Question 1

Exhibit 17-3
 
-In Exhibit 17-3,the optimal air quality level is
A) 0
B) 40
C) 50
D) 70
E) 100

Accepted Answer

In Exhibit 17-3, the optimal air quality level is shown to be at 50, where the marginal social benefits (MSB) and marginal social costs (MSC) intersect. At any level below 50, the MSB is greater than the MSC indicating that there is room for greater production of the air-cleaning service. At any level above 50, the MSC is greater than the MSB, showing that the costs of cleaning the air further outweigh the benefits. Therefore, the optimal air quality level is 50.

Question 2

As more pollution is abated,the total social benefit from pollution abatement increases.

Accepted Answer

This statement is true because as pollution is reduced, there are benefits to society including improved health, reduced damage to natural resources, and increased recreational opportunities. As these benefits increase, the overall social benefit of pollution abatement also increases.

Question 3

The socially optimal amount of pollution abatement may be less than 100 percent.

Accepted Answer

The socially optimal amount of pollution abatement balances the marginal cost of abatement with the marginal benefit of reduced pollution. In some cases, the cost of reducing pollution further may outweigh the benefits, leading to a socially optimal level of pollution that is less than 100 percent abatement.

Question 4

As more pollution is abated,the marginal social benefit from further abatement diminishes.

Accepted Answer

This statement is true as the initial pollution abatement efforts may bring about significant improvements in environmental quality and public health, but as pollution levels decrease, the incremental improvements become smaller and more costly to achieve. Hence, the marginal social benefit from further abatement diminishes.

Question 5

When using the economic efficiency approach to controlling air and water pollution,the government
A) forces each firm to produce emissions in the most cost efficient manner irrespective of its cost structure
B) offers each firm the flexibility to reduce emissions in the most cost effective manner,given its unique cost structure
C) offers each firm the option of choosing between the cost minimizing emission level and the profit maximizing emission level
D) provides each firm with some fixed rules and then requires them to maximize profits given these fixed rules
E) offers each firm the option of using marginal cost pricing and average cost pricing when determining the optimum emissions levels

Accepted Answer

The economic efficiency approach aims to reduce pollution in the most cost-effective manner, while still allowing firms to operate efficiently. Therefore, option B, which offers each firm the flexibility to reduce emissions in the most cost-effective manner given its unique cost structure, is the best choice. This approach allows firms to find the most efficient way to reduce pollution while minimizing the costs associated with it. This approach is seen as a more practical and effective method of controlling pollution, as it takes into account the unique circumstances and capabilities of individual firms.

Question 6

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper.On a graph of the optimal level of air quality,the use of the new technology would be represented by
A) a leftward shift of the marginal social cost curve
B) a rightward shift of the marginal social cost curve
C) movement to the right along the marginal social cost curve
D) movement to the left along the marginal social cost curve
E) a downward shift of the marginal net benefit curve

Accepted Answer

The use of the new technology would mean that the cost of reducing air pollution decreases, resulting in a rightward shift of the marginal social cost curve. This means that the optimal level of air quality is now achieved at a lower cost, which is beneficial for both the industry and society as a whole.

Question 7

The optimal level of air quality
A) is always zero
B) occurs when the marginal social cost of air quality exceeds the marginal social benefit
C) is greater if the marginal social benefit curve of air quality shifts rightward
D) occurs when positive externalities are eliminated
E) eliminates the common pool problem

Accepted Answer

The optimal level of air quality is not always zero (A) because a certain level of pollution may be necessary for economic activities. The optimal level of air quality occurs when the marginal social benefit of air quality equals the marginal social cost (B), but if the marginal social benefit curve shifts rightward, then the optimal level of air quality will also shift rightward (C). Eliminating positive externalities (D) would reduce the optimal level of air quality because the benefits of clean air would not be fully accounted for. The common pool problem (E) relates to the allocation of a finite resource, which is not directly relevant to the optimal level of air quality.

Question 8

The optimal level of air quality will increase if
A) the cost of polluting increases
B) pollution is found to be self-absorbing
C) a new process allows pollution to be removed more cheaply
D) the marginal social cost of air quality increases
E) the marginal social benefit of air quality decreases

Accepted Answer

The answer of The optimal level of air quality will...

Question 9

Exhibit 17-3
 
-In Exhibit 17-3,the welfare loss (from society's perspective) that results from 70 units of air quality is shown by area
A) edcb
B) eda
C) bac
D) adc
E) there is no loss

Accepted Answer

The answer of Exhibit 17-3
 
-In Exhibit 17-3,the welfare loss...

Question 10

The marginal social cost curve is downward sloping under variable technology.

Accepted Answer

The answer of The marginal social cost curve is downward...

Question 11

When using the traditional command-and-control approach to environmental regulation,the government attempts to
A) set a minimum requirement and then allows the firm to determine the most efficient method for achieving this requirement
B) determine the most efficient method for different industries
C) make allowances for differences across industries and between firms
D) set engineering standards that are applicable to all situations and does not recognize unique circumstances
E) set a maximum requirement and they allows the individual firm the latitude of choosing the most efficient method

Accepted Answer

The traditional command-and-control approach to environmental regulation sets engineering standards that are applicable to all situations and does not recognize unique circumstances. It does not allow for flexibility based on differences across industries or between firms.

Question 12

If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent,which of the following must be true?
A) The free market will not reduce pollution by less than 85 percent.
B) The free market will accomplish 85 percent abatement,but it will be inefficient.
C) If only 75 percent of the pollution is abated,the society will be better off than if 85 percent had been abated.
D) If only 75 percent of the pollution is abated,the society will be worse off than if 85 percent had been abated.
E) If 75 percent of the pollution is abated,then in the next period the government should set the abatement level at 95 percent.

