Deck 16: Externalities, Externaliteis, the Environment, and Natural Resources

Question 1

Centrally planned economies have historically been more damaging to the environment than capitalist ones.

Answer 1

True

Question 2

Economists believe it is feasible and desirable to reduce environmental damage to zero.

Answer 2

False

Question 3

Economists believe that externalities can be remedied by market methods.

Answer 3

True

Question 4

Cap-and-trade programs limit pollution by selling firms a fixed amount of permits to pollute.

Question 5

Externalities can create a threat to environmental quality.

Question 6

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Question 7

The production of smoke as a pollutant is a failure of the market system.

Question 8

Individuals and government have been contributors in harming the environment.

Question 9

Centrally planned economies like China produce relatively little pollution.

Question 10

Pollution is a relatively new phenomenon.

Question 11

Externalities pose a market pricing system failure.

Question 12

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

Question 13

Recycling rates for aluminum, paper, and glass have been increasing in the United States.

Question 14

Increasing environmental awareness in the United States has occurred with increasing GDP, which has reduced concerns about basic needs.

Question 15

The Army Corps of Engineers has been accused of acting on the basis of a so-called "edifice complex."

Question 16

Increasing GDP generally causes increases in problems of waste disposal.

Question 17

If not recycled, an input used in production ultimately winds up as a waste product.

Question 18

In the last three decades, air quality in American cities has improved.

Question 19

Pollution is an example of a negative externality.

Question 20

Environmental problems occur exclusively in capitalist economies.

Question 21

A pollution tax penalizes inefficient firms.

Question 22

Emissions permits might be called an allowance.

Question 23

One advantage of emissions permits is that they allow the government to choose the level of pollution reduction.

Question 24

Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Question 25

New discoveries of lead, zinc, and copper will reduce prices.

Question 26

Direct controls have a clear advantage when a total ban is necessary.

Question 27

Direct controls often require long legal proceedings before they can be effective.

Question 28

Direct controls may be a more expensive method in reducing pollution than emissions taxes.

Question 29

Voluntary programs, direct controls, and emissions taxes are all equally effective ways of controlling pollution.

Question 30

Direct controls have traditionally been used heavily to control pollution in the United States.

Question 31

Emissions permits allow polluters to pay for the right to pollute a specified amount.

Question 32

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Question 33

Rising prices will discourage consumption and encourage conservation.

Question 34

Voluntary programs are dependable ways to protect the environment.

Question 35

Direct controls work only if the legal system imposes substantial penalties on violators.

Question 36

Taxing pollution will encourage firms to reduce pollutants dumped in the atmosphere or in streams.

Question 37

Economic theory predicts that the price of a depletable resource will rise as it becomes more scarce.

Question 38

When pollution emissions can be measured, taxation will tend to be more effective than any other method of controlling pollution.

Question 39

Taxing firms that emit pollutants is one way to reduce pollution.

Question 40

Direct controls are considered inefficient because all firms are forced to pay the same costs.

Question 41

Concerns about environmental damages arise from

A)concerns about rising real gross domestic product in developing countries.
B)concerns about unemployment and the cost of living.
C)new research findings made public.
D)concerns about the quality of life.

Question 42

Economic theory would suggest that rising oil prices would reduce the amount of oil exploration and extraction.

Question 43

One of the conclusions of A. C. Pigou was that

A)a system of mandatory controls is the only effective means to control pollution.
B)a system of charges can be an effective means to control pollution.
C)pollution will wither away if a socialist system is in place.
D)pollution cannot be adequately addressed in a price system.

Question 44

Rising prices of resources leads to inefficient resource use by industry.

Question 45

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

Question 46

A failure of the pricing system has led to pollution.

Question 47

The invention of new mining methods will affect price through the supply side.

Question 48

The U.S. Environmental Protection Agency estimated that communities that use the "pay-as-you-throw" program generate almost 50 percent less waste than communities where fixed fees or taxes cover the cost of curbside trash pickup.

Question 49

Dwindling resources encourage the development of substitute products.

Question 50

Identify the economist who first addressed the environmental problem in terms of externalities.

A)Joseph Schumpeter
B)Maynard Keynes
C)A.C. Pigou
D)J.B. Say

Question 51

Economists use a resource's price as an indicator of its relative scarcity.

Question 52

If a depletable resource is selling in a perfectly competitive market, its expected price will continue to fall over time. This makes it unprofitable for firms to seek out the resource and bring it to market.

Question 53

Price controls would ordinarily be used to increase rather than decrease prices of depletable resources.

Question 54

Unexpected discoveries of mineral reserves will ordinarily cause the price of these minerals to increase.

Question 55

Centrally planned economies are able to cope with environmental pollution issues much better than capitalist countries.

Question 56

One of the virtues of rising resource prices is they encourage innovation, especially the discovery of other more abundant resources.

Question 57

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

Question 58

Price controls on resources generally lead to surpluses.

Question 59

The worst and most difficult to extract resources are used first.

Question 60

In a free market, the quantity demanded will not exceed the quantity supplied of a resource, even if it is undergoing rapid depletion.

