Deck 13: Global Air Quality: Policies for Ozone Depletion and Climate Change

Question 1

Climate change and global warming are exactly the same phenomenon.

Answer 1

False

Question 2

Scientists agree that the presence of chlorofluorocarbons (CFCs) in the atmosphere most likely explains the existence of the ozone hole.

Answer 2

True

Question 3

As the effective price of ozone-depleting substances rises due to the excise tax, the demand for substitute substances increases.

Answer 3

True

Question 4

The Kyoto Protocol banned the use of CFCs.

Question 5

Proposals have been submitted to phase down HFCs, a CFC substitute, because they are greenhouse gases contributing to climate change.

Question 6

The Montreal Protocol is the international agreement aimed at addressing climate change.

Question 7

The largest "hole" in the earth's ozone layer occurs over North America.

Question 8

After Russia ratified the Kyoto Protocol in 2004, the international agreement entered into force.

Question 9

The "greenhouse effect" is a natural phenomenon.

Question 10

During the Bush administration, the United States ratified the Kyoto Protocol.

Question 11

The EPA's Endangerment Finding led to new controls on ozone-depleting substances released from stationary sources.

Question 12

To help the U.S. achieve its objectives to control ozone depletion, an escalating excise tax was levied on the production of ozone-depleting substances.

Question 13

According to the Regulatory Impact Analysis (RIA) of the phaseout plan for ozone-depleting substances, the associated costs exceed the expected benefits.

Question 14

As a consequence of actions under the Montreal Protocol, the ozone depletion problem has been eliminated.

Question 15

CFC allowance trading was an integral part of achieving the objectives of the Montreal Protocol.

Question 16

Oceans and forests act as natural carbon sinks, which can absorb the anthropogenic releases of CO₂.

Question 17

Scientific evidence supports the assertion that human activity is adding to the accumulation of greenhouse gases and therefore contributing to global warming.

Question 18

Title VI of the 1990 Clean Air Act Amendments specifically addressed the problem of tropospheric ozone.

Question 19

The release of CFCs associated with the production of refrigeration units is an example of a negative externality.

Question 20

Under the Kyoto protocol, developed and developing countries have the same responsibilities and commitments.

Question 21

To meet its emission reduction targets under the Kyoto Protocol, the European Union developed and instituted a greenhouse gas (GHG) allowance trading program.

Question 22

Which of the following statements is INCORRECT?

A) The United States is a signatory of the Montreal Protocol.
B) The production of CFCs has been banned in the U.S.
C) Even after the phaseout deadline, the excise tax on CFCs is still in place.
D) Volatile organic compounds (VOCs) are used as a substitute for CFCs.

Question 23

Ozone depletion refers to a thinning of the stratosphere, which is the atmospheric layer that is positioned

A) between 1 and 3 miles above the earth's surface
B) between 3 and 6 miles above the earth's surface
C) between 7 and 25 miles above the earth's surface
D) none of the above

Question 24

The first mandatory cap-and-trade program launched in the United States was the one established by the Western Climate Initiative (WCI).

Question 25

In the market for fossil-fuel-based electricity, too many resources are allocated to production because the associated MSC is above the MPC.

Question 26

In the United States, the use of CFCs in most aerosol sprays was banned in

A) 1987
B) 1978
C) 2005
D) 1970

Question 27

The Montreal Protocol uses the following instruments to protect the ozone layer

A) a CFC production and consumption allowance market
B) a fund to subsidize developing countries
C) a deposit-refund system for CFC substances
D) all of the above
E) a and b only

Question 28

Consider the following market for CFC-11, a known ozone-depleting substance:
Demand: Q = 20 - 1.5P Supply: Q = 5 + 0.5P
where P is price per pound.
Assume the governmental authority imposes a $5 per pound excise
tax on CFC-11, which shifts the supply function to Q' = 2.5 + 0.5P. Use this information for any or all of the next three questions below.
What is the equilibrium price and quantity of CFC-11 after the excise tax?

A) P = $8.75; Q = 6.875
B) P = $7.5; Q = 8.75
C) P = 6.875; Q = 8.75
D) none of the above

Question 29

In the United States, there is a federally enforced greenhouse gas (GHG) allowance trading program.

Question 30

Renewable energy certificates are market instruments that represent the displacement of power generated by fossil fuels, an outcome that helps to reduce GHG emissions.

Question 31

In this case, how much of the $5.00 excise tax is paid by the consumer?

A) $3.75
B) $2.25
C) $5.00
D) $1.25
E) none of the above

Question 32

All of the following are primary uses of CFCs, EXCEPT

A) refrigeration
B) aerosol propellants
C) insulation
D) fuel octane boosters

Question 33

Most studies suggest the economic effects of climate change on the U.S. economy will be relatively small.

Question 34

According to the U.S. Supreme Court, greenhouse gases are a pollutant, as defined by the Clean Air Act.

Question 35

The U.S. federal government has enacted a nationwide carbon tax to reduce carbon dioxide emissions.

Question 36

In the EU-ETS allowance market, the price of an allowance can be affected by the state of the economy.

Question 37

Which of the following are among the effects of CFC usage?

A) increased cases of skin cancer
B) acidification of surface waters
C) urban smog
D) all of the above

Question 38

In the United States, all ozone-depleting substances were phased out by 2005 with the exception of

A) CFCs
B) halons
C) methyl bromide
D) HCFCs
E) none of the above

Question 39

The gasoline tax is the most effective type of a product charge to reduce carbon dioxide emissions.

