Question 1

By altering market incentives, the government tries to shift

Accepted Answer

By altering market incentives, the government aims to make producers bear the external costs of their activities, thereby internalizing costs that would otherwise be borne by society. This can encourage more responsible production practices and reduce negative externalities.

Question 2

An emission charge is

Accepted Answer

An emission charge is a fee imposed on polluters based on the quantity of pollution they generate. This type of policy is intended to provide an economic incentive to reduce pollution by forcing polluters to internalize the costs of their activities, rather than imposing these costs on society at large.

Question 3

Producers can be encouraged to internalize external costs by

Accepted Answer

Imposing pollution fines or higher user fees incentivizes producers to bear the cost of their externalities. This encourages producers to shift towards more sustainable and environmentally-friendly practices, and internalize the costs that were previously externalized.

Question 4

By implementing user fees, the government tries to shift

Accepted Answer

By implementing user fees, the government tries to shift the external costs of using goods and services to the users. This is done in order to reduce the negative externalities associated with the consumption or use of certain goods and services. For example, by imposing a tax on the use of fossil fuels, the government tries to shift the external costs of pollution and environmental damage caused by the use of these fuels from the society to the users.

Question 5

A five-cent container deposit on bottles

Accepted Answer

A five-cent container deposit on bottles typically encourages recycling by providing a financial incentive to return bottles for recycling. This increased supply of recycled materials can lead to a decrease in the price of recycled materials, making them more attractive for use in production and thus encouraging recycling.

Question 6

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 reduced pollution through

Accepted Answer

The answer of The Comprehensive Environmental Response, Compensation, and Liability...

Question 7

If the government imposed a green tax on gasoline, the amount of air pollution should

Accepted Answer

If the government imposes a green tax on gasoline, it would increase the cost of gasoline and make people switch to more fuel-efficient cars, resulting in less air pollution. Hence, the best option is D.

Question 8

The primary purpose of tradable pollution permits is to

Accepted Answer

Tradable pollution permits aim to reduce the cost of pollution control by allowing firms to buy and sell pollution permits on a market, encouraging them to invest in cost-effective pollution control measures. The permits also provide an incentive to reduce pollution as firms can sell their excess permits and generate revenue, which creates an economic motivation for them to reduce emissions. Tradable pollution permits do not aim to increase pollution to optimal levels, eliminate private costs, or completely eliminate pollution.

Question 9

A polluting company can be billed in proportion to its pollution through

Accepted Answer

The answer of A polluting company can be billed in...

Question 10

A market for power plant pollution rights will

Accepted Answer

A market for power plant pollution rights enables power plants to buy and sell the rights to emit pollutants. This creates an incentive for power plants to reduce their emissions below the required level so that they can sell their excess pollution permits to other plants. As a result, the total amount of pollution by power plants can be reduced beyond the required level without increasing costs. Additionally, power plants that find it difficult or expensive to reduce their emissions can buy permits from other plants rather than installing costly pollution control equipment. This enables all power plants to meet pollution standards at lower costs. Therefore, option B is correct. Option A is incorrect because it wrongly states that the total amount of pollution will be reduced beyond the required level. Option C is partially correct but incomplete because it does not mention the role of pollution permits in reducing costs. Option D is incorrect because it is contradictory to the purpose and function of a pollution permit market.

Question 11

Which of the following is not a market incentive to discourage pollution?

Accepted Answer

Regulatory intervention is not a market incentive but rather a government mandate or regulation that requires companies to reduce pollution. The other options listed are market incentives as they use financial instruments to encourage companies to reduce pollution.

Question 12

A five-cent container deposit on bottles

Accepted Answer

A five-cent container deposit on bottles increases the incentive to recycle. This is because people are more likely to recycle when they can get some money back for returning the bottle. The deposit acts as an additional incentive to encourage recycling and reduce littering.

Question 13

If the government imposed a green tax on gasoline, ceteris paribus, the price of gasoline should

Accepted Answer

The green tax is an additional tax on gasoline to discourage its use and promote alternative energy sources. This will increase the cost of production for gasoline, and oil companies will pass on the additional cost to the consumers in the form of an increased price. Therefore, the price of gasoline should increase with the imposition of green tax, ceteris paribus.

