Question 1

Social costs are

Accepted Answer

A)  costs borne by society whenever a resource-using action takes place. 
B)  costs incurred by government and borne by all taxpayers. 
C)  costs incurred in governmental welfare programs. 
D)  external costs minus internal costs. 
A)  costs borne by society whenever a resource-using action takes place. 
B)  costs incurred by government and borne by all taxpayers. 
C)  costs incurred in governmental welfare programs. 
D)  external costs minus internal costs.

Question 2

Which of the following is not a private cost?

Accepted Answer

A)  The health insurance costs a firm must pay for its employees. 
B)  The pollution caused by a firm dumping its wastes into the river. 
C)  The coffee pot that Jan dropped and broke this morning. 
D)  The amount that a firm must pay for raw materials to make its product. 
A)  The health insurance costs a firm must pay for its employees. 
B)  The pollution caused by a firm dumping its wastes into the river. 
C)  The coffee pot that Jan dropped and broke this morning. 
D)  The amount that a firm must pay for raw materials to make its product.

Question 3

An example of the external costs due to automobile driving is

Accepted Answer

A)  wear and tear on toll roads. 
B)  the opportunity cost of the driver's time. 
C)  air pollution due to exhaust fumes. 
D)  the cost of washing dirty cars. 
A)  wear and tear on toll roads. 
B)  the opportunity cost of the driver's time. 
C)  air pollution due to exhaust fumes. 
D)  the cost of washing dirty cars.

Question 4

When both internal and external costs for using a scarce resource are included, then there is

Accepted Answer

A)  an increase in the production of the good. 
B)  a negative externality. 
C)  an increase in the price of the good. 
D)  a positive externality. 
A)  an increase in the production of the good. 
B)  a negative externality. 
C)  an increase in the price of the good. 
D)  a positive externality.

Question 5

In a situation in which property rights are not well-defined and social costs exceed private costs, government can use all of the following to induce producers to bring private costs into alignment with social costs EXCEPT

Accepted Answer

A)  taxing production. 
B)  coercive limits on production. 
C)  subsidization of production. 
D)  regulation of production. 
A)  taxing production. 
B)  coercive limits on production. 
C)  subsidization of production. 
D)  regulation of production.

Question 6

Which one of the following is an example of an external cost?

Accepted Answer

A)  the cost to attend college 
B)  labor costs to a firm 
C)  emissions from a factory 
D)  a house payment owed by a friend 
A)  the cost to attend college 
B)  labor costs to a firm 
C)  emissions from a factory 
D)  a house payment owed by a friend

Question 7

An externality exists when

Accepted Answer

A)  there are private costs. 
B)  there are internal costs. 
C)  there are external costs. 
D)  there are opportunity costs. 
A)  there are private costs. 
B)  there are internal costs. 
C)  there are external costs. 
D)  there are opportunity costs.

Question 8

There is "too much" steel production if the

Accepted Answer

A)  social costs of steel production are significantly lower than the private costs. 
B)  social benefits of steel production are declining. 
C)  social costs of steel production are significantly higher than the private costs. 
D)  social costs of steel production are declining. 
A)  social costs of steel production are significantly lower than the private costs. 
B)  social benefits of steel production are declining. 
C)  social costs of steel production are significantly higher than the private costs. 
D)  social costs of steel production are declining.

Question 9

An individual who pays for personal auto repair has incurred a

Accepted Answer

A)  social cost. 
B)  private cost. 
C)  negative externality. 
D)  positive externality. 
A)  social cost. 
B)  private cost. 
C)  negative externality. 
D)  positive externality.

Question 10

Explain why the buffalo almost became extinct while cattle did not, even though both provide similar goods for people.

Accepted Answer

Cattle have been privately owned for mos

Question 11

Which of the following is FALSE?