Question 40

Consider the following market for CFC-11, a known ozone-depleting substance:
Demand: Q = 20 - 1.5P Supply: Q = 5 + 0.5P
where P is price per pound.
Assume the governmental authority imposes a $5 per pound excise
tax on CFC-11, which shifts the supply function to Q' = 2.5 + 0.5P. Use this information for any or all of the next three questions below.
What is the equilibrium price and quantity of CFC-11 before the excise tax?

A) P = $8.75; Q = 5
B) P = $7.5; Q = 8.75
C) P = $6.875; Q = 8.75
D) none of the above

Question 41

The proposed GHG controls on stationary sources in the United States

A) recommends the use of permits with no emissions standards
B) involve subsidies for the development of new abatement technologies
C) include permitting requirements and emissions standards
D) recommend significant monetary penalties on power plants releasing GHGs

Question 42

According to the text application, renewable energy certificates (RECs)

A) can be issued only by major electric utilities
B) are sold only as a bundle with one megawatt-hour of green power
C) convey rights to the benefits linked to renewable energy to the REC final owner
D) all of the above

Question 43

The EPA's Endangerment finding

A) had no effect on GHG regulation in the United States
B) asserted that GHGs posed a threat to the health and welfare of current and future generations
C) argued that GHGs present no danger to public health and welfare
D) indicated that only HFCs could endanger public welfare and recommended that they be banned from production and consumption

Question 44

All of the following are major greenhouse gases (GHGs), EXCEPT

A) carbon dioxide (CO₂)
B) methane (CH₄)
C) nitrous oxide (N₂O)
D) volatile organic compounds (VOCs)

Question 45

At the sixteenth Conference of the Parties (COP16) in Cancún,

A) participating nations signed binding commitments to further reduce GHGs
B) the countries in attendance could not reach agreement on any issue
C) the parties agreed to extend the Kyoto Protocol for 5 more years
D) participants agreed to GHG emissions reductions to keep the rise in average global temperature to less than 2 degrees Celsius

Question 46

As an economic consultant to the federal government, you recommend a market-based national policy response to global warming. In particular, you suggest using a pollution charge, which can be implemented as a gasoline tax. Based on your estimates, the marginal benefits and costs per gallon of gasoline are modeled as follows:
MPB = 10 - 0.7Q MEB = - 0.05Q MSC = MPC = 1 + 0.15Q,
where Q is in millions of gallons.

-Find the dollar value of a per unit gasoline tax that would achieve the efficient solution, and calculate the resulting tax revenues generated to government.

Question 47

Carbon footprints can be calculated for

A) households
B) products
C) individuals
D) all of the above
E) none of the above

Question 48

The Kyoto Protocol expired in

A) 2011
B) 2012
C) 2020
D) none of the above

Question 49

President Bush removed the United States from the Kyoto Protocol because

A) he did not accept the scientific explanation of global warming
B) Congress voted for him to do so
C) the protocol did not impose emissions cuts on developing countries
D) he believed that the emissions targets were too lenient

Question 50

According to the textbook application, the avoided GHG emissions associated with the Energy Star Program in 2010 were equivalent to

A) removing 33 million cars from America's highways
B) producing 3 million fewer automobiles in the United States
C) scrapping 3.3 million cars from highways around the world
D) eliminating 33.3 million heavy-duty trucks from America's highways
E) none of the above

Question 51

From an economic standpoint, the most relevant tax approach to reducing carbon dioxide emissions is a

A) gasoline tax
B) BTU tax
C) carbon tax
D) all of the above

Question 52

Currently, which country emits the largest amount of carbon dioxide (CO₂)?

A) United States
B) United Kingdom
C) China
D) Russia

Question 53

In response to the climate change issue, President Obama

A) pledged to reduce the nation's GHG emissions by 17 percent below 2005 levels by 2020
B) has vetoed all environmental bills that do not include a cap-and-trade program
C) implemented a national carbon tax effective in 2012
D) committed the United States to participating in the EU ETS, starting in 2012

Question 54

To meet their obligation under the Kyoto Protocol, member countries of the European Union (EU) in 2005 devised

A) a universal carbon tax
B) a GHG trading program
C) an EU-wide subsidy program for electric cars
D) none of the above

Question 55

As an economic consultant to the federal government, you recommend a market-based national policy response to global warming. In particular, you suggest using a pollution charge, which can be implemented as a gasoline tax. Based on your estimates, the marginal benefits and costs per gallon of gasoline are modeled as follows:
MPB = 10 - 0.7Q MEB = - 0.05Q MSC = MPC = 1 + 0.15Q,
where Q is in millions of gallons.

-1.Algebraically solve for the efficient equilibrium price and quantity, P_E and Q_E.
2. Find the dollar value of a per unit gasoline tax that would achieve the efficient solution, and calculate the resulting tax revenues generated to government.

Question 56

Currently, which of the following countries have not ratified the Kyoto Protocol?

A) United States
B) China
C) Russia
D) all of the above
E) (a) and (b) only

Question 57

In the market for fossil-fuel-based electric power,

A) the MEC is horizontal
B) the competitive equilibrium is efficient
C) the MSC is exactly equal to the MPC
D) none of the above