True/False
Indicate whether the
statement is true or false.
|
|
|
1.
|
Wealthier countries tend to consume less energy than poorer countries because
wealthier countries can afford energy-efficient technologies.
|
Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
2.
|
Which of the following is a good example of a negative externality?
a. | A forest that absorbs carbon dioxide and generates oxygen. | b. | A landfill that
creates undesirable odors on surrounding property. | c. | A "big box" retail store that
outcompetes existing retail stores. | d. | A rose garden in your front
yard. |
|
|
|
3.
|
Suppose air pollution creates a haze that obscures a previously clear view of a
distant mountain range. This effect of pollution would be called
a. | a health impact. | b. | material and crop damage. | c. | harm to
environmental amenities. | d. | ecological
damage. |
|
|
|
4.
|
To estimate the value of a statistical life, economists sometimes ask people how
much they would be willing to pay to reduce their risk of death by a small amount. This method of
determining the value of a statistical life is known as
a. | revealed preference. | b. | stated preference. | c. | the actuarial
method. | d. | the survey method. |
|
|
|
5.
|
If the marginal cost curve for paper production were altered to reflect the cost
of the odor imposed on surrounding areas, which of the following would occur?
a. | The marginal cost curve would shift downward. | b. | The market price,
accounting for the externality, would rise. | c. | It would become socially efficient to produce
more paper. | d. | The market price would fall. |
|
|
|
6.
|
Controlling pollution by setting the same maximum allowable amount of pollution
for each polluter, and making specific rules about the way it must be reduced, is called
a. | the common-law approach. | b. | tax-and-fine regulation. | c. | cap-and-trade
regulation. | d. | command-and-control regulation. |
|
|
|
7.
|
If the government sells certificates giving the owner permission to emit a
particular amount of pollution, and then allows these certificates to be bought and sold at a market
price, then the government is using a market-based approach to pollution reduction called
a. | tradable pollution permits. | b. | command-and-control
regulation. | c. | a carbon tax. | d. | mitigation. |
|
|
|
8.
|
A tax on different kinds of fuels based on their carbon content is called
a
a. | mitigation tax. | b. | BTU tax. | c. | carbon
tax. | d. | fossil fuel tax. |
|
|
|
9.
|
Which of the following is a type of command-and-control regulation?
a. | A law setting the maximum allowable amount of sulfur dioxide (SO2) in a certain
district, and auctioning off permits totaling the allowable tons of SO2. | b. | A law requiring coke
ovens to be built in a certain way so as to restrict the amount of pollution they
emit. | c. | A law taxing users of fuels according to the carbon content in the
fuel. | d. | A law requiring consumers of electronics to pay a tax according to the amount of
toxic heavy metals in each item purchased. |
|
|
|
10.
|
Which of the following statements is true?
a. | If a buyer ends up being worse off from an exchange rather than better off as
expected, this is a negative externality. | b. | Secondhand cigarette smoke is an example of a
negative externality. | c. | As long as the benefits to society from an
exchange outweigh the costs to society, no negative externality has occurred. | d. | As long as the
benefits to society from an exchange outweigh the costs to the producer of the good or service, no
negative externality has occurred. |
|