Deck 16: Pollution, the Environment, and Global Warming

Question 1

Consider the graph of the marginal costs of producing electricity.After point A this is observed in the production process.

A)the Law of Diminishing Return.
B)the Law of Increasing Total Cost.
C)the Law of Diminishing Marginal Benefits.
D)the Law of Increasing Marginal Costs.

Answer 1

D

Question 2

Social market costs include

A)private marginal costs.
B)the negative externality present in the market.
C)both the private marginal costs plus the negative externality present in the market.
D)the private marginal costs minus the negative externality present in the market.

Answer 2

C

Question 3

The change in marginal benefits moving from Point A to Point B illustrates

A)the Law of Diminishing Return.
B)the Law of Increasing Total Cost.
C)the Law of Diminishing Marginal Benefits.
D)the Law of Increasing Marginal Costs.

Answer 3

C

Question 4

Which of the following is an example of a market failure?

A)The local state football game is sold-out
B)Because of concerns of impending storm threats, the local hardware store runs out of plywood
C)Because of changes in mortgage loan requirements and regulations, fewer people qualify for mortgages
D)The daily traffic jam on the commute to work

Question 5

Marginal costs born only by the producer is known as

A)private marginal costs.
B)private total costs.
C)social marginal costs.
D)social total costs.

Question 6

Consider the graph which represents a local power plant.The production process includes the dumping of waste in the local river.The level of output Q_Private

A)represents an efficient allocation of resources for the production of electricity.
B)represents an overallocation of resources for the production of electricity.
C)represents an underallocation of resources for the production of electricity.
D)represents a cost-effective allocation of resources for the production of electricity.

Question 7

Pollution is an example of

A)a positive externality.
B)a negative externality.
C)marginal benefit.
D)marginal cost.

Question 8

External costs can be defined as

A)the difference between costs to the producer from production and the costs to society from the production of a good.
B)the difference between the costs to society and the private benefits of production.
C)the difference between the private costs of production and the private benefits of production.
D)the difference between the marginal social costs and marginal benefits.

Question 9

Marginal benefits from producing a product that creates pollution includes

A)revenue to the producer.
B)a desired product to consumers.
C)both revenue to the producer and a desired product to consumers.
D)social costs to consumers.

Question 10

Reference: Use the graph to answer questions 5-7.
The downward slope of the curve reflects

A)The inverse relationship between price and quantity demanded.
B)the direct relationship between price and quantity demanded.
C)the direct relationship between price and demand.
D)the inverse relationship between price and demand.

Question 11

When the market system does not generate the optimal, or efficient, allocation of goods and services a ___________________ occurs.

A)public good
B)private good
C)market instability
D)market failure

Question 12

When a negative externality exists the market experiences

A)a level of production less than optimal.
B)a level of production that is greater than optimal.
C)a level of production that equals optimal.
D)a level of production where society maximizes benefits.

Question 13

When benefits are experienced by someone other than the consumer a ______________ occurs.

A)a positive externality
B)a negative externality
C)marginal benefit
D)marginal cost

Question 14

The main cause of pollution since the 1950s are

A)naturally occurring.
B)anthropogenic in nature.
C)both naturally occurring and anthropogenic in nature.
D)equally caused by nature and anthropogenic.

Question 15

Marginal costs that are born by society as a whole is known as

A)private marginal costs.
B)private total costs.
C)social marginal costs.
D)social total costs.

Question 16

This allows the use of dollars as a common measure of a comparison of benefits and costs of pollution.

A)diminishing marginal utility.
B)increasing marginal cost.
C)willingness to pay framework for marginal benefits.
D)willingness to pay framework for marginal costs.

Question 17

A negative externality occurs when

A)costs of production are imposed on third parties.
B)costs of distribution are imposed on third parties.
C)benefits of the product are passed on to third parties.
D)both costs of distribution are imposed on third parties and benefits of the product are passed on to third parties.

