Question 1

The problem of overfishing in waters that are commonly owned can be solved by

Accepted Answer

A)  the use of the Coase Theorem. 
B)  establishing property rights for fishing in the waters. 
C)  subsidizing fishing. 
D)  allowing the market to ration fish. 
A)  the use of the Coase Theorem. 
B)  establishing property rights for fishing in the waters. 
C)  subsidizing fishing. 
D)  allowing the market to ration fish.

Question 2

Suppose that the nation wide average cost of air pollution generated by a car is $1,000. Would a tax of $1,000 on every car induce people to take external costs into consideration and bring about the optimal price and output for autos? Explain.

Accepted Answer

Not necessarily. The $1,000 is an averag

Question 3

Which of the following would be viewed as a common property problem?

Accepted Answer

A)  Your property is burglarized. 
B)  Vandals damage your property. 
C)  People pick all of the flowers in a public park. 
D)  To be safe you must lock your door at night. 
A)  Your property is burglarized. 
B)  Vandals damage your property. 
C)  People pick all of the flowers in a public park. 
D)  To be safe you must lock your door at night.

Question 4

Which of the following is a true statement?

Accepted Answer

A)  Any property right system will yield a situation in which all externalities are internalized. 
B)  Voluntary agreements can always yield a situation in which all externalities are internalized. 
C)  Opportunity costs always exist with whoever has property rights. 
D)  Opportunity costs turn external costs into social costs. 
A)  Any property right system will yield a situation in which all externalities are internalized. 
B)  Voluntary agreements can always yield a situation in which all externalities are internalized. 
C)  Opportunity costs always exist with whoever has property rights. 
D)  Opportunity costs turn external costs into social costs.

Question 5

A good that has social costs that are equal to private costs has a price that is

Accepted Answer

A)  too high. 
B)  too low. 
C)  just right. 
D)  equal to marginal cost. 
A)  too high. 
B)  too low. 
C)  just right. 
D)  equal to marginal cost.

Question 6

By adding internal costs to external costs, we determine the total

Accepted Answer

A)  private cost. 
B)  social cost. 
C)  psychological cost. 
D)  marginal cost. 
A)  private cost. 
B)  social cost. 
C)  psychological cost. 
D)  marginal cost.

Question 7

The 1997 Kyoto Protocol was signed by

Accepted Answer

A)  only the United States and the European Union. 
B)  only nations in Asia. 
C)  more than three dozen nations. 
D)  all nations in the world. 
A)  only the United States and the European Union. 
B)  only nations in Asia. 
C)  more than three dozen nations. 
D)  all nations in the world.

Question 8

Why are most endangered species belong to common property?

Accepted Answer

In contrast to private propert

Question 9

As we approach total pollution abatement

Accepted Answer

A)  the marginal cost to society falls. 
B)  the marginal cost to society rises. 
C)  the marginal cost to society equals the marginal benefit to society. 
D)  the marginal cost to society falls but then rises. 
A)  the marginal cost to society falls. 
B)  the marginal cost to society rises. 
C)  the marginal cost to society equals the marginal benefit to society. 
D)  the marginal cost to society falls but then rises.

Question 10

Property that is owned by everyone and therefore by no one in particular is referred to as

Accepted Answer

A)  common property. 
B)  social property. 
C)  private property. 
D)  commercial property. 
A)  common property. 
B)  social property. 
C)  private property. 
D)  commercial property.

Question 11

Air pollution is a problem because

Accepted Answer

A)  people are greedy. 
B)  people are not environmentally conscious. 
C)  people make use of air without having to bear all the costs of their actions. 
D)  a market economy does not provide as strong an incentive for environmental cleanup as a socialist economy. 
A)  people are greedy. 
B)  people are not environmentally conscious. 
C)  people make use of air without having to bear all the costs of their actions. 
D)  a market economy does not provide as strong an incentive for environmental cleanup as a socialist economy.

Question 12

Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to

Accepted Answer

A)  the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo. 
B)  the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo. 
C)  cattle existing in Europe also while buffalo were specific to North America. 
D)  the use of private property rights on cattle and common property rights on buffalo. 
A)  the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo. 
B)  the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo. 
C)  cattle existing in Europe also while buffalo were specific to North America. 
D)  the use of private property rights on cattle and common property rights on buffalo.

