Question 1

Governments can increase the consumption of a product that creates positive externalities by

Accepted Answer

A)   subsidizing the production of the product so that the supply is increased and market price is reduced.
B)   taxing the production and consumption of the product.
C)   convincing everyone to consume the good.
D)   assigning property rights to the producers of the product.

Question 2

Suppose the government mandates the installation of certain type of pollution abatement equipment for the leather tannery industry.For some firms in the industry,installing this equipment may not be the most cost effective method of reducing pollution.

Accepted Answer

A) True 
 B)False

Question 3

Figure 5-1 1 is not the economically efficient output. The economically efficient output is Q2. -Refer to Figure 5-1.If,because of an externality,the economically efficient output is Q2 and not the current equilibrium output of Q1,what does S1 represent? A)  the market supply curve reflecting external cost B)  the market supply curve reflecting implicit cost C)  the market supply curve reflecting social cost D)  the market supply curve reflecting private cost" class="answers-bank-image d-inline" rel="preload" >
 Figure 5-1 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2.
-Refer to Figure 5-1.If,because of an externality,the economically efficient output is Q2 and not the current equilibrium output of Q1,what does S1 represent?

Accepted Answer

A)   the market supply curve reflecting external cost
B)   the market supply curve reflecting implicit cost
C)   the market supply curve reflecting social cost
D)   the market supply curve reflecting private cost

Question 4

Some critics of the U.S.Environmental Protection Agency's proposed NSPS air pollution regulations which are designed to reduce carbon dioxide emissions argue that the policy will

Accepted Answer

A)   significantly increase electric utility rates.
B)   ultimately result in an increase in carbon dioxide emissions.
C)   increase greenhouse gases in exchange for the reduction of carbon dioxide.
D)   result in an increase in the consumption of fossil fuels.

Question 5

Figure 5-3 
-Refer to Figure 5-3.The private profit maximizing output level is

Accepted Answer

A)   Qm.
B)   Qn.
C)   Qo.
D)   Qo - Qm.

Question 6

The private cost of a good or service is the cost borne by the producer.

Accepted Answer

A) True 
 B)False

Question 7

Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service.The value of the service to each of them is $50 and it costs $80 to hire a housecleaner.Should they hire a housecleaner?

Accepted Answer

A)   Yes, if each contributes $50, then each stands to gain a consumer surplus.
B)   No, because each will wait for the other to hire the housecleaner.
C)   Yes, but only if a housecleaner will accept $50 so that each can take turns to pay the housecleaner.
D)   No, because it will be difficult for them to agree on which housecleaning service to use.

Question 8

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

Accepted Answer

A) True 
 B)False

Question 9

Figure 5-2 d. B)  Qb. C)  Qa. D)  Qb - Qd." class="answers-bank-image d-inline" rel="preload" >
 Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The efficient output level is

Accepted Answer

A)   Qd.
B)   Qb.
C)   Qa.
D)   Qb - Qd.

Question 10

When there is a negative externality,the competitive output is more than the economically efficient output level.

Accepted Answer

A) True 
 B)False

Question 11

A product is considered to be nonexcludable if

Accepted Answer

A)   you can keep those who did not pay for the item from enjoying its benefits.
B)   you cannot keep those who did not pay for the item from enjoying its benefits.
C)   your consumption of the product reduces the quantity available for others to consume.
D)   it is jointly owned by all members of a community.

Question 12

Figure 5-2 
 Figure 5-2 shows a market with a negative externality.
-Refer to Figure 5-2.The deadweight loss due to the externality is represented by the area

Accepted Answer

A)   abc.
B)   abf.
C)   abd.
D)   ade.

Question 13

Should the level of pollution be reduced to zero and if not,then to what level?

Accepted Answer

No,the level of pollution should not be ...

Question 14

Because producers do not bear the external cost of pollution

Accepted Answer

A)   the economically efficient level of production is achieved.
B)   private production is below the economically efficient level.
C)   private production exceeds the economically efficient level.
D)   the market price is too high.

Question 15

Figure 5-4 
-Refer to Figure 5-4.The marginal cost of reducing pollution curve is the same curve as

Accepted Answer

A)   the supply of pollution reduction curve.
B)   the demand for pollution reduction curve.
C)   the negative externality curve.
D)   the value of pollution reduction curve.

Question 16

Conceptually,the efficient level of carbon emissions is the level for which

Accepted Answer

A)   the marginal benefit of reducing carbon emissions is maximized.
B)   the marginal cost of reducing carbon emissions is minimized.
C)   the marginal benefit of reducing carbon emissions is equal to the cost of reducing carbon emissions.
D)   the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized.

Question 17

Private costs

Accepted Answer

A)   are borne by producers of a good while social costs are borne by government.
B)   are borne by consumers of a good while social costs are borne by government.
C)   are borne by producers of a good while social costs are borne by society at large.
D)   are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good.

