black Ash's pollution. If the firm is forced to pay the social costs of its production,

Which of the following constitutes an external cost of driving an automobile?

All of the following are private costs of operating an automobile EXCEPT

Which of the following statements concerning pollution is correct?

The problem associated with endangered populations of migratory birds is the

An externality that is not fully paid by the individual using an automobile is

Which of the following is NOT a possible solution to the problem of pollution?

To find the social cost of an action, add together

It is assumed that the marginal benefit of air cleanliness falls with the degree of cleanliness since

What are the private costs of driving an automobile? What are the external costs?

The Kyoto Protocol was signed by participating nations in

John raises bees to pollinate his orchard. A couple of bees which escaped ended up pollinating his neighbor's orchard, so

In economic analysis, air pollution, water pollution, and scenery destruction are considered to be

-Refer to the above figure. is the supply curve that includes only private costs. is the supply curve that includes social costs. From this figure we know that

Suppose cars are taxed according to the amount of pollution they emit per gallon of gasoline consumed. We would expect to observe all of the following EXCEPT

When social and private costs differ, economists state that

Explain how a market for pollutant emission allowances can induce firms to reduce the amount of emissions.

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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