Question 1

What is common property? What does common property have to do with externalities?

Accepted Answer

The answer of What is common property? What does common...

Question 2

Property that is owned by everyone and therefore by no one in particular is referred to as

Accepted Answer

Common property refers to resources or assets that are available to everyone, but not owned by any individual or group. Examples include public parks, roads, and waterways.

Question 3

For voluntary action to correct an externality,

Accepted Answer

If transaction costs are high, it may not be efficient for parties to negotiate a solution to the externality. If transaction costs are split unevenly, the party with lower costs may not have an incentive to participate in negotiations. Therefore, when transaction costs are low, parties have a greater incentive to negotiate and reach an agreement on how to address the externality.

Question 4

Why are externalities associated with common property rather than private property?

Accepted Answer

The answer of Why are externalities associated with common property...

Question 5

Property owned by everyone (and thus no one in particular)is generally referred to as

Accepted Answer

Common property is owned collectively by a group of individuals or a community and thus no one individual has exclusive rights over it. Examples of common property include public parks, lakes, and forests.

Question 6

Explain why the buffalo almost became extinct while cattle did not, even though both provide similar goods for people.

Accepted Answer

The answer of Explain why the buffalo almost became extinct...

Question 7

In the Kyoto Protocol, participating nations agreed to

Accepted Answer

Participating nations in the Kyoto Protocol agreed to reduce their overall emissions of greenhouse gases between 1997 and 2020 to as much as 20 percent below 1990 levels. They did not agree to trade carbon-dioxide permits, eliminate all emissions of greenhouse gases by 2020, or buy greenhouse gas emission permits from developing nations.

Question 8

A resource that is a common property is

Accepted Answer

Water in a publicly owned river is a common property resource as it is owned and used by the general public and is not privately owned. The other options involve resources that are owned by specific companies or individuals, and therefore not common property resources.

Question 9

In 2005, the European Union began a program to

Accepted Answer

The program mentioned is the European Union Emissions Trading System, which allows companies to trade carbon dioxide permits among themselves. This system helps to create a market-based incentive for reducing greenhouse gas emissions without overly burdening businesses with regulations. Options A and B are not accurate targets set by the EU, and Option C does not align with the goal of reducing emissions.

Question 10

All of the costs associated with making and enforcing contracts are referred to as

Accepted Answer

Transactions costs are the costs associated with making and enforcing contracts. Alternative costs and opportunity costs refer to the costs of choosing one option over another, while marginal costs refer to the additional cost of producing one additional unit of a good or service.

Question 11

The costs associated with the negotiation and enforcement of an agreement are

Accepted Answer

The costs associated with the negotiation and enforcement of an agreement are transaction costs. These refer to the costs incurred in making an economic exchange, such as information costs, search and bargaining costs, and enforcement costs. Property costs refer to the costs of acquiring and maintaining property. Resource factor costs refer to the costs of the inputs used in production. Attorney fees are a specific type of transaction cost that may be incurred in the negotiation and enforcement of an agreement. However, transaction costs is the most comprehensive and appropriate answer.

Question 12

In order for a voluntary agreement to be reached in general, transaction costs should be

Accepted Answer

If transaction costs are low relative to the expected marginal benefits of the agreement, then it is more likely that parties will negotiate and reach a voluntary agreement. When transaction costs are high, parties may find it too costly to negotiate and may opt for alternative solutions such as regulation or litigation. Infinite transaction costs would make any negotiation impossible. The determination of transaction costs is not within the purview of the Environmental Protection Agency.

Question 13

When property rights are clearly defined, there is generally a

Accepted Answer

When property rights are clearly defined, it becomes easier for individuals or groups to reach voluntary agreements regarding the use and allocation of property resources without external intervention, making it the most suitable option from the given choices. A and B are not necessarily required when property rights are clearly defined, and C refers to a situation where property rights are not well-defined.

Question 14

In a market for emission permits, firms that emit over their allowed limits

Accepted Answer

In a market for emission permits, firms that emit over their allowed limits must buy more allowances through a trading system. This incentivizes firms to reduce their emissions and/or invest in cleaner technologies to stay within their allotted permits, as it becomes more expensive to buy more allowances.

Question 15

Which type of property would be the most likely to experience pollution?

Accepted Answer

Common property is more likely to experience pollution due to the "tragedy of the commons," where individuals tend to overuse and deplete shared resources since no single person holds responsibility for its maintenance or preservation.

Question 16

Suppose a large tree on Adam's property blocks Eve's view of the ocean. Adam accepts Eve's offer of $15,000 to cut down the tree. This is an example of

Accepted Answer

This situation involves externalities (the tree blocking Eve's view), and Adam and Eve have internalized the externality by reaching a voluntary agreement (Adam accepting Eve's offer to cut down the tree in exchange for $15,000). This is an example of market-based solutions to externalities, where individuals negotiate and reach mutually beneficial agreements to create optimal outcomes.

Question 17

In a market for emission permits, firms that emit over their allowed limits

Accepted Answer

In a market for emission permits, firms that emit over their allowed limits pay a price for these emissions. This price is determined by the supply and demand of the permits in the market, and serves as a way to incentivize firms to reduce their emissions or purchase additional permits to offset their excess emissions.

Question 18

In a situation in which property rights are not well-defined and social costs exceed private costs, government can use all of the following to induce producers to bring private costs into alignment with social costs EXCEPT

Accepted Answer

Subsidization of production would not induce producers to bring private costs into alignment with social costs, as it would only encourage an increase in production and likely exacerbate the problem of social costs exceeding private costs. The other options all have the potential to align private costs with social costs in a variety of ways.

Question 19

Which of the following is NOT an example of common property?

Accepted Answer

A trampoline is a private property, owned by an individual or group, and not available for use by the general public. Air, gravity, and sunshine are all examples of common property as they are resources that are available to everyone and cannot be privately owned or controlled.

Question 20

The Framework Convention on Climate Change took place in

Accepted Answer

The Framework Convention on Climate Change was adopted at the Earth Summit in Rio de Janeiro in 1992 and entered into force in 1994. The Kyoto Protocol, which was adopted in 1997, is an international agreement under the Convention that requires countries to reduce their greenhouse gas emissions. The other options listed refer to international trade negotiations.

Quiz 31: Environmental Economics

What is common property? What does common property have to do with externalities?

Property that is owned by everyone and therefore by no one in particular is referred to as

For voluntary action to correct an externality,

Why are externalities associated with common property rather than private property?

Property owned by everyone (and thus no one in particular) is generally referred to as

Explain why the buffalo almost became extinct while cattle did not, even though both provide similar goods for people.

In the Kyoto Protocol, participating nations agreed to

A resource that is a common property is

In 2005, the European Union began a program to

All of the costs associated with making and enforcing contracts are referred to as

The costs associated with the negotiation and enforcement of an agreement are

In order for a voluntary agreement to be reached in general, transaction costs should be

When property rights are clearly defined, there is generally a

In a market for emission permits, firms that emit over their allowed limits

Which type of property would be the most likely to experience pollution?

Suppose a large tree on Adam's property blocks Eve's view of the ocean. Adam accepts Eve's offer of $15,000 to cut down the tree. This is an example of

In a market for emission permits, firms that emit over their allowed limits

In a situation in which property rights are not well-defined and social costs exceed private costs, government can use all of the following to induce producers to bring private costs into alignment with social costs EXCEPT

Which of the following is NOT an example of common property?

The Framework Convention on Climate Change took place in