Question 14

An emission charge

Accepted Answer

An emission charge makes producers pay for the negative externalities they create by polluting the environment. The cost of production for polluting firms increases, making the private marginal cost higher than before. Consequently, the equilibrium output decreases as firms reduce their production to avoid paying the higher cost. This reduction in output leads to a decrease in pollution levels, improving social welfare. Therefore, an emission charge increases private marginal cost and reduces output.

Question 15

Laws requiring the sorting and recycling of trash are an example of

Accepted Answer

Laws requiring the sorting and recycling of trash are an example of process regulation, which is a type of environmental regulation that sets requirements for how businesses or individuals conduct their activities.

Question 16

If the tax on gasoline is increased to provide incentives to curb air pollution, then the tax serves as

Accepted Answer

The answer of If the tax on gasoline is increased...

Question 17

When the government requires a firm to pay an emission charge in proportion to its pollution,

Accepted Answer

When a government imposes an emission charge on a firm based on the amount of pollution it produces, the firm incurs an additional cost for every unit of pollution. This increases the cost of producing each additional unit, raising the marginal cost. Since the total cost of production increases with the emission charge, and this cost is spread over all units produced, average total costs also rise.

Question 18

A completely successful emission charge would

Accepted Answer

The goal of an emission charge is to align the private cost (MC) with the social cost (MC) to incentivize firms to produce the socially optimal level of output. Therefore, the emission charge should shift the private MC curve to the same position as the social MC curve, ensuring that the marginal cost to society of producing the good with the pollution (social MC) is reflected in the price faced by the firm (private MC). Option A is incorrect because completely eliminating pollution may not be socially optimal (some pollution may be acceptable if the benefits of production outweigh the costs), and an emission charge is not typically designed to achieve this outcome. Option C is incorrect because social costs are typically higher than private costs, and an emission charge should aim to internalize these costs by raising private costs. Option D is incorrect because the emission charge needs to shift at least one of the curves to be effective in reducing pollution.

Question 19

Firm A finds it very expensive to reduce its sulfur dioxide emissions, while Firm B finds it very cheap to reduce its sulfur dioxide emissions. If a program of tradable pollution permits was enacted, we would most likely see

Accepted Answer

Firm B, finding it cheaper to reduce emissions, would likely reduce its emissions and sell its excess permits to Firm A, which finds it more expensive to reduce emissions. This allows Firm A to emit more while still adhering to overall limits, optimizing costs for both firms.

Question 20

A polluting company may be able to purchase the right to pollute through

Accepted Answer

Pollution permits are a market-based approach to controlling pollution. The government sets a limit on the total amount of pollution that is allowed and then divides that limit into permits that can be bought and sold by polluting companies. This allows companies to choose how they want to reduce their emissions, either by investing in cleaner technology or buying permits from companies that have reduced their emissions below the limit. This system incentivizes companies to reduce their emissions most efficiently and effectively, and rewards those that do so by allowing them to sell their unused permits.

Quiz 14: Environmental Protection

By altering market incentives, the government tries to shift

An emission charge is

Producers can be encouraged to internalize external costs by

By implementing user fees, the government tries to shift

A five-cent container deposit on bottles

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 reduced pollution through

If the government imposed a green tax on gasoline, the amount of air pollution should

The primary purpose of tradable pollution permits is to

A polluting company can be billed in proportion to its pollution through

A market for power plant pollution rights will

Which of the following is not a market incentive to discourage pollution?

A five-cent container deposit on bottles

If the government imposed a green tax on gasoline, ceteris paribus, the price of gasoline should

An emission charge

Laws requiring the sorting and recycling of trash are an example of

If the tax on gasoline is increased to provide incentives to curb air pollution, then the tax serves as

When the government requires a firm to pay an emission charge in proportion to its pollution,

A completely successful emission charge would

Firm A finds it very expensive to reduce its sulfur dioxide emissions, while Firm B finds it very cheap to reduce its sulfur dioxide emissions. If a program of tradable pollution permits was enacted, we would most likely see

A polluting company may be able to purchase the right to pollute through