Question 1

Exhibit 17-3 
-In Exhibit 17-3,the optimal air quality level is where the MSB=MSC.

Accepted Answer

The optimal air quality level is where the marginal social benefit (MSB) is equal to the marginal social cost (MSC), which is represented by the intersection of the demand curve and the marginal cost curve. Therefore, the statement is true.

Question 2

The optimal level of air quality
A)is 100 percent,which creates a pollution-free environment
B)is smaller the lower the marginal social cost of air quality
C)is greater the lower the marginal social benefit of air quality
D)is greater the lower the marginal social cost of air quality
E)is smaller the greater the marginal social benefit of air quality

Accepted Answer

The optimal level of air quality is where the marginal social benefit and marginal social cost intersect. As the quality of air increases, the marginal social benefit decreases and the marginal social cost increases. Therefore, the optimal level of air quality is reached when the marginal social cost is at its lowest, which is the point where the marginal social benefit intersects. Choice D states that the optimal level of air quality is greater the lower the marginal social cost of air quality, which is consistent with the explanation above.

Question 3

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 4

To achieve the socially optimal level of pollution,the biggest polluters should be targetted for the greates reduction in pollution.

Accepted Answer

The answer of To achieve the socially optimal level of...

Question 5

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 6

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

If the government regulation is set at 75 percent but the optimal level of pollution abatement is 85 percent, it means that society would be better off if pollution was reduced by 85 percent. Therefore, if only 75 percent of the pollution is abated, the society will be worse off than if 85 percent had been abated.

Question 7

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

Accepted Answer

Environmental problems occur when the social costs of private actions are not reflected in their private costs, resulting in negative consequences for society as a whole. This is known as the "tragedy of the commons" or the "externalities problem." In other words, when individuals or companies do not bear the full costs of their actions, they may engage in environmentally harmful activities that benefit them in the short term but cause harm in the long term.

Question 8

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)declines...

Question 9

The marginal social benefit curve for water quality slopes downward because
A)the total benefit from clean water decreases as water becomes cleaner
B)the added benefit from cleaner water is greater when water quality is poor than when water quality is high
C)the added benefit from cleaner water is smaller when water quality is poor than when water quality is high
D)the total benefit from clean water increases as water becomes cleaner
E)people demand clean water at any price

Accepted Answer

The marginal social benefit curve for water quality slopes downward because the added benefit from cleaner water is greater when water quality is poor than when water quality is high. As water quality improves, the additional benefits of further improvements become smaller and smaller, so the marginal social benefit curve slopes downward.

Question 10

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 11

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 answer of The optimal level of air quality
A)is always...

Question 12

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 13

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 the case of variable technology, the optimal level of air quality occurs where the marginal social cost of air quality equals the marginal social benefit. This ensures that the society gets maximum welfare while also ensuring that the polluters bear the full cost of their pollution. The marginal private cost of air quality may not take into account the negative externalities imposed on the society, so it may not lead to an optimal outcome. Government regulators may not always have perfect information or may face political constraints, so relying solely on them may not lead to an optimal outcome. And if all costs are absorbed by the polluter, they may not have sufficient incentive to reduce their pollution levels.

Question 14

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

Accepted Answer

This is because pollution abatement leads to a reduction in negative externalities such as health problems and environmental damage, which increases the overall social welfare.

Question 15

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 minimize the cost of reducing pollution while also achieving the desired level of pollution control. This approach offers each firm the flexibility to reduce emissions in the most cost-effective manner, given its unique cost structure. This allows firms to choose the most efficient and least costly approach to pollution reduction, which may vary depending on their individual circumstances. It also provides incentives for firms to innovate and find more efficient ways of reducing pollution, as they will be rewarded for doing so through lower costs.

Question 16

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

Accepted Answer

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

Question 17

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 18

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

The optimal air quality level in Exhibit 17-3 is where the marginal cost of reducing pollution is equal to the marginal benefit of reducing pollution. In this graph, that occurs at an air quality level of 50, where the marginal cost and marginal benefit curves intersect. Therefore, the best choice is option C.

Question 19

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

When using the traditional command-and-control approach, the government sets engineering standards that are applicable to all situations and does not recognize unique circumstances. This approach is inflexible and can result in excess costs for firms that face unique circumstances.

Question 20

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. This means that the cost of reducing pollution further would be greater than the benefit gained from that reduction, and any additional pollution beyond this level would have a greater social cost than benefit. Therefore, B is the best choice. A would be ideal from an environmental standpoint but may not be feasible in terms of economic or social costs. C and D do not account for marginal costs and benefits, and E does not necessarily result in the optimal level of pollution.

Quiz 19: Externalities and the Environment

Exhibit 17-3 -In Exhibit 17-3,the optimal air quality level is where the MSB=MSC.

The optimal level of air quality

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

To achieve the socially optimal level of pollution,the biggest polluters should be targetted for the greates reduction in pollution.

The optimal level of air quality will increase if

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?

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

The marginal social benefit of air quality

The marginal social benefit curve for water quality slopes downward because

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

The optimal level of air quality

The optimal level of water and air quality

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

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

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

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

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

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

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

The optimal level of pollution is