Question 18

Pollution is defined as

A)the contamination of the ground causing disruption to ecosystems.
B)the contamination of the ground and sky causing disruption to production.
C)the contamination of the environment that creates inefficiency to production.
D)the contamination of the environment that causes instability, harm, or disruption to ecosystems.

Question 19

The optimal level of pollution is where

A)total profit is maximized for the producer.
B)marginal profit is maximized for the producer.
C)marginal benefits of control of the pollution equals marginal costs.
D)the marginal benefits of production equals the marginal social costs of production.

Question 20

Which of the following is a true statement?

A)Environmental economists work toward zero-pollution as a morally correct strategy for society.
B)Environmental economists recognize that a zero-pollution level is not a feasible focus.
C)Environmental economists accept a strategy of zero-pollution.
D)Environmental economists accept a strategy of zero-pollution as long as marginal benefits are greater than marginal costs.

Question 21

Reference: Use the following graph to answer questions 22-24.
Consider the graph.A negative externality is represented by

A)the difference between Q_Private and Q_Social.
B)the difference between P_Private and P_Social.
C)the difference between SMC_Private) and SMC_Social).
D)the difference between MB_Private and MB_Social.

Question 22

Policy response to pollution that involves direct government regulation is known as

A)command-and-control.
B)assignment of property rights.
C)pollution abatements.
D)common property resources.

Question 23

Reference: Use the following graph to answer questions 22-24.
Consider the graph that illustrates the production of electricity where not all of the costs of production are captured in the private costs.Which of the following statements is true?

A)An output of Q_Private provides an optimal allocation of resources to the market.
B)An output of Q_Private provides an efficient allocation of resources to the market.
C)An output of Q_Social provides an optimal allocation of resources to the market.
D)An output of Q_Private minus Q_Social provides an efficient allocation of resources to the market.

Question 24

The government sells permits that allow producers to emit a particular amount of pollution which can be bought and sold among producers is known as

A)command-and-control regulations.
B)common property resources.
C)cap and trade systems.
D)tradable pollution rights.

Question 25

Under cap and trade systems

A)an upper limit is set that sets the marginal social costs equal to the marginal benefits of emissions.
B)an upper limit that sets marginal private costs equal to the marginal private benefits of emissions.
C)an upper limit that sets marginal social costs equal to the marginal private benefits of production.
D)an upper limit that sets marginal private costs equal to the marginal social benefits of production.

Question 26

When a resource has no direct price

A)overuse of the resource and the tragedy of the commons may occur.
B)overuse of resources and underproduction will occur.
C)pollution occurs.
D)underallocation of resources may occur.

Question 27

A negative to the command-and-control approaches to reducing pollution would include all of the following except

A)the lack of efficiency because of the government intervention.
B)the lack of flexibility.
C)the expense of regulation.
D)the unpopularity.

Question 28

Describe the consequences to the market when a product is not produced at the optimal level?

Question 29

An example of a command-and-control policy is

A)public lands and wildlife.
B)ITQs.
C)the federal taxes on gasoline.
D)limits on production.

Question 30

Collectively owned resources are known as

A)ITQs.
B)tradable pollution rights.
C)common property resources.
D)cap and trade systems.

Question 31

List and briefly explain three types of negative impacts from pollution.

Question 32

A method of environmental preservation that does not rely on continual government intervention is

A)tragedy of the commons.
B)command-and-control.
C)assignment of property rights.
D)emission limits.

Question 33

Policy responses to pollution can be classified as

A)command-and-control.
B)assignment of property rights.
C)command-and-control and assignment of property rights.
D)fees and taxes.

Question 34

Examples) of command-and-control methods of pollution reduction include

A)taxes and fees equal to the amount of the negative externality.
B)common property resources for collectively owned resources.
C)ITQs for the collectively owned resources.
D)tradable pollution rights.

Question 35

A system of pollution reduction that allows producers to emit a specific amount of pollutants is known as

A)ITQs.
B)tradable pollution rights.
C)common property resources.
D)cap and trade systems.