Question 1

-In the above figure, the optimal level of pollution cleanup is

Accepted Answer

A)    . 
B)  Q2. 
C)    . 
D)    . 
A)    . 
B)  Q2. 
C)    . 
D)    .

Question 2

In economic analysis, the optimal level of pollution

Accepted Answer

A)  is always zero. 
B)  arises at the point at which the marginal benefit from further reduction equals the marginal cost of further reduction. 
C)  occurs at the point at which demand crosses the private cost supply curve. 
D)  should be determined by the private market without any government intervention. 
A)  is always zero. 
B)  arises at the point at which the marginal benefit from further reduction equals the marginal cost of further reduction. 
C)  occurs at the point at which demand crosses the private cost supply curve. 
D)  should be determined by the private market without any government intervention.

Question 3

Generally, as levels of pollution are reduced,

Accepted Answer

A)  marginal benefits from the reduction decrease. 
B)  marginal benefits from the reduction increase. 
C)  marginal costs from the reduction decrease. 
D)  marginal cost from the reduction are constant. 
A)  marginal benefits from the reduction decrease. 
B)  marginal benefits from the reduction increase. 
C)  marginal costs from the reduction decrease. 
D)  marginal cost from the reduction are constant.

Question 4

"Creating a free market for carbon-dioxide emission permits would only encourage firms to pollute more." Do you agree or disagree? Why?

Accepted Answer

Disagree. In a market of carbon-dioxide

Question 5

In the process of reducing pollutants in our environment, we are

Accepted Answer

A)  achieving a cleaner environment at no real cost. 
B)  causing higher levels of unemployment. 
C)  reallocating resources in an inefficient manner. 
D)  trading off less of other goods and services for a cleaner environment. 
A)  achieving a cleaner environment at no real cost. 
B)  causing higher levels of unemployment. 
C)  reallocating resources in an inefficient manner. 
D)  trading off less of other goods and services for a cleaner environment.

Question 6

"Private costs are borne by individuals while social costs are borne by society." Do you agree or disagree? Why?

Accepted Answer

Disagree. Social costs are pri

Question 7

Suppose there are two factories on a river, and both need clean water for their production processes. The upstream factory takes in clean water and dumps dirty water back into the river. The downstream firm must clean up the water it gets from the river before using it. In this situation,

Accepted Answer

A)  the private costs of the downstream factory are more than the private costs of the upstream factory, but for both factories private costs and social costs are the same. 
B)  the social costs are greater than the private costs for the upstream firm, while the social costs are less than the private costs for the downstream firm. 
C)  the upstream factory's private costs are less than its social costs, and its external costs are borne by the downstream factory. 
D)  the internal costs of the upstream factory are externalized by the downstream factory, which then passes them on to its customers. 
A)  the private costs of the downstream factory are more than the private costs of the upstream factory, but for both factories private costs and social costs are the same. 
B)  the social costs are greater than the private costs for the upstream firm, while the social costs are less than the private costs for the downstream firm. 
C)  the upstream factory's private costs are less than its social costs, and its external costs are borne by the downstream factory. 
D)  the internal costs of the upstream factory are externalized by the downstream factory, which then passes them on to its customers.

Question 8

Which of the following statements is true about the relationship among external, internal and social costs?

Accepted Answer

A)  External cost is the difference between social and internal costs. 
B)  Internal cost is the sum of social and external costs. 
C)  Social cost is the difference between internal and external costs. 
D)  None of the above. 
A)  External cost is the difference between social and internal costs. 
B)  Internal cost is the sum of social and external costs. 
C)  Social cost is the difference between internal and external costs. 
D)  None of the above.

Question 9

The Endangered Species Act is an attempt to

Accepted Answer

A)  protect endangered species against greedy loggers, farmers, and business people. 
B)  protect endangered species from the overzealousness of many environmentalists. 
C)  protect species endangered because there are no private property rights on them. 
D)  prevent some people from earning a good living. 
A)  protect endangered species against greedy loggers, farmers, and business people. 
B)  protect endangered species from the overzealousness of many environmentalists. 
C)  protect species endangered because there are no private property rights on them. 
D)  prevent some people from earning a good living.

Question 10

In the Kyoto Protocol, participating nations agreed to

Accepted Answer

A)  trade carbon-dioxide permits. 
B)  eliminate all emissions of greenhouse gases by 2020. 
C)  reduce their overall emissions of greenhouse gases between 1997 and 2020 to as much as 20 percent below 1990 levels. 
D)  buy greenhouse gas emission permits from developing nations. 
A)  trade carbon-dioxide permits. 
B)  eliminate all emissions of greenhouse gases by 2020. 
C)  reduce their overall emissions of greenhouse gases between 1997 and 2020 to as much as 20 percent below 1990 levels. 
D)  buy greenhouse gas emission permits from developing nations.

Question 11

The total costs of using a resource are made up of

Accepted Answer

A)  private costs only. 
B)  external costs only. 
C)  social costs only. 
D)  internal and private costs only. 
A)  private costs only. 
B)  external costs only. 
C)  social costs only. 
D)  internal and private costs only.

