Question 1

The view that pollution should involve efforts in which the market forces direct firms and individuals to undertake environmental protection actions voluntarily is most closely associated with the
A) Conservative position.
B) Liberal position.
C) Radical position.
D) Conservative and Radical positions.

Accepted Answer

The market-based approach to pollution control, which relies on market forces to encourage voluntary environmental protection actions by firms and individuals, is most closely associated with the Conservative position. This approach emphasizes limited government intervention and the promotion of private sector solutions to environmental problems.

Question 2

An example of a good or service with significant spillover benefits would be
A) medical services.
B) higher education.
C) a company operated day-care program.
D) All of the above.
E) None of the above.

Accepted Answer

Medical services provide spillover benefits because an individual who receives a vaccination or treatment not only benefits themselves but also decreases the likelihood of spreading the illness to others. Higher education provides spillover benefits because a well-educated population benefits the economy as a whole by improving productivity and innovation. A company-operated day-care program provides spillover benefits because it enables working parents to be more productive and focused on their job, thus benefiting the company as a whole.

Question 3

Which of the following is not a view advanced by any of our representative paradigms?
A) The legal system can provide redress for environmental damages.
B) Direct pollution controls will halt pollution.
C) Selling "rights to pollute" is one way of internalizing pollution costs into prices.
D) Spillover costs is not a problem that deserves serious public policy attention.
E) None of the above.

Accepted Answer

All of the other statements reflect views advanced by at least one of the representative paradigms. For example, the legal system view is often associated with the neoclassical paradigm, direct pollution controls are a focus of the regulatory paradigm, and "rights to pollute" are often discussed within the property rights paradigm. However, spillover costs (i.e. externalities) are a key concern for all of the paradigms, and are not seen as unworthy of attention.

Question 4

Advocates of marginal social cost (MSC)-marginal social benefit (MSB) analysis would suggest spending
A) up to the point of greatest divergence between MSC and MSB.
B) where MSC = MSB.
C) the largest possible amount on pollution controls regardless of the benefits.
D) up to the point where MSB = 0.

Accepted Answer

Marginal social cost (MSC)-marginal social benefit (MSB) analysis suggests that resources should be allocated to the point where MSC = MSB. This is because at this point, the social cost is equal to the social benefit, and any additional spending would result in a decrease in social welfare. Therefore, spending should be allocated efficiently to maximize social welfare.

Question 5

The concept of externalities refers to
A) the internalized cost of producing.
B) a situation where actual benefits or costs are not reflected in the market price of the good.
C) the difficulty in determining actual polluters.
D) None of the above.

Accepted Answer

Externalities refer to situations where actual benefits or costs are not reflected in the market price of a good. This occurs when the production or consumption of a good or service affects third parties who are not directly involved in the transaction. For example, pollution from a factory may have negative effects on the health and well-being of nearby residents, but these costs are not factored into the price of the goods being produced.

Question 6

An example of external diseconomy would be
A) living downwind from a steel mill.
B) a situation where total social costs exceeded total revenues from a hazardous product.
C) a situation in which general costs to the public are not internalized in a firms production costs.
D) All of the above.
E) None of the above.

Accepted Answer

External diseconomies refer to situations where a firm's production causes negative effects on third parties or the environment, which are not reflected in the firm's costs. All the options provided (A, B, C) are examples of external diseconomies. Living downwind from a steel mill (A) involves negative health and environmental impacts not accounted for by the steel mill. A situation where total social costs exceed total revenues from a hazardous product (B) implies that the broader societal costs of the product (like health issues or environmental damage) are not covered by the revenue it generates. A situation in which general costs to the public are not internalized in a firm's production costs (C) directly describes an external diseconomy, where the negative impacts on society are not reflected in the cost of production.

Question 7

According to Milton Friedman
A) voluntary exchange is possible under all market conditions.
B) "neighborhood effects" may justify intervening in the market.
C) direct controls are the best antipollution tactic.
D) there is no pollution problem.

Accepted Answer

Friedman acknowledged the existence of "neighborhood effects" or externalities, such as pollution, where he believed government intervention might be justified to correct market failures.

Question 8

The Environmental Protection Agency (created in 1972) was given power to
A) set emission levels.
B) determine what fuels might be burned in automobiles.
C) close down polluters that pose an immediate threat to the public.
D) All of the above.
E) None of the above.

Accepted Answer

The Environmental Protection Agency (EPA) was established to protect the environment and human health by regulating and enforcing laws related to pollution. The EPA has the authority to set emission levels for pollutants, determine what fuels might be burned in automobiles, and close down polluters that pose an immediate threat to the public. Therefore, all the choices mentioned (A, B, and C) are correct, making option D the best choice.

Question 9

Conservatives favor the following antipollution strategies:
A) No action at all.
B) Government subsidies of pollution control expenditures by private businesses.
C) Levying emissions taxes.
D) Creation of a government "superagency."
E) None of the above.

Accepted Answer

Levying emissions taxes is the antipollution strategy favored by conservatives, as it aligns with their ideology of limited government intervention and free market principles. This approach allows businesses to make their own decisions on how to reduce emissions, while also incentivizing them to do so through taxation. The other options listed do not align as well with conservative values. A) No action at all goes against the idea of protecting the environment, which many conservatives support. B) Government subsidies go against the idea of limited government intervention and free markets. D) Creating a government "superagency" also goes against the idea of limited government intervention. E) "None of the above" is not a specific antipollution strategy.

