The Economics Of Environmental Quality Exam Questions Ch.5

Chapter 05

The Economics of Environmental Quality

Multiple Choice Questions
 

1. Determining a target level of environmental quality is an example of _______. 
A. positive policy analysis
B. positive economics
C. normative policy analysis
D. benefit-cost analysis

Difficulty: Easy
 

2. For certain pollutants with a (n) _______, emissions or ambient quality up to a certain level cause _________ damages. 
A. threshold; no
B. ambient concentration; no
C. threshold; severe
D. ambient concentration; severe

 Difficulty: Easy

 

3. A marginal damage function that becomes vertical at high levels of emissions represents _______. 
A. a threshold
B. an infinite ambient concentration
C. a toxic pollutant
D. an environmental catastrophe

Difficulty: Easy

4. A(n) ________ shows how damages are related to the concentration of a waste product contained in the ambient environment. 
A. emission damage function
B. ambient damage function
C. marginal damage function
D. ambient concentration

Difficulty: Easy

Figure 5.1

5.  Refer to Figure 5.1. Total damages associated with damage curve MD₁ at an emissions level of e₁ is _________.
A. $12
B. $28
C. area a
D. area b

Difficulty: Easy

 

6.  Refer to Figure 5.1. Total damages associated with damage curve MD₂ at an emissions level of e₁ is _________.
A. $28
B. area a
C. area b
D. area a + b

Difficulty: Easy

7.  Refer to Figure 5.1. The change in damages associated with a shift from MD₁ to MD₂ at an emissions level of e₁ is _________.

A. $28 - $12
B. area a
C. area b
D. area a + b

Difficulty: Easy

8. For a firm with more than one source of output with differing cost structures, its ________ will be minimized when its ________ are equalized across sources. 
A. marginal production costs; production levels
B. total production costs; production levels
C. total production costs; marginal production costs
D. marginal production costs; total production costs

Difficulty: Easy
 

9. For a firm with more than one source of emissions, the ________ states that the total costs of meeting a given abatement target will be minimized when the marginal costs of abatement are ________ across sources. 
A. equimarginal principle; equalized
B. law of one price; equalized
C. equimarginal principle; minimized
D. Coase theorem; equalized

 
Difficulty: Easy

 

15. Under what circumstances would a firm with more than one source of emissions minimize its total costs of abatement by setting abatement levels equal at each source? 
A. This method will always result in the firm minimizing its total abatement costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.

Difficulty: Moderate

16. Under what circumstances would a firm with more than one source of production minimize its total costs of production by setting production levels equal at each source? 
A. This method will always result in the firm minimizing its total production costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.

 
Difficulty: Moderate 

17. The study of what ought to be such as determining the socially efficient level of emissions is known as _____________.

A. normative economics
B. positive economics
C. equimarginal principle
D. Coase theorem

Difficulty: Easy

18. Describing and explaining economic events that have taken place in the real world is known as ___________.
A. normative economics
B. positive economics
C. equimarginal principle
D. Coase theorem

Difficulty: Easy

 

19. For a single, non-accumulative pollutant, when no threshold exists

A. the marginal damage function begins below the origin.
B. release of the pollutant into the environment is safe at very low levels.
C. the marginal damage function begins at the origin. 
D. the very first unit of emissions has an impact on the environment.

Difficulty: Easy

 

20. The height of the marginal damage curve at a particular level of emissions shows 
A. the amount of accumulated damaging material in the ambient environment.
B. the concentration of damaging material in the ambient environment.
C. the number of people damaged by the emission.
D. how much total damages change if there is a small change in the quantity of emissions.

Difficulty: Easy

 

21. The least costly way of reducing emissions for a group of polluting sources is depicted by

A. adding individual marginal abatement cost curves together to represent one curve
B. the aggregate marginal abatement cost function of the group of sources
C.  a single marginal abatement cost curve that accumulates curves for each individual source
D.  all of the above

Difficulty: Easy
 

22. Which Figure above represents a greater total abatement cost than total damage cost at the socially optimal point of emissions?

A. Figure (a)
B. Figure (b)
C. Figure (c)
D. Figures (a), (b) and (c)

Difficulty: Easy

 

23. Which Figure above represents a marginal damages curve with a threshold?

A. Figure (a)
B. Figure (b)
C. Figure (c)
D. Figures (a), (b) and (c)

Difficulty: Easy

24. Which Figure above represents a social optimum at e*?

A. Figure (a)
B. Figure (b)
C. Figure (c)
D.  Figures (a), (b) and (c)

Difficulty: Easy

25. Which of the above Figures reveals a marginal damage curve that displays a threshold?

A. Figure (a)
B. Figure (b)
C. Neither Figure (a) nor (b)
D. Both Figures (a) and (b)

Difficulty: Easy

26. In Figure (b), the change in abatement costs represented by the change in the socially optimal emission level from e₁^* to e₂^*

can be described as __________.

A. (a+b)–(b+c)
B. (a-c)
C. (b+c)

D.  both A. and B

Difficulty: Easy

27. Which of the above figures shows a shift in the marginal abatement cost function?

A. Figure (a)
B. Figure (b)
C. Neither Figure (a) nor (b) Both Figures (a) and (b)

Difficulty: Easy

28. In Figure (a) above, we can see that as the marginal damage curve rises, representing increased damages for every unit of emissions, the socially optimal level of emissions ___________.

A. remains unchanged
B. increases
C. decreases

D.  is indeterminate

Difficulty: Easy

29. Review the figure above. When enforcement costs are considered, abatement costs _______ and the socially optimal level of emissions ______________ .

A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases

Difficulty: Easy

30. Review the table above. Assume that one firm operates both sources and controls emissions. Currently, each source produces 12 tons/wk of emissions. If the firm is required to reduce emissions to a total of 15 tons per week, how should emissions be distributed between the two sources?

A. Source A $6,000/wk; Source B $6,000/wk
B. Source A 6 tons/wk; Source B 9 tons/wk
C. Source A 4 tons/wk; Source B 8 tons/wk
D. Sources A $10,000/wk; Source B $10,000/wk

Difficulty: Easy

31. Review the table above. Assume that one firm operates both sources and controls emissions. Currently, each source produces 12 tons/wk. of emissions. If the firm is required to reduce emissions by 3 tons from the current total of 24 tons/wk. (12 tons/wk. from each source), how should the 3 tons emissions reduction be distributed between the two sources?

A. Source A reduces 3 tons; Source B reduces by zero tons

B. Source A reduces zero tons; Source B reduces by 3 tons

C. Source A reduces 1 ½ tons; Source B reduces 1 ½ tons

D. Source A reduces 2 tons; Source B reduces 1 ton

32. A policy that requires all polluters to reduce emissions by 30% is

A. equitable

B. efficient

C. flexible

D. none of above

33. To maintain efficiency with an increase in MAC with no change in MD, emissions would need to

A. increase

B. decrease

C. not change

D. cannot determine

34. An efficient level of emissions is reached when

A. MD is minimized

B. MAC is minimized

C. MD = MAC

D. when the difference between MD and MAC is maximized

35. Improving environmental quality requires a trade-off between

A. non-point source and point-source emissions

B. marginal damages and marginal abatement costs

C. continuous and episodic emissions

D. willingness to pay and ability to pay