Question 1

Fish are
A)always renewable resources
B)renewable resources whenever property rights are well defined
C)renewable resources if they are taken and replaced at rates that provide a steady supply
D)renewable resources only if they are replaced at a rate that exceeds the rate at which they are caught
E)renewable resources whenever property rights are well defined and can be easily enforced

Accepted Answer

Fish can be renewable resources, but only if they are taken and replaced at rates that provide a steady supply. Overfishing disrupts this balance and can deplete fish populations, making them no longer renewable. Additionally, property rights can help regulate fishing and ensure sustainable practices, but they alone do not guarantee sustainability. Therefore, choice C is the most accurate option.

Question 2

Property rights can be defined and enforced
A)only by the government
B)only by ethical norms
C)by the government and by ethical norms
D)only through constant renegotiation
E)by government, by informal social actions, and by ethical norms

Accepted Answer

Property rights can be defined and enforced through various means. While the government plays a vital role in defining and enforcing property rights, informal social actions and ethical norms surrounding property also have a significant impact. For example, in some communities, there may be social norms against stealing or taking what is not yours, which reinforces the concept of private property. Ethical norms also play a role in defining what is considered acceptable behavior regarding property rights. Therefore, it is best to choose option E that includes all three methods of defining and enforcing property rights.

Question 3

Some pollution occurs because property rights to some resources are welldefined.

Accepted Answer

Pollution can occur when property rights are well-defined but not assigned, such as in the case of air pollution where it is difficult to assign property rights to the atmosphere. This leads to the tragedy of the commons where users of the resource have no incentive to conserve it, leading to overuse and pollution.

Question 4

When an activity results in the imposition of external costs, markets willproduce more than the socially optimal level of that activity.

Accepted Answer

When external costs are not factored into the market price, producers will continue to produce and sell goods even if the social cost exceeds the benefits to society. This results in overproduction and a level of output that is higher than the socially optimal level.

Question 5

Which of the following can be a renewable resource?
A)oil
B)timber
C)coal
D)iron ore
E)uranium

Accepted Answer

Timber can be a renewable resource if it is harvested using sustainable practices where new trees are planted to replace the ones that are cut down. The other options are non-renewable resources.

Question 6

An individual who drives a car without a muffler in an attempt to increasefuel economy is creating
A)a positive externality
B)a public good
C)a negative externality
D)a winner's curse
E)vertical inequity

Accepted Answer

When an individual drives a car without a muffler, it creates noise pollution which is a negative externality as it affects others who are not involved in the transaction. Also, the attempt to increase fuel economy by driving a car without a muffler is not a public good, a winner's curse, or vertical equity.

Question 7

)Renewable resources are those for which
A)additional units can be purchased in the market
B)additional units can be purchased in the market or provided by government
C)worn­out units can be repaired for further use
D)periodic use can be continued indefinitely
E)additional sources are constantly being discovered

Accepted Answer

Renewable resources are those that can be used repeatedly without being depleted. Therefore, periodic use can be continued indefinitely, making option D the best choice. Option A implies a tradable commodity, option B suggests government involvement, option C refers to repairable goods, and option E implies a constantly expanding resource base, which doesn't fit the definition of renewable resources.

Question 8

Which of the following would not be considered a negative externality?
A)loud rap music at 2 a.m.in the apartment next door to you
B)traffic congestion
C)an Alaskan oil spill
D)measles vaccinations
E)air pollution

Accepted Answer

Measles vaccinations are not a negative externality because they provide a positive impact on society by preventing the spread of disease. The other options are examples of negative externalities because they impose a cost or harm on individuals or the environment without compensation.

Question 9

All of the following are examples of negative externalities except one.Which is the exception?
A)water pollution
B)your roommate going on a diet
C)second­hand smoke
D)loud conversation in the workplace
E)your neighbor building a bomb shelter on her front lawn

Accepted Answer

Your roommate going on a diet is not a negative externality. It does not affect anyone else's well-being or property.

Question 10

When consumption of a good or service produces benefits or costs that arenot reflected in the market price for the good, this is known as a(n)
A)externality
B)common pool problem
C)nonexcludable resource
D)public good
E)renewable resource

Accepted Answer

An externality occurs when the consumption or production of a good or service affects people who are not directly involved in the transaction and the costs or benefits are not reflected in the market price. This leads to inefficiencies and market failure.

Question 11

Pollution and other negative externalities arise because
A)there are no enforceable property rights to open­ access resources
B)legislators cannot agree on what to do about them
C)they are the price consumers are willing to pay for production of goods and services
D)private property rights to pollute are controlled by businesses
E)science cannot decide how to control them

Accepted Answer

Pollution and other negative externalities arise because there are no enforceable property rights to open-access resources. Open-access resources are available to everyone and no one owns them, which leads to overuse and degradation of resources. Without property rights, individuals and firms are not held responsible for the damages that they cause to the environment or to others, resulting in pollution and other negative externalities.

Question 12

When an activity results in the creation of external benefits, markets willproduce more than the socially optimal level of that activity.

Accepted Answer

The answer of When an activity results in the creation...

