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Chapter 14 Test Bank Key
1. Which of the following is not a form of air pollution?
2. According to the text, which of the following is the prime cause of the greenhouse effect?
A. Sulfur dioxide.
3. According to the text, which of the following is a form of water pollution?
4. Only ____ percent of the U.S. population is served by a system of sewers and adequate water treatment
plants.
A. 40
plants.
5. Sophisticated waste treatment plants can reduce organic pollution by up to ____ percent.
A. 99
6. Thermal pollution is brought about by the discharge of
Topic: THE ENVIRONMENTAL THREAT
7. Electric power plants account for over ____ percent of all thermal discharges.
8. According to EPA studies, the United States generates over ____ billion tons of solid waste each year.
A. 50
9. From an economic standpoint, the pursuit of a zero-pollution environment
10. The true economic costs of pollution control are the
11. Assigning values to environmental damage is relatively
A. Easy because of current scientific techniques.
12. According to the EPA, using known and available technology, what percentage of the current air and water
pollution could be eliminated with current resources?
13. The Environmental Protection Agency estimates that the total cost of pollution to society
A. Is $3 billion a year.
14. Which of the following is assumed to be the most important motivation for producers?
15. In general, a firm's efficiency decision will result
in A. A plant that maximizes profits.
16. Requiring that a firm engage in pollution abatement will likely do all of the following except
17. If a firm adopts a production process that is costly in order to reduce pollution, the result is
A. A decrease in the firm's MC curve and a decrease in the firm's profits.
18. The behavior of profit-maximizing producers is guided by
19. The reason pollution occurs is because people tend to
20. External costs occur because
21. External costs are
22. An external cost is borne by
23. External costs are the difference between
A. Social costs and private costs.
24. If the social costs of an economic activity are $120 and the private costs are $75, then the external costs of the
activity are ____, and market failure _______.
25. If the social costs of an economic activity are $200 and the private costs are $200, then the external costs of
the activity are ____, and market failure _______.
26. Which of the following is not the case when social costs are greater than private
costs? A. The market's price signals are flawed.
27. When external costs are present,
28. When external costs exist,
29. A power plant in Illinois produces electricity by burning coal. This results in acid rain that kills trees and
wildlife in New York. This is an example of
A. An external cost.
30. Social costs are
A. The total resource costs of an economic activity.
31. If firms were charged the full social opportunity cost of the resources they used, there would be
32. When private and social costs are
equal, A. Market failure occurs.
33. If a manufacturer does not have to pay for its contribution to pollution, it will produce
A. Too much output from a social viewpoint.
35. Under the market mechanism, a market characterized by external costs will produce too
36. An example of a negative externality in consumption is
37. If a firm that pollutes wants to maximize profits, it will produce where
A. The social value of production equals the social cost of production.
38. In order to maximize social welfare, a firm's production of a good should occur at the output where
A. Social marginal cost equals social marginal benefit.
39. All of the following are negative externalities in production except
A. Secondhand smoke in a restaurant.
40. Which of the following is a market incentive to discourage pollution?
A. Emission charges and user charges.
41. Which of the following is not a market incentive to discourage pollution?
A. Emission charges.
42. Producers can be encouraged to internalize external costs by
43. By altering market incentives, the government tries to shift
44. A polluting company can be billed in proportion to its pollution through
45. When the government requires a firm to pay an emission charge in proportion to its pollution,
46. An emission charge is
47. An emission charge
48. A completely successful emission charge would
49. A five-cent container deposit on bottles
50. A five-cent container deposit on bottles
A. Increases the price of containers that do not use recycled materials.
51. By implementing user fees, the government tries to shift
52. If the tax on gasoline is increased to provide incentives to curb air pollution, then the tax serves as
A. A user fee.
53. If the government imposed a green tax on gasoline, ceteris paribus, the price of gasoline should
54. If the government imposed a green tax on gasoline, the amount of air pollution should
A. Increase as people begin to use public transportation more.
55. The primary purpose of tradable pollution permits is
56. A polluting company may be able to purchase the right to pollute through
57. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 reduced
pollution through
58. A market for power plant pollution rights will
A. Reduce the total amount of pollution by power plants beyond the required reduction level.
59. Laws requiring the sorting and recycling of trash are an example of
60. Firm A finds it very expensive to reduce its sulfur dioxide emissions, while Firm B finds it very cheap to reduce its
sulfur dioxide emissions. If a program of tradable pollution permits was enacted, we would most likely
see
61. Tradable pollution permits, when compared to command-and-control options, tend
62. Which of the following is an example of bypassing the market through regulation to achieve
environmental protection?
A. Privatization.
63. The command-and-control strategy for pollution reduction refers to
64. The Clean Air Acts of 1970 and 1990 reduced pollution through
65. The command-and-control approach to pollution reduction
A. May be less efficient than a market-based option.
66. Excessive process regulation may
A. Raise the costs of environmental cleanup.
67. When the government requires specific processes for reducing pollution, it is using
A. A command-and-control approach.
68. Government intervention that fails to improve economic outcomes is known as
69. When environmental regulations continue long after they are obsolete, there is
70. Pollution control efforts
A. Are free of opportunity costs.
71. The costs of environmental protection can be measured by
A. The difference between social benefits and social costs.
72. Emission charges, user fees, and pollution fines increase the _______ of polluting.
74. All of the following can be costs of environmental cleanup except
75. Many economists would argue that
A. The optimal amount of pollution is greater than zero.
76. The marginal benefit of reducing pollution
77. The marginal cost of reducing pollution
A. Rises as the environment gets cleaner.
78. The marginal cost to society of reducing pollution increases as the level of pollution reduction
increases because of the law of
A. Demand.
79. When thinking about the real costs of environmental cleanup, we should take into consideration A.
The total costs of the cleanup as estimated by the Environmental Protection Agency.
80. In cost-benefit analysis, the government should intervene as long as
81. The costs of pollution control will
A. Always be borne entirely by the pollution producer.
82.
Refer to Table 28.1. Suppose the government commands each firm to reduce its emissions by one ton each.
What is the total cost?
83.
Refer to Table 28.1. Suppose the government allows these two firms to trade pollution permits. The total cost to
reduce emissions by a total of two tons could be as low as
84.
Refer to Table 28.1. Suppose the government allows these two firms to trade pollution permits. The
most efficient transaction would result in
85.
Refer to Table 28.1. Suppose the government allows these two firms to trade pollution permits. The
most efficient transaction would result in
86.
Refer to Table 28.1. Suppose the government allows these two firms to trade pollution permits. What would be
the price of a permit to emit the second ton of pollutants?