Question 13

Transaction costs are

Accepted Answer

A)  the costs associated with making a transaction that is required by the government. 
B)  not true costs since they are often not paid. 
C)  the costs associated with exchanges in the service area. 
D)  the costs associated with making, reaching and enforcing agreements. 
A)  the costs associated with making a transaction that is required by the government. 
B)  not true costs since they are often not paid. 
C)  the costs associated with exchanges in the service area. 
D)  the costs associated with making, reaching and enforcing agreements.

Question 14

Which of the following is TRUE of the European Union's cap-and-trade program?

Accepted Answer

A)  Firms are taxed based on the their pollution levels. 
B)  Firms are forced to shut down when they exceed their pollution limits. 
C)  Governments subsidize firms to develop devices to reduce pollution. 
D)  Firms can trade pollution permits to meet their pollution limits. 
A)  Firms are taxed based on the their pollution levels. 
B)  Firms are forced to shut down when they exceed their pollution limits. 
C)  Governments subsidize firms to develop devices to reduce pollution. 
D)  Firms can trade pollution permits to meet their pollution limits.

Question 15

All of following are commonly considered to be common property EXCEPT

Accepted Answer

A)  spotted owls in the wild. 
B)  fish in an ocean. 
C)  chickens raised in a farm. 
D)  wild salmon in a river. 
A)  spotted owls in the wild. 
B)  fish in an ocean. 
C)  chickens raised in a farm. 
D)  wild salmon in a river.

Question 16

If pollutants from smoke stacks in a city such as Newark causes people to paint their homes and cars more frequently, this implies

Accepted Answer

A)  external benefits to the home and car owners. 
B)  external costs on home and car owners. 
C)  internal cost to home and car owners. 
D)  none of the above 
A)  external benefits to the home and car owners. 
B)  external costs on home and car owners. 
C)  internal cost to home and car owners. 
D)  none of the above

Question 17

In general, pollution exists in situations in which

Accepted Answer

A)  people are selfish. 
B)  people refuse to take social responsibility seriously. 
C)  there are poorly defined private property rights. 
D)  there exists public property. 
A)  people are selfish. 
B)  people refuse to take social responsibility seriously. 
C)  there are poorly defined private property rights. 
D)  there exists public property.

Question 18

An externality occurs whenever

Accepted Answer

A)  private costs are the same as social costs. 
B)  private costs are the same as internal costs. 
C)  private costs diverge from social costs. 
D)  private costs plus internal costs equal social costs. 
A)  private costs are the same as social costs. 
B)  private costs are the same as internal costs. 
C)  private costs diverge from social costs. 
D)  private costs plus internal costs equal social costs.

Question 19

In a situation in which internal costs differ from social costs, we say that there exists a(n)

Accepted Answer

A)  welfare loss. 
B)  welfare benefit. 
C)  internality. 
D)  externality. 
A)  welfare loss. 
B)  welfare benefit. 
C)  internality. 
D)  externality.

Question 20

Private property rights involve

Accepted Answer

A)  exclusive rights to use, transfer, and exchange the property. 
B)  exclusive rights to use property, but not to exchange the property. 
C)  rights to enjoy the property in any way desired but not to transfer or exchange the property. 
D)  rights granted by the government for renewable terms of 100 years or more. 
A)  exclusive rights to use, transfer, and exchange the property. 
B)  exclusive rights to use property, but not to exchange the property. 
C)  rights to enjoy the property in any way desired but not to transfer or exchange the property. 
D)  rights granted by the government for renewable terms of 100 years or more.

Exam 31: Environmental Economics

The problem of overfishing in waters that are commonly owned can be solved by

Suppose that the nation wide average cost of air pollution generated by a car is $1,000. Would a tax of $1,000 on every car induce people to take external costs into consideration and bring about the optimal price and output for autos? Explain.

Which of the following would be viewed as a common property problem?

Which of the following is a true statement?

A good that has social costs that are equal to private costs has a price that is

By adding internal costs to external costs, we determine the total

The 1997 Kyoto Protocol was signed by

Why are most endangered species belong to common property?

As we approach total pollution abatement

Property that is owned by everyone and therefore by no one in particular is referred to as

Air pollution is a problem because

Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to

Transaction costs are

Which of the following is TRUE of the European Union's cap-and-trade program?

All of following are commonly considered to be common property EXCEPT

If pollutants from smoke stacks in a city such as Newark causes people to paint their homes and cars more frequently, this implies

In general, pollution exists in situations in which

An externality occurs whenever

In a situation in which internal costs differ from social costs, we say that there exists a(n)

Private property rights involve

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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