Question 10

Liberals generally claim
A) external diseconomies result from excessive government controls.
B) an external benefit does not reflect a market failure while an external cost does.
C) the EPA should be abolished.
D) the market economy provides few incentives to make investments that produce external benefits or lower costs.

Accepted Answer

Liberals generally believe that the market economy does not provide sufficient incentives for individuals and businesses to invest in activities that produce external benefits or lower costs. They therefore support government interventions such as subsidies, taxes, or regulations to address this market failure. Options A and C are not consistent with liberal ideology, and option B is incorrect since both external benefits and external costs reflect market failures.

Question 11

Liberals support which of the following antipollution strategies?
A) Purely voluntary actions.
B) Letting the political party in power establish the environmental standards.
C) Metering all effluents and taxing accordingly.
D) Use of direct intervention in particularly threatening cases of pollution.

Accepted Answer

The answer of Liberals support which of the following antipollution...

Question 12

Generally, Radicals have opposed past pollution policies on the grounds that
A) government efforts have shown a bias on behalf of business.
B) pollution is a highly exaggerated problem.
C) they support the "bubble concept."
D) pollution ultimately reduces the aggregate rate of profit.

Accepted Answer

Radicals believe that government efforts have often shown a bias towards protecting business interests at the cost of the environment. They view pollution policies as ineffective and insufficient in addressing the root cause of environmental degradation, which they see as capitalist exploitation of natural resources for profit.

Question 13

The Kyoto Treaty of 1997 sought to
A) reduce import taxes on U.S. goods shipped to Japan.
B) regulate automobile safety.
C) avert a global climate change disaster.
D) relax international environmental standards.

Accepted Answer

The Kyoto Treaty, also known as the Kyoto Protocol, was an international agreement aimed at reducing greenhouse gas emissions in order to prevent global climate change. Therefore, choice (C) is the correct answer. Choices (A), (B), and (D) are all incorrect because they are unrelated to the purpose of the Kyoto Treaty.

Question 14

A "spillover cost" refers to the fact that not all costs of a good have been internalized into that good's price.

Accepted Answer

A spillover cost, also known as an external cost, is a cost incurred by a third party as a result of a transaction between two other parties. These costs are not reflected in the price of the good or service, and are therefore not internalized.

Question 15

By and large, Liberals are more likely to support direct controls of pollution levels than are Conservatives.

Accepted Answer

Generally, Liberals prioritize environmental protection and regulation, while Conservatives prioritize business and economic interests. Thus, Liberals are more likely to advocate for direct controls on pollution levels.

Question 16

Conservatives, Liberals, and Radicals agree that the acid rain problem is proof that all of the environmental efforts of the past several decades have done little or nothing to improve national environmental quality.

Accepted Answer

This statement is misleading and false. While acid rain is still a problem, there have been significant efforts to reduce its impact through regulations and technologies. Additionally, there have been noticeable improvements in air and water quality in many areas due to environmental efforts. Different political ideologies may have varying opinions on the effectiveness and priorities of environmental efforts, but it is inaccurate to say that there has been no improvement in national environmental quality.

Question 17

The society is best served whenever the outlays for maintaining clean air are such that the marginal social benefit is just equal to the marginal social cost for the last unit of clean air obtained.

Accepted Answer

This statement is true. The optimal level of pollution control occurs when the cost of reducing pollution is equal to the benefits gained from pollution reduction. This level is achieved when marginal social cost equals marginal social benefit, and is referred to as the socially optimal level of pollution.

Question 18

Liberals and Conservatives agree that subsidies paid to firms that undertake cleanup activities is the best way for internalizing the external costs of pollution.

Accepted Answer

Liberals and Conservatives often have differing views on how to address environmental issues, including the use of subsidies for cleanup activities. Liberals might support such subsidies as a way to internalize the external costs of pollution, while Conservatives might prefer market-based solutions or less government intervention.

Question 19

Government subsidies--as a technique for inducing firms to clean up their effluents--is attractive because it is costless.

Accepted Answer

Government subsidies are not costless. The government has to allocate resources to fund these subsidies, which can come from tax revenue or borrowing, and there may be administrative costs associated with implementing and monitoring the subsidy program.

Question 20

Radicals argue that economic cost ought not to be the determining factor in pollution cleanup efforts.

Accepted Answer

Radicals prioritize environmental protection over economic costs and believe that the responsibility for pollution cleanup should fall on polluters, rather than taxpayers.

Quiz 3: Dealing With Externalities: How Can We Save the Environment

The view that pollution should involve efforts in which the market forces direct firms and individuals to undertake environmental protection actions voluntarily is most closely associated with the

An example of a good or service with significant spillover benefits would be

Which of the following is not a view advanced by any of our representative paradigms?

Advocates of marginal social cost (MSC) -marginal social benefit (MSB) analysis would suggest spending

The concept of externalities refers to

An example of external diseconomy would be

According to Milton Friedman

The Environmental Protection Agency (created in 1972) was given power to

Conservatives favor the following antipollution strategies:

Liberals generally claim

Liberals support which of the following antipollution strategies?

Generally, Radicals have opposed past pollution policies on the grounds that

The Kyoto Treaty of 1997 sought to