Accepted Answer

A)  Social costs do not include private costs. 
B)  Private costs do not include external costs. 
C)  If social costs are greater than private costs, "too much" of a good is being produced. 
D)  Pollution is a social cost. 
A)  Social costs do not include private costs. 
B)  Private costs do not include external costs. 
C)  If social costs are greater than private costs, "too much" of a good is being produced. 
D)  Pollution is a social cost.

Question 12

Which type of property would be the most likely to experience pollution?

Accepted Answer

A)  common property 
B)  private property 
C)  property held in partnership 
D)  corporate property 
A)  common property 
B)  private property 
C)  property held in partnership 
D)  corporate property

Question 13

The marginal cost curve of pollution abatement

Accepted Answer

A)  slopes upward because of the law of diminishing product. 
B)  slopes upward because firms will maximize profits. 
C)  slopes downward because of the law of diminishing marginal utility. 
D)  slopes downward because of the law of diminishing returns. 
A)  slopes upward because of the law of diminishing product. 
B)  slopes upward because firms will maximize profits. 
C)  slopes downward because of the law of diminishing marginal utility. 
D)  slopes downward because of the law of diminishing returns.

Question 14

Saving endangered species

Accepted Answer

A)  benefits all people in society without any trade-off. 
B)  must involve the loss of another species. 
C)  may involve a trade-off in terms of the loss of other economic activities. 
D)  requires the government to list those species as common property. 
A)  benefits all people in society without any trade-off. 
B)  must involve the loss of another species. 
C)  may involve a trade-off in terms of the loss of other economic activities. 
D)  requires the government to list those species as common property.

Question 15

Social costs are

Accepted Answer

A)  private costs plus any external costs. 
B)  the costs of the externality only. 
C)  costs incurred when common property is used. 
D)  the costs associated with reaching and enforcing agreements. 
A)  private costs plus any external costs. 
B)  the costs of the externality only. 
C)  costs incurred when common property is used. 
D)  the costs associated with reaching and enforcing agreements.

Question 16

What is an externality?

Accepted Answer

An externality is a situation in which p

Question 17

Why do economists believe that it is socially optimal to have some amount of pollution?

Accepted Answer

Economists recognize the trade-off betwe

Question 18

-In the above figure,

Accepted Answer

A)  the optimal degree of air cleanliness is less than 100 percent. 
B)  the marginal cost curve slopes up because of the law of diminishing returns. 
C)  Neither A nor B are correct. 
D)  Both A and B are correct. 
A)  the optimal degree of air cleanliness is less than 100 percent. 
B)  the marginal cost curve slopes up because of the law of diminishing returns. 
C)  Neither A nor B are correct. 
D)  Both A and B are correct.

Question 19

Generally, as levels of pollution are reduced,

Accepted Answer

A)  marginal benefits from the reduction increase. 
B)  marginal costs from the reduction increase. 
C)  marginal costs from the reduction stay the same. 
D)  marginal costs from the reduction decrease. 
A)  marginal benefits from the reduction increase. 
B)  marginal costs from the reduction increase. 
C)  marginal costs from the reduction stay the same. 
D)  marginal costs from the reduction decrease.

Question 20

What is common property? What does common property have to do with externalities?

Accepted Answer

Common property is property that is owne

Exam 31: Environmental Economics

Social costs are

Which of the following is not a private cost?

An example of the external costs due to automobile driving is

When both internal and external costs for using a scarce resource are included, then there is

In a situation in which property rights are not well-defined and social costs exceed private costs, government can use all of the following to induce producers to bring private costs into alignment with social costs EXCEPT

Which one of the following is an example of an external cost?

An externality exists when

There is "too much" steel production if the

An individual who pays for personal auto repair has incurred a

Explain why the buffalo almost became extinct while cattle did not, even though both provide similar goods for people.

Which of the following is FALSE?

Which type of property would be the most likely to experience pollution?

The marginal cost curve of pollution abatement

Saving endangered species

Social costs are

What is an externality?

Why do economists believe that it is socially optimal to have some amount of pollution?

-In the above figure,

Generally, as levels of pollution are reduced,

What is common property? What does common property have to do with externalities?

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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