Question 12

The marginal benefit of pollution abatement is the

Accepted Answer

A)  additional cost to clean up an additional unit of pollution. 
B)  additional benefit from cleaning up an additional unit of pollution. 
C)  total social costs of pollution clean-up divided by total social benefits. 
D)  total social costs of pollution clean-up divided by the total units of clean-up. 
A)  additional cost to clean up an additional unit of pollution. 
B)  additional benefit from cleaning up an additional unit of pollution. 
C)  total social costs of pollution clean-up divided by total social benefits. 
D)  total social costs of pollution clean-up divided by the total units of clean-up.

Question 13

When a person drives an automobile, that individual is creating

Accepted Answer

A)  internal costs only. 
B)  private costs only because the individual pays for the insurance, gas etc. 
C)  external costs only. 
D)  social costs. 
A)  internal costs only. 
B)  private costs only because the individual pays for the insurance, gas etc. 
C)  external costs only. 
D)  social costs.

Question 14

Explain how the optimal quantity of air pollution is determined.

Accepted Answer

As the air becomes cleaner, the marginal

Question 15

Costs that are borne solely by the individuals who incur them are called

Accepted Answer

A)  private costs. 
B)  public costs. 
C)  social costs. 
D)  external costs. 
A)  private costs. 
B)  public costs. 
C)  social costs. 
D)  external costs.

Question 16

Internal costs are

Accepted Answer

A)  costs borne solely by the individuals who incur them. 
B)  costs borne by people in the same society as those who incur them. 
C)  costs borne by people working in the firm that incurs them. 
D)  all costs incurred in the marketplace. 
A)  costs borne solely by the individuals who incur them. 
B)  costs borne by people in the same society as those who incur them. 
C)  costs borne by people working in the firm that incurs them. 
D)  all costs incurred in the marketplace.

Question 17

Technological change that makes it easier to produce in a "cleaner" fashion would cause

Accepted Answer

A)  the marginal cost curve of pollution abatement to shift left, increasing the degree of air quality. 
B)  the marginal cost curve of pollution abatement to shift right, increasing the degree of air quality 
C)  the marginal benefit curve of pollution abatement to shift right, increasing the degree of air quality 
D)  the marginal benefit curve of pollution abatement to shift left, increasing the degree of air quality 
A)  the marginal cost curve of pollution abatement to shift left, increasing the degree of air quality. 
B)  the marginal cost curve of pollution abatement to shift right, increasing the degree of air quality 
C)  the marginal benefit curve of pollution abatement to shift right, increasing the degree of air quality 
D)  the marginal benefit curve of pollution abatement to shift left, increasing the degree of air quality

Question 18

A good that has external benefits associated with its production will be

Accepted Answer

A)  produced at the optimal level. 
B)  underproduced. 
C)  overproduced. 
D)  not produced. 
A)  produced at the optimal level. 
B)  underproduced. 
C)  overproduced. 
D)  not produced.

Question 19

Suppose a large tree on Adam's property blocks Eve's view of the ocean. Adam accepts Eve's offer of $15,000 to cut down the tree. This is an example of

Accepted Answer

A)  internalizing externalities via voluntary agreements. 
B)  a result of logrolling. 
C)  a consequence of a positive externality. 
D)  a consequence of private costs exceeding social costs. 
A)  internalizing externalities via voluntary agreements. 
B)  a result of logrolling. 
C)  a consequence of a positive externality. 
D)  a consequence of private costs exceeding social costs.

Question 20

Which of the following methods could be used to correct for external costs?

Accepted Answer

A)  Impose a tax or an effluent fee on the offenders. 
B)  Have the offender clean up the pollution it caused. 
C)  Require firms in the industry to install pollution control devices. 
D)  All of the above would be appropriate. 
A)  Impose a tax or an effluent fee on the offenders. 
B)  Have the offender clean up the pollution it caused. 
C)  Require firms in the industry to install pollution control devices. 
D)  All of the above would be appropriate.

Exam 31: Environmental Economics

-In the above figure, the optimal level of pollution cleanup is

In economic analysis, the optimal level of pollution

Generally, as levels of pollution are reduced,

"Creating a free market for carbon-dioxide emission permits would only encourage firms to pollute more." Do you agree or disagree? Why?

In the process of reducing pollutants in our environment, we are

"Private costs are borne by individuals while social costs are borne by society." Do you agree or disagree? Why?

Suppose there are two factories on a river, and both need clean water for their production processes. The upstream factory takes in clean water and dumps dirty water back into the river. The downstream firm must clean up the water it gets from the river before using it. In this situation,

Which of the following statements is true about the relationship among external, internal and social costs?

The Endangered Species Act is an attempt to

In the Kyoto Protocol, participating nations agreed to

The total costs of using a resource are made up of

The marginal benefit of pollution abatement is the

When a person drives an automobile, that individual is creating

Explain how the optimal quantity of air pollution is determined.

Costs that are borne solely by the individuals who incur them are called

Internal costs are

Technological change that makes it easier to produce in a "cleaner" fashion would cause

A good that has external benefits associated with its production will be

Suppose a large tree on Adam's property blocks Eve's view of the ocean. Adam accepts Eve's offer of $15,000 to cut down the tree. This is an example of

Which of the following methods could be used to correct for external costs?

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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