Question 1

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

Accepted Answer

When a firm is required to pay an emission charge based on its pollution level, both its average total costs and marginal costs increase. The emission charge adds to the cost of producing each unit of output, raising the average total costs. Additionally, the cost of producing one more unit (which includes the emission charge for the additional pollution) also increases, thus raising the marginal costs.

Question 2

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 3

The primary purpose of tradable pollution permits is to

Accepted Answer

Tradable pollution permits aim to reduce the cost of pollution control by establishing a market for permits that allow firms to emit certain levels of pollution. By using permits, firms are given an incentive to reduce their pollution levels below their permitted limit, which would then allow them to sell their unused permits to other firms that need them. This creates a market that encourages firms to reduce pollution levels at the lowest possible cost.

Question 4

Producers can be encouraged to internalize external costs by

Accepted Answer

Imposing pollution fines or higher user fees are effective ways to incentivize producers to internalize external costs. Emission charges could also be effective, but pollution fines are more targeted towards specific sources of pollution. Reducing user fees would not necessarily incentivize producers to internalize external costs. Altering market incentives without regulatory intervention may not lead to significant changes in producer behavior.

Question 5

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

Accepted Answer

A green tax on gasoline would increase the production costs for producers, who would then pass on these costs to consumers in the form of higher prices. Therefore, the price of gasoline would increase.

Question 6

A five-cent container deposit on bottles

Accepted Answer

A container deposit provides a financial incentive for individuals to recycle and return their containers, increasing the overall recycling rate. It also creates a financial disincentive for companies to use non-recyclable materials as it increases the cost of production. This reduces pollution and encourages sustainability.

Question 7

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

Accepted Answer

Pollution permits, also known as cap-and-trade systems, are a market-based approach to controlling pollution. The government sets a limit (or cap) on the total amount of pollution that can be emitted in a given time period, and then issues permits allowing companies to emit a certain amount of pollution. Companies that pollute less than their allotted amount can sell their extra permits to companies that pollute more than their allotted amount. This incentivizes companies to reduce their pollution levels and rewards those that do so.

Question 8

A completely successful emission charge would

Accepted Answer

A completely successful emission charge would internalize the external cost of pollution by aligning the private and social costs, which can be achieved by shifting the private MC curve to the same position as the social MC curve. This would result in an efficient level of pollution reduction, where the marginal cost of pollution reduction equals the marginal benefit of pollution reduction. Option A is not feasible as it implies complete elimination of output, which is not efficient or practical. Option C implies that the private costs are too high and need to be reduced, which is not necessarily true. Option D suggests that no action is taken to address external costs, which would result in market failure.

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 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.

Question 11

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

Accepted Answer

Regulatory intervention refers to government laws and regulations that restrict or prohibit certain polluting activities. This is not a market incentive but rather a government intervention in the market. The other options (A, B, and D) are all market incentives to discourage pollution.

Question 12

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 13

An emission charge is

Accepted Answer

An emission charge is a fee imposed on polluters based on the quantity of pollution they generate. It is a form of economic incentive to encourage polluters to reduce their emissions and internalize the costs of their pollution. It is also known as a pollution tax or a carbon tax.

Question 14

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 15

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

In a tradable pollution permits system, firms that find it cheaper to reduce emissions (Firm B) can sell their permits to firms for whom reduction is more expensive (Firm A). This allows Firm B to profit from its efficiency in reducing emissions, while Firm A can continue operating without making costly reductions, by buying permits instead.

Question 16

A market for power plant pollution rights will

Accepted Answer

A market for power plant pollution rights would allow power plants to buy and sell permits to emit pollutants. This creates a financial incentive for power plants to reduce their pollution levels below the required reduction level in order to sell excess permits to other plants that are still exceeding their limits. This would result in lower overall pollution and lower pollution control costs for power plants, making B the best choice. Option A is incorrect because the market would not necessarily reduce the total amount of pollution beyond the required reduction level. Option C is incorrect because not all power plants may participate in the market, and some may still need to make costly changes to meet pollution standards. Option D is incorrect because the market would create incentives to reduce pollution levels, not increase them.

Question 17

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, as they dictate how waste must be managed and processed. Pollution fines (A) and emission charges (D) are monetary penalties for polluting, while higher user fees (B) refer to charges for using certain public services or infrastructure.

Question 18

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

Accepted Answer

If a green tax is imposed on gasoline, it will increase the cost of using gasoline-powered vehicles, thus encouraging people to switch to more fuel-efficient cars. More fuel-efficient cars produce less air pollution, which will lead to a decrease in air pollution. Therefore, the amount of air pollution should decrease as people switch to more fuel-efficient cars.

Question 19

An emission charge

Accepted Answer

An emission charge is a tax on pollution emissions. By increasing the cost of production, it raises the private marginal cost for firms, and discourages them from producing as much output as they would have done without the tax. Therefore, it reduces output.

Question 20

By implementing user fees, the government tries to shift

Accepted Answer

By implementing user fees, the government is trying to shift the external costs of a product or service (such as environmental impacts or resource depletion) onto users. This is in contrast to shifting costs onto society as a whole or onto the producer, which would not directly incentivize individual users to reduce their usage and therefore reduce the external costs.

Quiz 14: Environmental Protection

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

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

The primary purpose of tradable pollution permits is to

Producers can be encouraged to internalize external costs by

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

A five-cent container deposit on bottles

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

A completely successful emission charge would

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

A five-cent container deposit on bottles

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

By altering market incentives, the government tries to shift

An emission charge is

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

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 market for power plant pollution rights will

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

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

An emission charge

By implementing user fees, the government tries to shift