Question 1

Approximately what percentage of the world's extinct species became extinct before humans appeared on earth?

Accepted Answer

A)  2 percent 
B)  10 percent 
C)  67 percent 
D)  more than 99 percent 
A)  2 percent 
B)  10 percent 
C)  67 percent 
D)  more than 99 percent

Question 2

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 3

The EU Emission Trading Scheme created a market for

Accepted Answer

A)  permits to emit greenhouse gases. 
B)  crude oil. 
C)  wind energy. 
D)  devices that lower the global temperature. 
A)  permits to emit greenhouse gases. 
B)  crude oil. 
C)  wind energy. 
D)  devices that lower the global temperature.

Question 4

In order to correct the problems associated with external costs,

Accepted Answer

A)  the signals given to the economy must change so that decision-makers will take into account all the costs of their actions. 
B)  the government must take over production of industries that are responsible for most of the pollution. 
C)  standards must be established that make it illegal to pollute. 
D)  the prices of all goods must be raised so people will consume less of the world's resources. 
A)  the signals given to the economy must change so that decision-makers will take into account all the costs of their actions. 
B)  the government must take over production of industries that are responsible for most of the pollution. 
C)  standards must be established that make it illegal to pollute. 
D)  the prices of all goods must be raised so people will consume less of the world's resources.

Question 5

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

Accepted Answer

A)  the cost of labor to a firm 
B)  the pollution caused by automobile exhaust 
C)  the cost of tires for your car 
D)  the opportunity cost of getting a college education 
A)  the cost of labor to a firm 
B)  the pollution caused by automobile exhaust 
C)  the cost of tires for your car 
D)  the opportunity cost of getting a college education

Question 6

Transaction costs are

Accepted Answer

A)  the costs, such as sales taxes, that are imposed by the government. 
B)  equal to the hourly cost of a lawyer used to write a contract. 
C)  the costs associated with making, reaching, and enforcing agreements. 
D)  not true costs because they relate to time rather than real resources. 
A)  the costs, such as sales taxes, that are imposed by the government. 
B)  equal to the hourly cost of a lawyer used to write a contract. 
C)  the costs associated with making, reaching, and enforcing agreements. 
D)  not true costs because they relate to time rather than real resources.

Question 7

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 8

-Refer to the above figure. The marginal benefit of pollution abatement is curve

Accepted Answer

A)  (1). 
B)  (2). 
C)  (3). 
D)  (4). 
A)  (1). 
B)  (2). 
C)  (3). 
D)  (4).

Question 9

If a good is produced by firms that incur all private and external costs, the price consumers pay

Accepted Answer

A)  will be efficient since it includes all social costs. 
B)  will not be socially acceptable. 
C)  will be too high because the consumers end up paying all of the costs instead of the firm. 
D)  will be the correct price, but inefficient. 
A)  will be efficient since it includes all social costs. 
B)  will not be socially acceptable. 
C)  will be too high because the consumers end up paying all of the costs instead of the firm. 
D)  will be the correct price, but inefficient.

Question 10

External costs are

Accepted Answer

A)  borne by individuals other than those who incurred them. 
B)  another term for implicit costs. 
C)  borne by the public but incurred by the government. 
D)  borne by the government but incurred by the public. 
A)  borne by individuals other than those who incurred them. 
B)  another term for implicit costs. 
C)  borne by the public but incurred by the government. 
D)  borne by the government but incurred by the public.

Question 11

A good that has external costs 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 12

When social costs of an activity exceed private costs

Accepted Answer

A)  there is a tendency for resources to be under-utilized. 
B)  this means that resources are being efficiently used. 
C)  there is a tendency for resources to be over-utilized. 
D)  None of the above is correct. 
A)  there is a tendency for resources to be under-utilized. 
B)  this means that resources are being efficiently used. 
C)  there is a tendency for resources to be over-utilized. 
D)  None of the above is correct.

Question 13

In a market for emission permits, firms that emit over their allowed limits

Accepted Answer

A)  are forced to shut down. 
B)  are taxed by the government for the amount of emissions. 
C)  will sell their excess allowances through a trading system. 
D)  must buy more allowances through a trading system. 
A)  are forced to shut down. 
B)  are taxed by the government for the amount of emissions. 
C)  will sell their excess allowances through a trading system. 
D)  must buy more allowances through a trading system.

Question 14

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 15

"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 16

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 17

If external costs are included and added to a firm's private costs, then

Accepted Answer

A)  the demand curve will shift to the right. 
B)  the demand curve will shift to the left. 
C)  the supply curve will shift to the right. 
D)  the supply curve will shift to the left. 
A)  the demand curve will shift to the right. 
B)  the demand curve will shift to the left. 
C)  the supply curve will shift to the right. 
D)  the supply curve will shift to the left.

Question 18

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 19

The Framework Convention on Climate Change took place in

Accepted Answer

A)  the 1973-1979 Tokyo Round. 
B)  the 1987-1993 Uruguay Round. 
C)  the 1997 Kyoto Protocol. 
D)  the 2001 Doha Round. 
A)  the 1973-1979 Tokyo Round. 
B)  the 1987-1993 Uruguay Round. 
C)  the 1997 Kyoto Protocol. 
D)  the 2001 Doha Round.

Question 20

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.

Exam 31: Environmental Economics

Approximately what percentage of the world's extinct species became extinct before humans appeared on earth?

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

The EU Emission Trading Scheme created a market for

In order to correct the problems associated with external costs,

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

Transaction costs are

Which of the following is NOT a private cost?

-Refer to the above figure. The marginal benefit of pollution abatement is curve

If a good is produced by firms that incur all private and external costs, the price consumers pay

External costs are

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

When social costs of an activity exceed private costs

In a market for emission permits, firms that emit over their allowed limits

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

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

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

If external costs are included and added to a firm's private costs, then

Social costs are

The Framework Convention on Climate Change took place in

Generally, as levels of pollution are reduced

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

Filters