Exam Prep | Pollution, The Environment, And Global – Ch.16

c16; Chapter 16: Pollution, The Environment, and Global Warming

Learning Objectives

1. Describe the benefits and costs of pollution
2. Model the externalities associated with pollution
3. Describe the policy responses to pollution
4. Assess methods to address pollution problems

Multiple Choice

1. Pollution is defined as
   1. the contamination of the ground causing disruption to ecosystems.
   2. the contamination of the ground and sky causing disruption to production.
   3. the contamination of the environment that creates inefficiency to production.
   4. the contamination of the environment that causes instability, harm, or disruption to ecosystems.

LO-1

Level: Easy

1. The main cause of pollution since the 1950s are
   1. naturally occurring.
   2. anthropogenic in nature.
   3. both naturally occurring and anthropogenic in nature.
   4. equally caused by nature and anthropogenic.

LO-1

Level: Easy

1. This allows the use of dollars as a common measure of a comparison of benefits and costs of pollution.
   1. diminishing marginal utility.
   2. increasing marginal cost.
   3. willingness to pay framework for marginal benefits.
   4. willingness to pay framework for marginal costs.

LO-1

Level: Easy

1. Which of the following is a true statement?
   1. Environmental economists work toward zero-pollution as a morally correct strategy for society.
   2. Environmental economists recognize that a zero-pollution level is not a feasible focus.
   3. Environmental economists accept a strategy of zero-pollution.
   4. Environmental economists accept a strategy of zero-pollution as long as marginal benefits are greater than marginal costs.

LO-1

Level: Moderate

Reference: Use the graph to answer questions 5-7.

1. The downward slope of the curve reflects
   1. The inverse relationship between price and quantity demanded.
   2. the direct relationship between price and quantity demanded.
   3. the direct relationship between price and demand.
   4. the inverse relationship between price and demand.

LO-1

Level: Moderate

1. For the producer of the electricity which of the following is true?
   1. The marginal revenue at point A will be less than the marginal revenue at point B.
   2. The total revenue at point A will be more than the total revenue at point B.
   3. The marginal revenue at point B will be less than the marginal revenue at point A.
   4. The total revenue at point B will be less than the marginal revenue at point A.

LO-1

Level: Moderate

1. The change in marginal benefits moving from Point A to Point B illustrates
   1. the Law of Diminishing Return.
   2. the Law of Increasing Total Cost.
   3. the Law of Diminishing Marginal Benefits.
   4. the Law of Increasing Marginal Costs.

LO-1

Level: Easy

1. Marginal benefits from producing a product that creates pollution includes
   1. revenue to the producer.
   2. a desired product to consumers.
   3. both revenue to the producer and a desired product to consumers.
   4. social costs to consumers.

LO-1

Level: Easy

1. Consider the graph of the marginal costs of producing electricity. After point A this is observed in the production process.
   1. the Law of Diminishing Return.
   2. the Law of Increasing Total Cost.
   3. the Law of Diminishing Marginal Benefits.
   4. the Law of Increasing Marginal Costs.

LO-1

Level: Moderate

1. The optimal level of pollution is where
   1. total profit is maximized for the producer.
   2. marginal profit is maximized for the producer.
   3. marginal benefits of control of the pollution equals marginal costs.
   4. the marginal benefits of production equals the marginal social costs of production.

LO-1

Level: Moderate

1. External costs can be defined as
   1. the difference between costs to the producer from production and the costs to society from the production of a good.
   2. the difference between the costs to society and the private benefits of production.
   3. the difference between the private costs of production and the private benefits of production.
   4. the difference between the marginal social costs and marginal benefits.

LO-2

Level: Moderate

1. Pollution is an example of
   1. a positive externality.
   2. a negative externality.
   3. marginal benefit.
   4. marginal cost.

LO-2

Level: Easy

1. A negative externality occurs when
   1. costs of production are imposed on third parties.
   2. costs of distribution are imposed on third parties.
   3. benefits of the product are passed on to third parties.
   4. both costs of distribution are imposed on third parties and benefits of the product are passed on to third parties.

LO-2

Level: Easy

1. When the market system does not generate the optimal, or efficient, allocation of goods and services a ___________________ occurs.
   1. public good
   2. private good
   3. market instability
   4. market failure

LO-2

Level: Moderate

1. Which of the following is an example of a market failure?
   1. The local state football game is sold-out
   2. Because of concerns of impending storm threats, the local hardware store runs out of plywood
   3. Because of changes in mortgage loan requirements and regulations, fewer people qualify for mortgages
   4. The daily traffic jam on the commute to work

LO-2

Level: Moderate

1. When a negative externality exists the market experiences
   1. a level of production less than optimal.
   2. a level of production that is greater than optimal.
   3. a level of production that equals optimal.
   4. a level of production where society maximizes benefits.

LO-2

Level: Easy

1. When benefits are experienced by someone other than the consumer a ______________ occurs.
   1. a positive externality
   2. a negative externality
   3. marginal benefit
   4. marginal cost

LO-2

Level: Easy

1. Marginal costs born only by the producer is known as
   1. private marginal costs.
   2. private total costs.
   3. social marginal costs.
   4. social total costs.