Question 61

Which of the following is an example of detrimental externality?

A)A trailer's entry onto an overcrowded road that delays the movement of other vehicles.
B)Fall in demand for gasoline in the United States softens the price of gasoline in the global market.
C)Government investment in energy generation from nonconventional sources.
D)Society devotes huge quantity of its scarce resources for vital innovative activity.

Question 62

What is new about environmental problems today is

A)that for the first time in history, we have environmental problems.
B)the increased rate at which air and water pollution is occurring in the United States.
C)the amount of attention the community now gives them.
D)that environmental problems with pollution and garbage disposal have almost completely disappeared.

Question 63

Some of the newer pollutants that have appeared

A)are far more visible to the eye than older pollution.
B)cause damage that is easily reversible.
C)pose no significant long-term hazards.
D)are far more dangerous than older forms of pollution.

Question 64

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy. Which of the following statements was probably made by an economist?

A)"We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved."
B)"Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost."
C)"Pollution is a moral issue that cannot be reduced to dollars and cents."
D)"Clean air and water are things we can buy-if the price is right."

Question 65

Air quality in most U.S. cities has ____ since World War II.

A)worsened
B)improved
C)remained unchanged
D)improved slightly before a recent deterioration

Question 66

Since World War II,

A)air pollution has worsened in most U.S. cities.
B)many new pollutants have been introduced or identified.
C)the federal government has reduced its reliance on economic incentives as a means of reducing pollution.
D)the United States has polluted more per capita than China and India.

Question 67

The socialist countries of Eastern Europe have

A)fewer environmental problems than capitalist countries.
B)improved their environment more than the capitalist countries.
C)worse environmental problems than capitalist countries.
D)worsened since the collapse of communism there.

Question 68

China, the last large communist society,

A)has proved that a command economy has far less pollution problems than capitalist economies.
B)has urban smog levels higher than Los Angeles.
C)has the world's most sophisticated pollution-control devices.
D)has lowered its level of pollution dramatically since 1980.

Question 69

Global warming of the past century, and especially in the past decade, is at least partly a consequence of human activities that have increased ____ in the atmosphere.

A)smog
B)PCBs
C)ozone
D)"greenhouse gases"

Question 70

Pollution problems

A)have existed for many centuries.
B)are attributable to modern industrialization.
C)can be blamed on the profit system.
D)have worsened in every respect in the past 40 years.

Question 71

Many of the new pollutants to which the world has been subjected are

A)more visible to the naked eye.
B)less malodorous and less visible.
C)less dangerous due to new environmental regulations.
D)pose less health risks.

Question 72

The environmental problems of China is not caused by

A)a lack of central planning in the economy.
B)the burning of low-quality, high-sulfur coal.
C)a lack of pollution controls.
D)the one-child policy of population control.

Question 73

Recycling in the United States in recent years

A)has decreased in spite of increased rates for common recycling materials.
B)has remained unchanged, and increased rates for recycling may help.
C)has increased with increased rates for recycling materials.
D)has increased with no help from increased fees for recycling materials.

Question 74

Interest in environmental problems has intensified, perhaps because

A)for the first time in history in the 1970s, people began to die from pollution-related diseases.
B)rising incomes have caused people to be more concerned with the quality of their lives.
C)the centrally planned economies are polluted.
D)decentralized economies are less polluted.

Question 75

Which of the following statements is not true?

A)Ozone remains a pervasive problem in the United States.
B)The United States suffers the worst air quality during winter months.
C)Since the 1980s, there has been a downward trend in ambient concentrations of sulfur dioxide, carbon monoxide, and lead in the United States.
D)Improperly dumped toxic substances can cause cancer and threaten overall health.

Question 76

The British economist A. C. Pigou did not do which of the following?

A)Write The Economics of Welfare in 1911
B)Offer an explanation of the market economy's poor environmental performance
C)Outline an approach to environmental policy still in favor with economists today
D)Suggest that increases in the human population would ultimately lead to the collapse of renewable resources

Question 77

Which fact about recycling is incorrect?

A)Between 1980 and 2008, recycling in the United States has tripled.
B)As of 2014, the 27 European Union members recycled more in terms of a percentage of garbage than the United States.
C)Recycling rates of commonly used materials in the United States and industrial countries have fallen.
D)Only 9 percent of plastics are recycled.

Question 78

Which of the following statements is incorrect about Eastern Europe and the countries of the former Soviet Union?

A)Grave environmental problems plague Eastern Europe.
B)The area suffers from widespread illness and countless premature deaths.
C)The Aral Sea, once the world's fourth-largest inland sea, is now half its previous size.
D)Environmental policies set by the United States became the foundation of their new environmental rules.

Question 79

Water quality in the United States has ____ in the past 25 years.

A)improved
B)worsened
C)remained unchanged
D)improved slightly before a recent deterioration

Question 80

Serious environmental problems are

A)unique to industrial economies.
B)unique to Western economies.
C)unique to civilized economies (i.e., those in which people live mainly in cities).
D)experienced by centrally planned and market-based economic systems.