Accepted Answer

Since the optimal level of pollution abatement is 85 percent, abating only 75 percent of the pollution would mean that society is worse off than if 85 percent had been abated. This is because the society would have to bear the costs of the additional pollution that could have been avoided. Therefore, option D is the correct answer. Option A is incorrect because the free market may not be able to achieve the optimal level of abatement without regulations. Option B is also incorrect because the market may not be inefficient in accomplishing the optimal level of abatement. Option C is incorrect because it contradicts the fact that the optimal level of abatement is 85 percent. Option E is also incorrect because the government should set the abatement level based on the optimal level, not based on the level achieved in the previous period.

Question 13

The marginal social benefit of air quality
A) declines as air quality increases
B) rises as air quality increases
C) remains constant as air quality increases
D) first falls then rises as air quality increases
E) is always negative

Accepted Answer

The answer of The marginal social benefit of air quality
A)...

Question 14

The marginal social cost of air quality increases as air quality increases.If the dirtiest production process would create 700 tons of pollutants,then
A) eliminating the first 20 tons of pollution is cheaper than eliminating the last 20 tons
B) eliminating the last 20 tons of pollution is cheaper than eliminating the first 20 tons
C) more damage will be done by the first 20 tons of pollution than by the last 20 tons
D) more damage will be done by the last 20 tons of pollution than by the first 20 tons
E) the optimal level of air quality is to reduce pollution by 700 tons

Accepted Answer

The answer of The marginal social cost of air quality...

Question 15

Environmental problems result when social costs and benefits are different from private costs and benefits.

Accepted Answer

This is because when social costs and benefits are not factored in the decision-making process of private entities, they may engage in activities that have negative consequences on the environment but do not directly affect their profits. These externalities can lead to environmental problems such as pollution, deforestation, and climate change.

Question 16

Exhibit 17-3
 
-The economic efficiency approach to emission control provides the polluting firm with
A) a license produce as much emissions as it wants
B) the option of choosing between focusing on profit or cost
C) a process for determining the optimum quantity of emissions
D) more flexibility in selecting the most cost effective method of control
E) a subsidy for producing additional emissions

Accepted Answer

The answer of Exhibit 17-3
 
-The economic efficiency approach to...

Question 17

If production is characterized by variable technology,the optimal level of air quality occurs where
A) the marginal private cost of air quality equals the marginal social benefit
B) the marginal social cost of air quality equals the marginal social benefit
C) the marginal social cost of air quality equals the marginal private cost of air quality
D) government regulators set it
E) all costs are absorbed by the polluter

Accepted Answer

In a situation where production is characterized by variable technology, the optimal level of air quality is achieved when the marginal social cost of air quality is equal to the marginal social benefit. This is because variable technology means that the costs of reducing pollution will differ across firms, and the marginal social cost curve will shift depending on the level of production. Therefore, the social costs and benefits must be taken into account to ensure that the overall net benefit to society is maximized.

Question 18

The optimal level of pollution is
A) zero
B) the level at which the marginal social cost of air quality equals the marginal social benefit
C) the level at which the average social cost of air quality equals the average social benefit
D) the level at which the total social cost of air quality equals the total social benefit
E) the level at which the marginal social cost of air quality is minimized

Accepted Answer

The optimal level of pollution is the level at which the marginal social cost of air quality equals the marginal social benefit because at this level, the overall benefit to society from having some level of pollution is maximized while minimizing the negative impact on society from too much pollution. A level of zero pollution is not realistic or practical, as there are always trade-offs and costs associated with reducing pollution to zero. The other options (C and D) take into account the average or total social cost and benefit, which do not capture the optimal level of pollution. Option E, minimizing the marginal social cost, would result in zero pollution which is not practical as mentioned earlier.

Question 19

The optimal level of water and air quality
A) is zero,which is a pollution-free environment
B) occurs when the marginal private cost of air quality equals its marginal social cost
C) is greater if the marginal social cost curve of air quality shifts downward
D) occurs when all negative externalities are eliminated
E) eliminates the common pool problem

Accepted Answer

The answer of The optimal level of water and air...

Question 20

If the marginal social cost of producing a product exceeds the marginal social benefit,producers will produce less of it.

Accepted Answer

The answer of If the marginal social cost of producing...

Quiz 17: Externalities and the Environment

Exhibit 17-3 -In Exhibit 17-3,the optimal air quality level is

As more pollution is abated,the total social benefit from pollution abatement increases.

The socially optimal amount of pollution abatement may be less than 100 percent.

As more pollution is abated,the marginal social benefit from further abatement diminishes.

When using the economic efficiency approach to controlling air and water pollution,the government

A tannery discovers a technology that makes it cheaper to reduce the air pollution it generates in making paper.On a graph of the optimal level of air quality,the use of the new technology would be represented by

The optimal level of air quality

The optimal level of air quality will increase if

Exhibit 17-3 -In Exhibit 17-3,the welfare loss (from society's perspective) that results from 70 units of air quality is shown by area

The marginal social cost curve is downward sloping under variable technology.

When using the traditional command-and-control approach to environmental regulation,the government attempts to

If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent,which of the following must be true?

The marginal social benefit of air quality

The marginal social cost of air quality increases as air quality increases.If the dirtiest production process would create 700 tons of pollutants,then

Environmental problems result when social costs and benefits are different from private costs and benefits.

Exhibit 17-3 -The economic efficiency approach to emission control provides the polluting firm with

If production is characterized by variable technology,the optimal level of air quality occurs where

The optimal level of pollution is

The optimal level of water and air quality

If the marginal social cost of producing a product exceeds the marginal social benefit,producers will produce less of it.