Question 13

Pollution arises because
A)the atmosphere is a nonrenewable resource
B)the atmosphere is a renewable resource
C)of enforceable property rights
D)the atmosphere is an open­access resource
E)there is no supply of pollution curve

Accepted Answer

Pollution arises because the atmosphere is an open-access resource, meaning there are no clear property rights to it and no cost to polluting. This leads to a tragedy of the commons situation where individuals and companies can freely pollute without bearing the full social cost of their actions.

Question 14

A person can cause a negative externality by
A)becoming immunized
B)talking loudly in a restaurant
C)landscaping her lawn
D)paying taxes
E)attending school

Accepted Answer

Talking loudly in a restaurant can disturb other diners, causing a negative externality for them. The other choices either don't have a clear negative externality (immunization, landscaping, attending school) or actually have positive externalities (paying taxes, which fund public goods and services).

Question 15

An externality is
A)a cost of a transaction that is borne by a third party
B)a benefit of a transaction that is enjoyed by a third party
C)a cost or benefit that arises when market price changes
D)any cost or benefit of a transaction that is not accounted for in the market price
E)the external revenue generated by a firm

Accepted Answer

The answer of An externality is
A)a cost of a transaction...

Question 16

All of the following are sources of negative externalities except one.Whichis the exception?
A)a paper mill that pollutes a river
B)a person who throws a beer can out the window of a moving car
C)cars, which emit carbon monoxide
D)a solar water heater which is outside and obscure from view
E)products that contribute to the greenhouse effect

Accepted Answer

A solar water heater that is outside and obscure from view does not have any negative impact on anyone else and therefore does not cause negative externalities.

Question 17

The most likely reason why Los Angeles has so much smog is that residents
A)do not have strong, enforceable property rights to rapid transit
B)do not have strong, enforceable property rights to clean air
C)prefer dirty air to the inconvenience of rapid transit
D)prefer dirty air to the inconvenience of carpools
E)prefer dirty air to the inconvenience of eliminating smog

Accepted Answer

The most likely reason for the high level of smog in Los Angeles is due to the lack of strong, enforceable property rights to clean air. This means that there are no regulations in place to ensure that businesses and individuals are not emitting harmful pollutants into the air.

Question 18

Private property rights are easily assigned to open­access resources.

Accepted Answer

Open-access resources are resources that are freely available without any limitations or restrictions on access or use. Since they are open to anyone, it is not possible to assign private property rights to them. Private property rights apply to resources that are owned by individuals, companies or institutions and can be traded or used according to the will of the owner.

Question 19

If periodic use of a resource can be continued indefinitely, that resource issaid to be
A)removable
B)renewable
C)cyclical
D)recyclable
E)part of a common pool

Accepted Answer

Renewable resources are those that can be replenished or regenerated at a rate faster than they are being used, allowing for sustained use over time. Examples include solar energy, wind power, and sustainably harvested forests.

Question 20

Oil is an example of a renewable resource.

Accepted Answer

Oil is a non-renewable resource, meaning it is finite and will eventually run out. It is formed over millions of years from the remains of dead organisms, and therefore cannot be replenished on a human timescale.

Quiz 17: Externalities and the Environment

Fish are

Property rights can be defined and enforced

Some pollution occurs because property rights to some resources are welldefined.

When an activity results in the imposition of external costs, markets willproduce more than the socially optimal level of that activity.

Which of the following can be a renewable resource?

An individual who drives a car without a muffler in an attempt to increasefuel economy is creating

) Renewable resources are those for which

Which of the following would not be considered a negative externality?

All of the following are examples of negative externalities except one.Which is the exception?

When consumption of a good or service produces benefits or costs that arenot reflected in the market price for the good, this is known as a(n)

Pollution and other negative externalities arise because

When an activity results in the creation of external benefits, markets willproduce more than the socially optimal level of that activity.

Pollution arises because

A person can cause a negative externality by

An externality is

All of the following are sources of negative externalities except one.Whichis the exception?

The most likely reason why Los Angeles has so much smog is that residents

Private property rights are easily assigned to openaccess resources.

If periodic use of a resource can be continued indefinitely, that resource issaid to be

Oil is an example of a renewable resource.

Quiz 17: Externalities and the Environment

Fish are

Property rights can be defined and enforced

Some pollution occurs because property rights to some resources are welldefined.

When an activity results in the imposition of external costs, markets willproduce more than the socially optimal level of that activity.

Which of the following can be a renewable resource?

An individual who drives a car without a muffler in an attempt to increasefuel economy is creating

) Renewable resources are those for which

Which of the following would not be considered a negative externality?

All of the following are examples of negative externalities except one.Which is the exception?

When consumption of a good or service produces benefits or costs that arenot reflected in the market price for the good, this is known as a(n)

Pollution and other negative externalities arise because

When an activity results in the creation of external benefits, markets willproduce more than the socially optimal level of that activity.

Pollution arises because

A person can cause a negative externality by

An externality is

All of the following are sources of negative externalities except one.Whichis the exception?

The most likely reason why Los Angeles has so much smog is that residents

Private property rights are easily assigned to open­access resources.

If periodic use of a resource can be continued indefinitely, that resource issaid to be

Oil is an example of a renewable resource.

Private property rights are easily assigned to openaccess resources.