Question 1

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain A

Question 2

Externalities can be positive,as well as negative.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain A

Question 3

Pure public goods involve positive externalities.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain A

Question 4

Pollution rights can be traded and are always efficient.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 5

In the 1970s,the U.S.relied on Command-and-Control models of pollution regulation.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 6

Why are command- and -control regulations less flexible than incentive based systems?

Accepted Answer

Although answers will vary,the main reas

Question 7

In the figure below,if the marginal damages line did not originate at 0,

Accepted Answer

A)  it would mean that marginal damages did not exist. 
B)  there is no way to find MSC. 
C)  MSC would not originate at the same intercept as MPC. 
D)  all of these answer options are correct. 
A)  it would mean that marginal damages did not exist. 
B)  there is no way to find MSC. 
C)  MSC would not originate at the same intercept as MPC. 
D)  all of these answer options are correct.

Question 8

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

Accepted Answer

Although answers may vary,the reader sho

Question 9

A steel factory has the right to discharge waste into a river.The waste reduces the number of fish,causing damage for fisheries.Let X denotes the quantity of waste dumped.The marginal damage,denoted MD,is given by the equation MD = 2 + 5Q.The marginal benefit (MB)of dumping waste is given by the equation MB = 34 - 3Q.
(a)Calculate the efficient quantity of waste.
(b)What is the efficient fee,in dollars per unit of waste,which would cause the firm to dump only an efficient quantity of waste?
(c)What would be the quantity dumped if the firm did not care about the fishery?

Accepted Answer

(a)Set MD = MB and solve for Q*.Q* = 4.

Question 10

A cap-and-trade policy

Accepted Answer

A)  has a set number of permits. 
B)  allows polluters to trade permits. 
C)  caps the total level of pollution allowed. 
D)  all of these answer options are correct. 
A)  has a set number of permits. 
B)  allows polluters to trade permits. 
C)  caps the total level of pollution allowed. 
D)  all of these answer options are correct.

Question 11

Pollution rights may be traded if

Accepted Answer

A)  polluters try to hide pollution. 
B)  administrators are uncertain about Pigouvian taxes. 
C)  there is no market for pollution. 
D)  pollution is harmless. 
A)  polluters try to hide pollution. 
B)  administrators are uncertain about Pigouvian taxes. 
C)  there is no market for pollution. 
D)  pollution is harmless.

Question 12

Refer to the figures below to answer this question:
  Cap-and-trade versus emissions fee when marginal social benefits are inelastic and costs are uncertain:   Cap-and-trade versus emissions fee when marginal social benefits are elastic and costs are uncertain: 
a)In case of an inelastic marginal social benefit curve,what type of pollution reduction system should the government employ? Why? 
b)If the social benefit curve is elastic,do you answer change? 
c)What are advantages and disadvantages of Cap-and-Trade systems over Emission Fee systems when the inflation and change in marginal costs are considered?

Accepted Answer

a)When the social marginal benefit curv

Question 13

Market-oriented solutions to externalities rarely work.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 14

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 15

Technology standards work in reducing externalities of all kinds.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 16

College education is an example of a positive externality.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 17

Externalities can be positive because

Accepted Answer

A)  marginal damages do not last over time. 
B)  utility can be impacted positively as well as negatively. 
C)  there is no concept for marginal benefit. 
D)  positive externalities are subsidies. 
A)  marginal damages do not last over time. 
B)  utility can be impacted positively as well as negatively. 
C)  there is no concept for marginal benefit. 
D)  positive externalities are subsidies.

Question 18

Congestion pricing

Accepted Answer

A)  is a tax. 
B)  keeps nasal passages clear. 
C)  is never efficient. 
D)  all of these answer options are correct. 
A)  is a tax. 
B)  keeps nasal passages clear. 
C)  is never efficient. 
D)  all of these answer options are correct.

Question 19

Command-and-control regulations

Accepted Answer

A)  are less flexible than incentive based regulations. 
B)  come from the private sector. 
C)  have technology standards a type of control. 
D)  are less flexible than incentive based regulations and have technology standards a type of control. 
E)  are less flexible than incentive based regulations and come from the private sector. 
A)  are less flexible than incentive based regulations. 
B)  come from the private sector. 
C)  have technology standards a type of control. 
D)  are less flexible than incentive based regulations and have technology standards a type of control. 
E)  are less flexible than incentive based regulations and come from the private sector.

Question 20

The private marginal benefit for commodity X is given by 15 - X,where X is the number of units consumed.The private marginal cost of producing X is constant at 10.In the absence of any government intervention,how much X is produced? What is the gain to society involved in moving from the inefficient to the efficient level of production?

Accepted Answer

Without intervention,optimal w

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

Externalities can be positive,as well as negative.

Pure public goods involve positive externalities.

Pollution rights can be traded and are always efficient.

In the 1970s,the U.S.relied on Command-and-Control models of pollution regulation.

Why are command- and -control regulations less flexible than incentive based systems?

In the figure below,if the marginal damages line did not originate at 0,

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

A cap-and-trade policy

Pollution rights may be traded if

Market-oriented solutions to externalities rarely work.

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

Technology standards work in reducing externalities of all kinds.

College education is an example of a positive externality.

Externalities can be positive because

Congestion pricing

Command-and-control regulations

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters

Exam 5: Externalities

A subsidy for pollution not produced can induce producers to pollute at the efficient level.

Externalities can be positive,as well as negative.

Pure public goods involve positive externalities.

Pollution rights can be traded and are always efficient.

In the 1970s,the U.S.relied on Command-and-Control models of pollution regulation.

Why are command- and -control regulations less flexible than incentive based systems?

In the figure below,if the marginal damages line did not originate at 0,

Which policy is more effective when handling externalities: Cap-and-trade or emissions fee?

A cap-and-trade policy

Pollution rights may be traded if

Market-oriented solutions to externalities rarely work.

An emissions fee is preferable to a cap-and-trade when MSB are elastic and costs are uncertain.

Technology standards work in reducing externalities of all kinds.

College education is an example of a positive externality.

Externalities can be positive because

Congestion pricing

Command-and-control regulations

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters