Question 1

In 1972,the EPA banned the pesticide DDT.How would you classify this approach to reducing the environmental contamination caused by DDT?

Accepted Answer

Command-and-control regulation controls pollution and makes specific rules about the way pollution must be reduced, including outright bans.

Question 2

One of the characteristics of the cap-and-trade system is that

Accepted Answer

Cap-and-trade systems allow the polluter to sell excess permits to pollute, so that if it is cheap for a polluter to reduce pollution, it will sell its permits to polluters who find this more expensive. The pollution is reduced where it is relatively cheap to do so.

Question 3

Responses to global climate change include the alteration of consumer and business behavior to reduce any damage that might occur from global climate change.This is called

Accepted Answer

Adaptation is the alteration of consumer and business behavior to reduce the damage from global climate change.

Question 4

If the government sells certificates giving the owner permission to emit a particular amount of pollution,and then allows these certificates to be bought and sold at a market price,then the government is using a market-based approach to pollution reduction called

Accepted Answer

A pollution permit gives a business the right to emit a particular amount of pollution. Only a certain number of permits are issued, which provides a cap on the amount of pollution. These permits can be bought or sold. The ability to sell permits for a profit gives firms incentive to cut their own emissions more than required.

Question 5

Controlling pollution by setting the same maximum allowable amount of pollution for each polluter,and making specific rules about the way it must be reduced,is called

Accepted Answer

The command-and-control to reduce pollution means the government tells businesses and consumers what to do and what not to do.

Question 6

If the true social marginal cost of producing a product,including the externality,is higher than the marginal cost to the producer alone,then which of the following must be true?

Accepted Answer

When the true social marginal cost of producing a product, including the externality, is higher than the marginal cost to the producer alone, it indicates that there are additional costs to society not borne by the producer. This scenario typically occurs when the production of the product generates a negative externality, such as pollution, where the societal costs (health issues, environmental degradation) are not reflected in the producer's costs. Positive externalities would have the opposite effect, implying benefits to society not captured by the producer's costs.

Question 7

A tax on different kinds of fuels based on their carbon content is called a

Accepted Answer

A carbon tax varies for different fuels according to their carbon content.

Question 8

Which of the following is a market-based approach to controlling pollution?

Accepted Answer

A pollution permit gives a business a right to emit a certain amount of pollution, but the permit may be sold on the open market at a price reflecting the cost of reducing pollution.

Question 9

Which of the following is a type of command-and-control regulation?

Accepted Answer

Command-and-control regulation controls pollution and makes specific rules about the way pollution must be reduced.

Question 10

One of the characteristics of a carbon tax is that it would

Accepted Answer

Carbon taxes would increase the costs of using energy, particularly carbon-intensive energy sources, and would therefore encourage greater energy efficiency.

Question 11

Among the characteristics of the command-and-control approach to pollution reduction is that it is

Accepted Answer

Command-and-control regulation usually forces all pollution emitters to meet the same standards or install the same equipment, which can be very expensive.

Question 12

Which of the following statements is true?

Accepted Answer

Negative externalities are adverse side effects on bystanders resulting from an exchange between a buyer and a seller. These may occur even if the social benefits exceed the costs.

Question 13

Which of the following is the most widely used energy source in the world?

Accepted Answer

The most widely used source of energy in the world is fossil fuels, which include coal, petroleum, and natural gas.

Question 14

Which of the following companies would benefit the most from a carbon tax?

Accepted Answer

Carbon taxes would impose a burden on users and producers of carbon-based fuels. Windmills are a carbon-free source of energy.

Question 15

If the marginal cost curve for paper production were altered to reflect the cost of the odor imposed on surrounding areas,which of the following would occur?

Accepted Answer

When the marginal cost curve is altered to include the cost of the odor imposed on surrounding areas, it becomes a negative externality that is not included in the market price. As a result, the market price does not reflect the true cost of production, and producers will continue to produce at a level where the marginal cost equals the market price, resulting in overproduction. To correct this, the market price must increase to reflect the true social cost, which would cause the marginal cost curve to shift upward. Therefore, choice B is correct.

Question 16

Suppose the production of widgets generates negative externalities but no positive externalities.If widget producers suddenly had to pay the true marginal cost of their product for every unit they produced,including all externalities,producers would

Accepted Answer

If widget producers had to pay the true marginal cost of their product, which includes negative externalities, it would increase the cost of production. This increase in cost would cause producers to reduce their output, resulting in less production than the current level. Widget producers would have an incentive to reduce pollution output to lower costs and continue with production. Therefore, the correct answer is C.

Question 17

Which of the following statements about the burden of a carbon tax is true?

Accepted Answer

Because poor families devote a larger share of their income to energy than do high-income families, the carbon tax would be regressive.

Question 18

Which of the following is considered a "nonrenewable" energy source?

Accepted Answer

Nonrenewable energy sources cannot be regenerated-once they are consumed, they are gone forever.

Question 19

Adjusting GDP downward for the impact industry has on the environment results in a number that is greatly disputed,but is often referred to as

Accepted Answer

Adjusting GDP downward for the impact industry has on the environment results in a number that is greatly disputed, but is often referred to as "green GDP."

Question 20

Negative externalities resulting from a coal-fired power plant would include

Accepted Answer

Negative externalities are adverse side effects on bystanders resulting from an exchange between a buyer and a seller. These adverse effects include the results of pollution from the burning of coal.

Quiz 19: Economics of Energy, the Environment, and Global Climate Change Glossary