Deck 16: Externalities, the Environment, and Natural Resources

Question 1

Centrally planned economies like China produce relatively little pollution.

Answer 1

False

Question 2

In the last three decades, air quality in American cities has improved.

Answer 2

True

Question 3

Increasing environmental awareness in the United States has occurred with increasing GDP, which has reduced concerns about basic needs.

Answer 3

True

Question 4

The production of smoke as a pollutant is a failure of the market system.

Question 5

If not recycled, an input used in production ultimately winds up as a waste product.

Question 6

Pollution is an example of a negative externality.

Question 7

Recycling rates for aluminum, paper, and glass have been increasing in the United States.

Question 8

The pricing system has a failure built into it when externalities exist.

Question 9

Pollution is a relatively new phenomenon.

Question 10

Externalities can create a threat to environmental quality.

Question 11

Environmental problems occur exclusively in capitalist economies.

Question 12

Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Question 13

Economists believe it is feasible and desirable to reduce environmental damage to zero.

Question 14

Externalities are benefits or damages conferred upon people who are directly involved in an exchange of a good or service.

Question 15

Economists believe that the goal of environmental policy should be zero pollution.

Question 16

Increasing GDP generally causes increases in problems of waste disposal.

Question 17

Individuals and government have been contributors in harming the environment.

Question 18

The Army Corps of Engineers has been accused of acting on the basis of a so-called "edifice complex."

Question 19

Economists believe that externalities can be cured by market methods.

Question 20

Environmental destruction is peculiar to centrally planned economies.

Question 21

Economic theory predicts that the price of a depletable resource will rise as it becomes more scarce.

Question 22

Direct controls are considered inefficient because all firms are forced to pay the same costs.

Question 23

Direct controls have traditionally been used heavily to control pollution in the U.S.

Question 24

A pollution tax penalizes inefficient firms.

Question 25

When pollution problems arise from a sudden crisis, pollution taxes are a useful form of control.

Question 26

When pollution emissions can be measured taxation will tend to be more effective than any other method of controlling pollution.

Question 27

Economists generally consider the use of taxes as the most efficient way of solving pollution problems.

Question 28

Direct controls have a clear advantage when a total ban is necessary.

Question 29

Charging firms that emit pollutants is one way to deal with pollution.

Question 30

Taxing pollution will encourage firms to reduce pollutants dumped in the atmosphere or in streams.

Question 31

Emissions permits allow polluters to pay for the right to pollute a specified amount.

Question 32

Direct controls often require long legal proceedings before they can be effective.

Question 33

Pollution taxes are preferred to direct controls because they don't require a way of measuring pollutants produced.

Question 34

Increasing scarcity of a resource causes new supplies to become more and more costly.

Question 35

Voluntary programs are dependable ways to protect the environment.

Question 36

Although pollution is caused by a failure of the market, many economists believe that the best way to protect the environment is to utilize the price mechanism.

Question 37

Voluntary programs, direct controls, and emissions taxes are all equally effective ways of controlling pollution.

Question 38

One advantage of emissions permits is that they allow the government to choose the level of pollution reduction.

Question 39

Emissions permits might be called a "license to pollute."

Question 40

Rising prices will discourage consumption and encourage conservation.

Question 41

When a resource is being depleted and becomes scarce, the market's way of encouraging conservation is for the price of the resource to rise, without any government intervention.

Question 42

Price controls on resources generally lead to surpluses.

Question 43

In a free market the quantity demanded will not exceed the quantity supplied of a resource, even if it is undergoing rapid depletion.

Question 44

John Maynard Keynes was the author of the book, The Economics of Welfare, which first addressed environmental problems in terms of externalities.​

Question 45

Unexpected discoveries of mineral reserves will ordinarily cause the price of these minerals to increase.

Question 46

The invention of new mining methods will affect price through the supply side.

Question 47

Identify the economist who first addressed the environmental problem in terms of externalities.

A)Joseph Schumpeter 
B)Maynard Keynes 
C)A.C.Pigou 
D)J.B.Say

Question 48

One of the virtues of rising resource prices is they encourage innovation, especially the discovery of other more abundant resources.

Question 49

One of the conclusions of A.C.Pigou was that

A)a system of mandatory controls is the only effective means to control pollution.
B)a system of charges can be an effective means to control pollution.
C)pollution will wither away if a socialist system is in place.
D)pollution cannot be adequately addressed in a price system.

Question 50

Centrally planned economies are able to cope with environmental pollution issues
much better than capitalist countries.

Question 51

A failure of the pricing system has led to pollution.

Question 52

Even if demand for a resource grows over time, ever-rising prices of the resource that result from its growing scarcity still discourage consumption.

Question 53

Dwindling resources encourage the development of substitute products.

Question 54

The worst and most difficult to extract resources are used first.

Question 55

Rising prices of resources leads to inefficient resource use by industry.

Question 56

Economic theory would lead us to suspect that deep sea oil reserves would be accessed before those located in the Middle East or on the U.S.mainland.

Question 57

Price controls would ordinarily be used to increase rather than decrease prices of depletable resources.

