Deck 5: The Economics of Environmental Quality

Question 1

Determining a target level of environmental quality is an example of _______.

A)positive policy analysis
B)positive economics
C)normative policy analysis
D)benefit-cost analysis

Answer 1

C

Question 2

In the following figure,the total damage cost of 25 units of emissions is equal to _______.

A)$10
B)$125
C)$250
D)$625

Answer 2

B

Question 3

The height of the marginal damage curve at a particular level of emissions shows how much total damages change if there is a small change in the quantity of emissions.

Answer 3

True

Question 4

For a firm with more than one source of emissions,the ________ states that the total costs of abating a given abatement target will be minimized when the marginal costs of abatement are ________ across sources.

A)equimarginal principle;equalized
B)law of one price;equalized
C)equimarginal principle;minimized
D)Coase theorem;equalized

Question 5

In the following figure,the marginal abatement cost of abating the 20^th unit of emissions is _______.

A)$40
B)$200
C)$400
D)impossible to determine from the information provided

Question 6

Under what circumstances would a firm with more than one source of production minimize its total costs of production by setting production levels equal at each source?

A)This method will always result in the firm minimizing its total production costs.
B)When each source has identical marginal cost of production structures.
C)When each source has identical marginal abatement cost structures.
D)When each source has identical marginal damage cost structures.

Question 7

Describing and explaining economic events that have taken place in the real world is known as positive economics.

Question 8

In the following figure,the total abatement cost of abating 20 units of emissions is _______.

A)$40
B)$400
C)$800
D)impossible to determine from the information provided

Question 9

The study of what ought to be such as determining the socially efficient level of emissions is known as normative economics.

Question 10

In the following figure,the uncontrolled level of emissions is _______.

A)80
B)40
C)160
D)impossible to determine from the information provided

Question 11

For certain pollutants with a(n)_______,emissions or ambient quality up to a certain level cause _________ damages.

A)threshold;no
B)ambient concentration;no
C)threshold;severe
D)ambient concentration;severe

Question 12

For a marginal damage cost function equal to: MD = 0.8E,the marginal damage cost of the 50^th unit of emissions is _______.

A)$4
B)$40
C)$1,000
D)$2,000

Question 13

Suppose there are three polluting sources with MAC₁ = 100 - 4E,MAC₂ = 80 - 2E and MAC₃ = 60 - 0.5E.When MAC equals $10,the aggregate level of abatement for these sources would be _______.

A)175 units
B)157.5 units
C)212.5 units
D)impossible to determine from the information provided

Question 14

In the following figure,the marginal damage cost of the 25^th unit of emissions is equal to _______.

A)$10
B)$25
C)$125
D)$250

Question 15

A(n)________ shows how damages are related to the concentration of a waste product contained in the ambient environment.

A)emission damage function
B)ambient damage function
C)marginal damage function
D)ambient concentration

Question 16

Under what circumstances would a firm with more than one source of emissions minimize its total costs of abatement by setting abatement levels equal at each source?

A)This method will always result in the firm minimizing its total abatement costs.
B)When each source has identical marginal cost of production structures.
C)When each source has identical marginal abatement cost structures.
D)When each source has identical marginal damage cost structures.

Question 17

For a single,non-accumulative pollutant,when no threshold exists the marginal damage function begins at the origin.
When no threshold exists,the very first unit of emissions has an impact on the environment.

Question 18

A marginal damage function that becomes vertical at high levels of emissions represents _______.

A)a threshold
B)an infinite ambient concentration
C)a toxic pollutant
D)an environmental catastrophe

Question 19

For a firm with more than one source of output with differing cost structures,its ________ will be minimized when its ________ are equalized across sources.

A)marginal production costs;production levels
B)total production costs;production levels
C)total production costs;marginal production costs
D)marginal production costs;total production costs

Question 20

Suppose there are three polluting sources with MAC₁ = 75 - 0.25E,MAC₂ = 120 - 4E and MAC₃ = 50 - 0.5E.When MAC equals $20,the aggregate level of abatement for these sources would be _______.

A)impossible to determine from the information provided
B)150 units
C)305 units
D)555 units

Question 21

What is the total abatement cost at the socially efficient level of emissions?

Question 22

What is the total damage cost at the socially efficient level of emissions for this industry?

Question 23

What is the total social cost at the socially efficient level of emissions?

Question 24

The equimarginal principle can only be applied at the level of one firm with multiple plants all producing the same good and pollutant.

Question 25

Let MAC₁ = 80 - 2E and MAC₂ = 50 - E.Graph each function and graphically derive the aggregate MAC curve.

Question 26

Briefly define positive and normative economics and give an example of each concept.

Question 27

The least costly way of achieving reductions in emissions for a group of polluting sources is depicted by the aggregate marginal abatement cost function of the group of sources.

Question 28

What is the socially efficient level of abatement for this industry?

Question 29

What is the socially efficient level of emissions for this industry?

Question 30

Draw a diagram of the marginal abatement cost curve described by: MAC = 100 - 2E.What is the uncontrolled level of emissions? What is the marginal abatement cost of the 40^th unit of abatement? What is the total abatement cost of 40 units of abatement?

Question 31

Draw a diagram of the marginal abatement cost curve described by: MAC = 90 - 3E.What is the uncontrolled level of emissions? What is the marginal abatement cost of the 10^th unit of abatement? What is the total abatement cost of 10 units of abatement?