LO-2

Level: Easy

1. Marginal costs that are born by society as a whole is known as
   1. private marginal costs.
   2. private total costs.
   3. social marginal costs.
   4. social total costs.

LO-2

Level: Easy

1. Consider the graph which represents a local power plant. The production process includes the dumping of waste in the local river. The level of output QPrivate
   1. represents an efficient allocation of resources for the production of electricity.
   2. represents an overallocation of resources for the production of electricity.
   3. represents an underallocation of resources for the production of electricity.
   4. represents a cost-effective allocation of resources for the production of electricity.

LO-2

Level: Moderate

1. Social market costs include
   1. private marginal costs.
   2. the negative externality present in the market.
   3. both the private marginal costs plus the negative externality present in the market.
   4. the private marginal costs minus the negative externality present in the market.

LO-2

Level: Easy

Reference: Use the following graph to answer questions 22-24.

1. Consider the graph that illustrates the production of electricity where not all of the costs of production are captured in the private costs. Which of the following statements is true?
   1. An output of Q_Private provides an optimal allocation of resources to the market.
   2. An output of Q_Private provides an efficient allocation of resources to the market.
   3. An output of Q_Social provides an optimal allocation of resources to the market.
   4. An output of Q_Private minus Q_Social provides an efficient allocation of resources to the market.

LO-2

Level: Hard

1. Consider the graph that illustrates the production of electricity that includes the dumping of waste into the nearby river. The negative externality is represented by
   1. the distance between Point A and Point B.
   2. the distance between Point A and Point C.
   3. the distance between Point B and C.
   4. the area of the triangle ABC.

LO-2

Level: Moderate

1. Consider the graph. A negative externality is represented by
   1. the difference between Q_Private and Q_Social.
   2. the difference between P_Private and P_Social.
   3. the difference between S(MC_Private) and S(MC_Social).
   4. the difference between MB_Private and MB_Social.

LO-2

Level: Hard

1. Policy responses to pollution can be classified as
   1. command-and-control.
   2. assignment of property rights.
   3. command-and-control and assignment of property rights.
   4. fees and taxes.

LO-3

Level: Easy

1. Policy response to pollution that involves direct government regulation is known as
   1. command-and-control.
   2. assignment of property rights.
   3. pollution abatements.
   4. common property resources.

LO-3

Level: Easy

1. An example of a command-and-control policy is
   1. public lands and wildlife.
   2. ITQs.
   3. the federal taxes on gasoline.
   4. limits on production.

LO-3

Level: Easy

1. Consider the graph that illustrates the impact of a pollution tax imposed on the producer. The tax imposed would be equal to
   1. the distance between Point A and Point B.
   2. the distance between Point A and Point C.
   3. the distance between Point B and C.
   4. the area of the triangle ABC.

LO-3

Level: Hard

1. Example(s) of command-and-control methods of pollution reduction include
   1. taxes and fees equal to the amount of the negative externality.
   2. common property resources for collectively owned resources.
   3. ITQs for the collectively owned resources.
   4. tradable pollution rights.

LO-3

Level: Easy

1. Collectively owned resources are known as
   1. ITQs.
   2. tradable pollution rights.
   3. common property resources.
   4. cap and trade systems.

LO-3

Level: Easy

1. A system of pollution reduction that allows producers to emit a specific amount of pollutants is known as
   1. ITQs.
   2. tradable pollution rights.
   3. common property resources.
   4. cap and trade systems.

LO-3

Level: Easy

1. Under cap and trade systems
   1. an upper limit is set that sets the marginal social costs equal to the marginal benefits of emissions.
   2. an upper limit that sets marginal private costs equal to the marginal private benefits of emissions.
   3. an upper limit that sets marginal social costs equal to the marginal private benefits of production.
   4. an upper limit that sets marginal private costs equal to the marginal social benefits of production.

LO-3

Level: Moderate

1. The government sells permits that allow producers to emit a particular amount of pollution which can be bought and sold among producers is known as
   1. command-and-control regulations.
   2. common property resources.
   3. cap and trade systems.
   4. tradable pollution rights.

LO-3

Level: Easy

1. When a resource has no direct price
   1. overuse of the resource and the tragedy of the commons may occur.
   2. overuse of resources and underproduction will occur.
   3. pollution occurs.
   4. underallocation of resources may occur.

LO-3

Level: Moderate

1. A negative to the command-and-control approaches to reducing pollution would include all of the following except
   1. the lack of efficiency because of the government intervention.
   2. the lack of flexibility.
   3. the expense of regulation.
   4. the unpopularity.

LO-4

Level: Moderate

1. A method of environmental preservation that does not rely on continual government intervention is
   1. tragedy of the commons.
   2. command-and-control.
   3. assignment of property rights.
   4. emission limits.

LO-4

Level: Easy

Essay

1. List and briefly explain three types of negative impacts from pollution.

Health impacts: loss of life and loss of quality of health caused by air, land, and water pollution

Physical impacts: damages to land, air, and water resulting in damages to plants, wildlife, and quality of soil

Ecological: damages to ecosystems resulting in long-term environmental harm as well as changes in property values

LO-1

Level: Moderate

1. Describe the consequences to the market when a product is not produced at the optimal level?

LO-1

Level: Moderate