Chapter 09 Criteria for Evaluating Environmental Policies

Multiple Choice Questions

1. Moral objections to the use of effluent subsidies to help firms reduce their emissions arise from the idea that .
   1. the polluter should pay
2. subsidies are politically unpalatable
3. subsidies can never be cost-effective
4. effluent taxes work better than subsidies

Difficulty: Moderate

1. For a policy to be _____________ it must be _______________.
   1. efficient; cost effective
2. cost effective; efficient
3. efficient; centralized
4. efficient; decentralized

Difficulty: Easy

1. Policies that can be readily adapted to new information about damages, technological innovation and changing economic or social conditions are considered .

A. morally superior
B. politically expedient
C. fair
D. flexible

Difficulty: Easy

1. The of a policy is not a criterion used to evaluate a pollution control policy.
   1. political acceptability
2. fairness
3. cost-effectiveness
4. incentives to innovate

Difficulty: Easy

5. Which of the following is a criterion used by environmental economists to evaluate environmental policies? 
A. Efficiency
B. Fairness
C. Equity
D. All of the above

Difficulty: Easy

6. A centralized policy requires that 
A. a controlling administrative agency be responsible for determining what is to be done.
B. all firms and individual decision makers make individual assessments about their emission levels.
C. net incomes are maximized.
D. all of the above.

Difficulty: Easy

7. Public policy makers typically do not have totally accurate information about the pollution control costs that firms or industries face in the real world. Accurate information regarding the costs of adaptation is, for the most part, _____________.
A. unavailable
B. private information
C. public information
D. market information

Difficulty: Easy

8. Cost effectiveness is an important piece of the evaluation of public policy because 
A. damages are often difficult to estimate.
B. cost effectiveness ensures efficiency.
C. cost effectiveness ensures a socially optimal outcome, balancing benefits with costs.
D. all of the above.

 
Difficulty: Moderate

9. Due to the concept that economist call asymmetric information, polluting firms can mislead regulators regarding the costs of abatement. It is often in the interest of polluting firms to _________ the costs abatement so that the regulated target for emissions is _______ than the socially efficient level.
A. understate; lower
B. understate; higher
C. overstate; lower
D. overstate; higher

Difficulty: Moderate

10. A program or policy is efficient if
A. it provides a maximum of net benefits for society.
B. it distributes benefit equally among society’s members.
C. it maximizes the net income to society.
D. all of the above.

11. Refer to the Figure above. MAC₁ represents a mis-estimation of abatement costs. True abatement costs are MAC₂; however, the regulatory agency believes that the costs are represented at MAC₁ and sets policy accordingly. Due to this error, emissions are ________ than the socially efficient level and damages are ___________ than the socially efficient level.
A. lower; lower
B. lower; higher
C. higher; lower
D. higher; higher

Difficulty: Easy

12. Refer to the Table above. Group X represents a low income group and Group Y represents a high income group. On the basis of efficiency, which program(s) is/are optimal?
A. Program A
B. Programs A and B
C. Programs C and D
D. Indeterminate

Difficulty: Moderate

13. Refer to the Table above. Group X represents a low income group and Group Y represents a high income group. Comparing Programs A and B, on the basis of equity, which program would be preferred?
A. Program A
B. Program B
C.  Both are equally equitable
D. Indeterminate

Difficulty: Moderate

14. Environmental justice is concerned that people of color and low-income people are disproportionately exposed to environmental contaminants. This exposure to the pollutants comes disproportionately from
A. indoor air pollution.
B. lead exposure.
C. water pollution.
D. hazardous waste sites.

Difficulty: Easy

15. Two main steps in enforcement are
A. monitoring and sanctioning.
B. moral suasion and evasion.
C. developing technology and attending court.
D. reporting to the GAO and ensuring compliance.

Difficulty: Easy

16. The paradox of sanctioning is
A. the greater the sanction (fines, jail time, etc.) the greater the deterrent; however, courts are reluctant to apply large sanctions.
B. the greater the enforcement costs, the more likely firms are to avoid compliance.
C. the larger the sanction, the greater the publicity.
D. all of the above.

Difficulty: Easy

17. A centralized policy requires that 
A. a controlling administrative agency be responsible for determining what is to be done.
B. all firms and individual decision makers make individual assessments about their emission levels.
C. net incomes are maximized.
D. all of the above.

