Question 1

Under the command-and-control regulation the supply curve for the polluting good will shift downward by a larger amount than with a tax regulation.

Accepted Answer

A) True 
 B)False

Question 2

What is acid rain?

Accepted Answer

The answer of What is acid rain?...

Question 3

In a market characterized by external benefits,the market equilibrium is not socially optimal.

Accepted Answer

A) True 
 B)False

Question 4

The Environmental Protection Agency requires that automakers install equipment in vehicles that lowers emissions.In most cases a more efficient way of lowering the pollution generated by cars is to:

Accepted Answer

A) ban the use of vehicles during daylight hours. 
B) create an annual pollution tax on each car. 
C) require automakers to develop a car that produces no emissions. 
D) None of the above-this regulation is the most efficient way to reduce automobile emissions.

Question 5

If a tax is placed on the output of perfectly competitive firm that imposes external costs on society,the firm's marginal cost curve will shift ________ and the market supply curve will shift to the ________.

Accepted Answer

A) down;left 
B) down;right 
C) up;right 
D) up;left

Question 6

When one firm sells its pollution permit to another:

Accepted Answer

A) the total amount of pollution generated rises. 
B) both firms benefit. 
C) the government determines the price of the permit. 
D) all of the above

Question 7

According to the application regarding options for reducing CO2 emissions from international shipping,3% of global CO2 emissions come from international shipping.What tool did the policy analysts use for comparing the cost of alternative reduction methods?

Accepted Answer

A) compute the average marginal cost of each method 
B) compute the marginal abatement cost of each method 
C) compute the total marginal cost of each method 
D) The analysts were unable to compare the cost of alternative reduction methods.

Question 8

Recall the application of how the European Union has a cap-and-trade system for CO2 allowances.The demand of allowances is determined by different factors such as level of economic activity,fuel prices,and the weather.

Accepted Answer

A) True 
 B)False

Question 9

What is a command-and-control policy?

Accepted Answer

The answer of What is a command-and-control policy?...

Question 10

Why would a firm continue to pollute even when it is fined (taxed)for doing so?

Accepted Answer

The answer of Why would a firm continue to pollute...

Question 11

The study of external costs is a major concern of:

Accepted Answer

A) labor economics. 
B) international economics. 
C) environmental economics. 
D) macroeconomists.

Question 12

The social cost of production is the sum of the private cost and external cost.

Accepted Answer

A) True 
 B)False

Question 13

An external cost of production is:

Accepted Answer

A) a cost incurred by someone other than the producer. 
B) the production cost borne by a producer. 
C) the result of the sum of private and social cost. 
D) another word for a tax.

Question 14

If the government taxes a firm that is generating an external cost,the price of the firm's product will:

Accepted Answer

A) increase and output will decrease. 
B) increase and output will increase. 
C) decrease and output will decrease. 
D) decrease and output will increase.

Question 15

In most cases,taxation is more likely to be inefficient than regulation because taxation corrects for only external costs at a higher overall cost to society.

Accepted Answer

A) True 
 B)False

Question 16

Pollution abatement results in benefits that exceed the costs to society.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a way of how the government runs a system of marketable pollution permits?

Accepted Answer

A) picks a target pollution level 
B) oversupplies the market with permits 
C) prohibits the trading of permits 
D) all of the above.

Question 18

To internalize the external costs from traffic congestion,policymakers could:

Accepted Answer

A) reduce the number of drivers' licenses. 
B) require smaller cars to be sold. 
C) establish a congestion tax. 
D) build fewer highways.

Question 19

Suppose there are only two manufacturers of in an area that and generate the same amount of carbon emission pollution per hour.The only difference is that firm 1 is a low cost firm and firm 2 is a high cost one.What would we expect if the government were to use a uniform abatement policy?

Accepted Answer

A) the demand for tires to increase 
B) the quantity of tires produced to increase 
C) The uniform abatement policy is likely to be inefficient. 
D) The uniform abatement policy is likely to be efficient.

Question 20

List two reasons why command-and-control policies may be inefficient.

Accepted Answer

The answer of List two reasons why command-and-control policies may...

Exam 16: External Costs and Environmental Policy

Under the command-and-control regulation the supply curve for the polluting good will shift downward by a larger amount than with a tax regulation.

What is acid rain?

In a market characterized by external benefits,the market equilibrium is not socially optimal.

The Environmental Protection Agency requires that automakers install equipment in vehicles that lowers emissions.In most cases a more efficient way of lowering the pollution generated by cars is to:

If a tax is placed on the output of perfectly competitive firm that imposes external costs on society,the firm's marginal cost curve will shift and the market supply curve will shift to the .

When one firm sells its pollution permit to another:

According to the application regarding options for reducing CO2 emissions from international shipping,3% of global CO2 emissions come from international shipping.What tool did the policy analysts use for comparing the cost of alternative reduction methods?

Recall the application of how the European Union has a cap-and-trade system for CO2 allowances.The demand of allowances is determined by different factors such as level of economic activity,fuel prices,and the weather.

What is a command-and-control policy?

Why would a firm continue to pollute even when it is fined (taxed)for doing so?

The study of external costs is a major concern of:

The social cost of production is the sum of the private cost and external cost.

An external cost of production is:

If the government taxes a firm that is generating an external cost,the price of the firm's product will:

In most cases,taxation is more likely to be inefficient than regulation because taxation corrects for only external costs at a higher overall cost to society.

Pollution abatement results in benefits that exceed the costs to society.

Which of the following is a way of how the government runs a system of marketable pollution permits?

To internalize the external costs from traffic congestion,policymakers could:

Suppose there are only two manufacturers of in an area that and generate the same amount of carbon emission pollution per hour.The only difference is that firm 1 is a low cost firm and firm 2 is a high cost one.What would we expect if the government were to use a uniform abatement policy?

List two reasons why command-and-control policies may be inefficient.