Question 1

Why are most endangered species belong to common property?

Accepted Answer

In contrast to private propert

Question 2

A person removes the anti-pollution devices on his automobile. An external cost associated with this is

Accepted Answer

A)  the feeling of guilt the person feels for violating the law. 
B)  the ticket he gets when a highway patrol officer pulls him over. 
C)  the man's neighbor washes his car more often because of increasing smog. 
D)  the man buys less gasoline, reducing the income of local gas stations. 
A)  the feeling of guilt the person feels for violating the law. 
B)  the ticket he gets when a highway patrol officer pulls him over. 
C)  the man's neighbor washes his car more often because of increasing smog. 
D)  the man buys less gasoline, reducing the income of local gas stations.

Question 3

The marginal cost of pollution abatement is graphically illustrated by

Accepted Answer

A)  an upward sloping curve. 
B)  a downward sloping curve. 
C)  a horizontal curve. 
D)  a vertical curve. 
A)  an upward sloping curve. 
B)  a downward sloping curve. 
C)  a horizontal curve. 
D)  a vertical curve.

Question 4

Which of the following is NOT an example of common property?

Accepted Answer

A)  cable TV 
B)  air 
C)  gravity 
D)  sunshine 
A)  cable TV 
B)  air 
C)  gravity 
D)  sunshine

Question 5

In which of the following externality situations would it be most likely that voluntary agreements could be used to internalize an externality?

Accepted Answer

A)  littering on highways 
B)  overharvesting of alligators in Louisiana 
C)  poaching of elephants in Africa 
D)  trees of one neighbor blocking a view of another 
A)  littering on highways 
B)  overharvesting of alligators in Louisiana 
C)  poaching of elephants in Africa 
D)  trees of one neighbor blocking a view of another

Question 6

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 7

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 8

Which of the following statements about pollution or pollution control is TRUE?

Accepted Answer

A)  A nationwide uniform tax on emissions is the appropriate way to reduce pollution levels. 
B)  A tax to reduce pollution levels should be based on the economic damages rather than on the absolute amount of pollution. 
C)  Private costs of pollution usually exceed social costs. 
D)  The optimum amount of pollution abatement is where the total benefits of pollution abatement equal the total costs of pollution abatement. 
A)  A nationwide uniform tax on emissions is the appropriate way to reduce pollution levels. 
B)  A tax to reduce pollution levels should be based on the economic damages rather than on the absolute amount of pollution. 
C)  Private costs of pollution usually exceed social costs. 
D)  The optimum amount of pollution abatement is where the total benefits of pollution abatement equal the total costs of pollution abatement.

Question 9

In economic analysis, air pollution, water pollution, and scenery destruction are considered to be

Accepted Answer

A)  externalities. 
B)  internalities. 
C)  private costs. 
D)  opportunity costs. 
A)  externalities. 
B)  internalities. 
C)  private costs. 
D)  opportunity costs.

Question 10

"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 11

Participating nations in the 1997 Kyoto Protocol agreed to reduce overall greenhouse gases emission

Accepted Answer

A)  to as much as 20 percent below the levels of the 1990s through 2020. 
B)  to as much as 10 percent below the levels of the 1990s through 2010. 
C)  to as much as 100 percent below the levels of the 1990s through 2007. 
D)  to as much as 50 percent below the levels of the 1990s through 2050. 
A)  to as much as 20 percent below the levels of the 1990s through 2020. 
B)  to as much as 10 percent below the levels of the 1990s through 2010. 
C)  to as much as 100 percent below the levels of the 1990s through 2007. 
D)  to as much as 50 percent below the levels of the 1990s through 2050.

Question 12

Buffalo in the United States almost became extinct while cattle have never been close to extinction. The difference is due to

Accepted Answer

A)  the greater marginal value of a buffalo relative to a head of cattle, leading to greater "harvesting" of buffalo. 
B)  the use of private property rights on cattle and common property rights on buffalo. 
C)  the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo. 
D)  the differences in size between the two animals, and the effect of size differences on the costs of hunting them. 
A)  the greater marginal value of a buffalo relative to a head of cattle, leading to greater "harvesting" of buffalo. 
B)  the use of private property rights on cattle and common property rights on buffalo. 
C)  the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo. 
D)  the differences in size between the two animals, and the effect of size differences on the costs of hunting them.

Question 13

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

Accepted Answer

Economists recognize the trade-off betwe

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

When social costs for using a scarce resource are included, then there is

Accepted Answer

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

Question 16

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 17

Is a uniform per-unit tax on firms that cause an externality an optimal policy for correcting the externality? Explain.

Accepted Answer

No. The concept of externality is about

Question 18

Explain how a market for pollutant emission allowances can induce firms to reduce the amount of emissions.

Accepted Answer

In the market for emission allowances, f

Question 19

All of the following are examples of goods for which external costs commonly exist EXCEPT

Accepted Answer

A)  cigarettes. 
B)  automobiles. 
C)  vaccinations. 
D)  oil transportation. 
A)  cigarettes. 
B)  automobiles. 
C)  vaccinations. 
D)  oil transportation.

Question 20

Property owned by everyone is generally referred to as

Accepted Answer

A)  social property. 
B)  free property. 
C)  common property. 
D)  natural property. 
A)  social property. 
B)  free property. 
C)  common property. 
D)  natural property.

Exam 31: Environmental Economics

Why are most endangered species belong to common property?

A person removes the anti-pollution devices on his automobile. An external cost associated with this is

The marginal cost of pollution abatement is graphically illustrated by

Which of the following is NOT an example of common property?

In which of the following externality situations would it be most likely that voluntary agreements could be used to internalize an externality?

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

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

Which of the following statements about pollution or pollution control is TRUE?

In economic analysis, air pollution, water pollution, and scenery destruction are considered to be

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

Participating nations in the 1997 Kyoto Protocol agreed to reduce overall greenhouse gases emission

Buffalo in the United States almost became extinct while cattle have never been close to extinction. The difference is due to

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

Saving endangered species

When social costs for using a scarce resource are included, then there is

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

Is a uniform per-unit tax on firms that cause an externality an optimal policy for correcting the externality? Explain.

Explain how a market for pollutant emission allowances can induce firms to reduce the amount of emissions.

All of the following are examples of goods for which external costs commonly exist EXCEPT

Property owned by everyone is generally referred to as

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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