Difficulty: Easy

18. One of the criteria of evaluating environmental policy is whether the policy provides incentives to find efficient and innovative ways to lower abatement costs. Which of the following are potential contributors to lowering abatement costs?
A. Research and development
B. Education
C. Training
D. All of the above

Difficulty: Easy

19. The rate of technological change for environmental improvement may be too slow because
A. private markets typically undersupply private goods.
B. private markets typically undersupply public goods.
C. regulating private markets is typically ineffective.
D. there are no markets for public goods.

Difficulty: Easy

20. A technology forcing policy is one that
A. forces firms to use a specific technology to abate emissions.
B. requires pollution control targets that force firms to innovate in order to meet the targets and experience reasonable cost increases.
C. forces technology firms to develop environmentally friendly solutions.
D. none of the above.

Difficulty: Easy

21. Cross media transfers refer to
A. television and other media pressure for environmental control.
B. the use of media to threaten environmental regulations.
C. the fact asserted by the materials balance equation that reductions of emissions into one media typically result in more emissions into another media, not a total reduction in emissions.
D. both A and B.

Difficulty: Easy

22. The materials balance equation asserts that, given a certain quantity of residuals, if the flow going into one environmental medium is reduced (e.g., water) the flow going into the others (air and/or land) must __________.
A. decrease
B. increase
C. increase exponentially
D. increase proportionately

Difficulty: Easy

23. Moral considerations are often a part of the criteria for evaluating public policy. Which of the following is not a moral consideration regarding environmental policy?
A. Polluters should not be rewarded for terminating environmentally damaging behavior.
B. Those who cause the problem should bear the burden of alleviating it.
C. Polluting is an immoral behavior.
D. All of the above are moral argument used to evaluate environmental policy.

Difficulty: Easy

24. In economics, the concept of market failure refers to
A. the failure of unregulated markets to offer the lowest possible prices
B. a situation where unregulated markets fail to offer efficient and equitable results
C. a lack of equilibrium
D. demand curves that have no slope

Difficulty: Easy

25. In economics, the concept of government failure refers to
A. tendencies within the government that work against efficient and equitable public policy.
B. the conservative agenda.
C. pro-business legislative agendas.
D. a stagnation in Congress.

Difficulty: Easy

26. As major U.S. federal environmental legislation has slowed,
A. individual states have played a growing role in environmental policy.
B. the United Nations have played a growing role in environmental policy.
C. individual municipalities have played a growing role in environmental policy.
D. environmental policy has stagnated.

Difficulty: Easy

27. Although the Environmental Protection Agency (EPA) has specific regulations regarding exports of electronic waste
A. the GAO has found that other countries do not have similar policies.
B. international firms with plants in the US are not held to those regulations.
C. the GAO has determined that the regulations have not been effectively enforced.
D. both A and C.

Difficulty: Easy

28. When examining environmental policy outcomes and consequences, equity considerations can be examined at the level of ___________.
A. income
B. region
C. international
D. all of the above

Difficulty: Easy

29. One of the challenges of using equity and fairness to evaluate the effectiveness of public policy is that
A. there is no agreement on how to determine what is fair and equitable.
B. there are often trade-offs between distribution of benefits and efficiency.
C. the effectiveness of public policy is often determined by voting.
D. both A. and B.

Difficulty: Easy

30. It has been determined that the Clean Air Act’s command and control policies that permit frequent adjustment and adaptation to new circumstances are

A. inefficient in the short run, but substantially more efficient in the long run.
B. efficient in the short run, but substantially more inefficient in the long run.
C. pro-business in their effect.
D. inefficient in both the short and long run.

Difficulty: Moderate

31. The requirement for efficiency is that

A. MD = MAC

B. MD > MAC

C. MD < MAC

D. MD and MAC are not part of efficiency

32. The requirement for equity is that

A. MD = MAC

B. MD > MAC

C. MD < MAC

D. MD and MAC are not part of equity

33. When flexibility is added to a policy

A. MD will shift but not MAC

B. MAC will shift but not MD

C. MD and MAC may shift

D. MD and MAC will not change

34. Social justice considerations in policy development address

A. externalities facing people living near pollution

B. enforcement of technology standards

C. sanctioning polluters that are in violation of the law

D. externalities facing all segments of society equally

35. When an environmental policy is adopted by a government agency, it usually includes

A. a statement of goals or objectives

B. enforcement within one year

C. money to finance monitoring

D. details about implementation