Question 18

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

Accepted Answer

A)   public goods
B)   private goods
C)   quasi-public goods
D)   common resources

Question 19

Consider the following methods of pollution reduction: 
a.the government sets a target for maximum emissions
b.the government mandates the installation of specific pollution abatement equipment
c.the government imposes a per unit tax on the good that creates pollution
d.the government gives firms a tax rebate for every unit of pollution abated
Which of the above is an example of a command and control approach to reducing pollution?

Accepted Answer

A)   a only
B)   b only
C)   a and b only
D)   a, b, and d only
E)   a, b, c, and d

Question 20

Figure 5-4 B to QE units? A)  PF B)  PF × QE C)  the value of the area BEF D)  the value of the area QBBFQE" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 5-4.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Accepted Answer

A)   PF
B)   PF × QE
C)   the value of the area BEF
D)   the value of the area QBBFQE

Exam 5: Externalities, environmental Policy, and Public Goods

Some critics of the U.S.Environmental Protection Agency's proposed NSPS air pollution regulations which are designed to reduce carbon dioxide emissions argue that the policy will

Correct Answer
verified

Figure 5-3 -Refer to Figure 5-3.The private profit maximizing output level is

Correct Answer
verified

A product is considered to be nonexcludable if

Correct Answer
verified

Correct Answer
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Private costs

Correct Answer
verified

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

Correct Answer
verified

Suppose the government mandates the installation of certain type of pollution abatement equipment for the leather tannery industry.For some firms in the industry,installing this equipment may not be the most cost effective method of reducing pollution.

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4.What is the incremental benefit of increasing the quantity of pollution reduction from Q_B to Q_E units?

Correct Answer
verified

Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service.The value of the service to each of them is $50 and it costs $80 to hire a housecleaner.Should they hire a housecleaner?

Correct Answer
verified

Governments can increase the consumption of a product that creates positive externalities by

Correct Answer
verified

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The efficient output level is

Correct Answer
verified

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The deadweight loss due to the externality is represented by the area

Correct Answer
verified

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

Correct Answer
verified

Because producers do not bear the external cost of pollution

Correct Answer
verified

Conceptually,the efficient level of carbon emissions is the level for which

Correct Answer
verified

Correct Answer
verified

Should the level of pollution be reduced to zero and if not,then to what level?

Correct Answer
verified
No,the level of pollution should not be ...
View Answer

The private cost of a good or service is the cost borne by the producer.

Correct Answer
verified

When there is a negative externality,the competitive output is more than the economically efficient output level.

Correct Answer
verified

Figure 5-4 -Refer to Figure 5-4.The marginal cost of reducing pollution curve is the same curve as

Correct Answer
verified

Exam 5: Externalities, environmental Policy, and Public Goods

Some critics of the U.S.Environmental Protection Agency's proposed NSPS air pollution regulations which are designed to reduce carbon dioxide emissions argue that the policy will

Correct AnswerverifiedShow Answer

Figure 5-3 -Refer to Figure 5-3.The private profit maximizing output level is

Correct AnswerverifiedShow Answer

A product is considered to be nonexcludable if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private costs

Correct AnswerverifiedShow Answer

A quasi-public good differs from a public good in that unlike a public good,it is possible to keep out those who do not pay for the quasi-public good from enjoying the benefits of the good.

Correct AnswerverifiedShow Answer

Suppose the government mandates the installation of certain type of pollution abatement equipment for the leather tannery industry.For some firms in the industry,installing this equipment may not be the most cost effective method of reducing pollution.

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.What is the incremental benefit of increasing the quantity of pollution reduction from QB to QE units?

Correct AnswerverifiedShow Answer

Sefronia and Bella share an apartment and they are deciding whether or not to purchase a weekly housecleaning service.The value of the service to each of them is $50 and it costs $80 to hire a housecleaner.Should they hire a housecleaner?

Correct AnswerverifiedShow Answer

Governments can increase the consumption of a product that creates positive externalities by

Correct AnswerverifiedShow Answer

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The efficient output level is

Correct AnswerverifiedShow Answer

Figure 5-2 Figure 5-2 shows a market with a negative externality. -Refer to Figure 5-2.The deadweight loss due to the externality is represented by the area

Correct AnswerverifiedShow Answer

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

Correct AnswerverifiedShow Answer

Because producers do not bear the external cost of pollution

Correct AnswerverifiedShow Answer

Conceptually,the efficient level of carbon emissions is the level for which

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Should the level of pollution be reduced to zero and if not,then to what level?

Correct AnswerverifiedNo,the level of pollution should not be ...View AnswerShow Answer

The private cost of a good or service is the cost borne by the producer.

Correct AnswerverifiedShow Answer

When there is a negative externality,the competitive output is more than the economically efficient output level.

Correct AnswerverifiedShow Answer

Figure 5-4 -Refer to Figure 5-4.The marginal cost of reducing pollution curve is the same curve as

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 5-4 -Refer to Figure 5-4.What is the incremental benefit of increasing the quantity of pollution reduction from Q_B to Q_E units?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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No,the level of pollution should not be ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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