Question 58

Economists use a resource's price as an indicator of its relative scarcity.

Question 59

If a depletable resource is selling in a perfectly competitive market, its price will rise by greater and greater dollar amounts each year.

Question 60

Increased concern about environmental problems derive partly from

A)concerns about increasing economic output.
B)concerns about unemployment and inflation.
C)new awareness that the problems exist.
D)concerns about the quality of life.

Question 61

What is new about environmental problems today is

A)that for the first time in history we have environmental problems.
B)the increased rate at which air and water pollution is occurring in the United States.
C)the amount of attention the community now gives them.
D)that environmental problems with pollution and garbage disposal have almost completely disappeared.

Question 62

Serious environmental problems are

A)unique to industrial economies.
B)unique to Western economies.
C)unique to civilized economies (i.e., those in which people live mainly in cities).
D)None of the above is correct.

Question 63

Pollution problems

A)have existed for many centuries.
B)are attributable to modern industrialization.
C)can be blamed on the profit system.
D)have worsened in every respect in the past forty years.

Question 64

The British economist A.C.Pigou

A)wrote The Economics of Welfare in 1911.
B)offered an explanation of the market economy's poor environmental performance.
C)outlined an approach to environmental policy still in favor with economists today.
D)All of the above are correct.

Question 65

Many of the new pollutants to which the world has been subjected are

A)less visible.
B)less malodorous.
C)far more dangerous.
D)All of the above are correct.

Question 66

Which of the following is an example of detrimental externality?

A)A trailer's entry onto an overcrowded road that delays the movement of other vehicles.
B)Fall in demand for gasoline in the US softens the price of gasoline in the global market.
C)Government investment in energy generation from non-conventional sources.
D)Society devotes huge quantity of its scarce resources for vital innovative activity.

Question 67

Since World War II,

A)air pollution has worsened in most U.S.cities.
B)many new pollutants have been introduced or identified.
C)the federal government has reduced its reliance on economic incentives as a means of reducing pollution.
D)All of the above are correct.

Question 68

Between 1980 and 2008 recycling in the United States has

A)decreased by less than 2%.
B)increased by less than 2%.
C)doubled.
D)tripled.

Question 69

Recycling in the United States in recent years

A)has decreased in spite of increased rates for common recycling materials.
B)has remained unchanged, and increased raes for recycling may help.
C)has increased with increased rates for recycling mterials.
D)has increased with no help from increased fees for recycling materials.

Question 70

Environmentalists, politicians, and economists have different perspectives on what constitutes appropriate environmental policy.Which of the following statements was probably made by an economist?

A)"We take the position that there are rights involved here, rights to be protected from threats to your health, regardless of the costs involved." 
B)"Protecting the environment is so important that standards cannot be too high, and continuing improvements must be made regardless of cost." 
C)"Pollution is a moral issue that cannot be reduced to dollars and cents." 
D)"Clean air and water are things we can buy-if the price is right."

Question 71

Air quality in most U.S.cities has ____ since World War II.

A)worsened 
B)improved 
C)remained unchanged 
D)improved slightly before a recent deterioration

Question 72

There has been a downward trend in the United States since 1980 in the ambient concentrations of

A)sulfur dioxide.
B)carbon monoxide.
C)lead.
D)all of the above.

Question 73

The environmental problems of China:

A)were caused by a lack of central planning in the economy.
B)were caused by the burning of low-quality, high-sulfur coal.
C)were caused by a lack of pollution controls.
D)All of the above are correct.

Question 74

China, the last large communist society,

A)has proved that a command economy has far less pollution problems than capitalist economies.
B)has urban smog levels higher than Los Angeles.
C)has the world's most sophisticated pollution-control devices.
D)has lowered its level of pollution dramatically since 1980.

Question 75

Water quality in the United States has ____ in the past 25 years.

A)improved 
B)worsened 
C)remained unchanged 
D)improved slightly before a recent deterioration

Question 76

The socialist countries of Eastern Europe have

A)fewer environmental problems than capitalist countries.
B)improved their environment more than the capitalist countries.
C)worse environmental problems than capitalist countries.
D)worsened since the collapse of communism there.

Question 77

In Eastern Europe and the countries of the former Soviet Union,

A)grave environmental problems plague Eastern Europe.
B)the area suffers from widespread illness and countless premature deaths. 
C)the Aral Sea, once the world's fourth-largest inland sea, is now half its previous size.
D)All of the above are correct.

Question 78

Interest in environmental problems has intensified, perhaps because

A)for the first time in history in the 1970s people began to die from pollution-related diseases.
B)rising incomes have caused people to be more concerned with the quality of their lives.
C)the centrally planned economies are polluted.
D)All of the above are true.

Question 79

Global warming of the past century, and especially in the past decade, is at least partly a consequence of human activities that have increased ____ in the atmosphere.

A)smog 
B)PCBs 
C)ozone 
D)"greenhouse gases"

Question 80

Some of the newer pollutants that have appeared

A)are far more visible to the eye than older pollution.
B)cause damage that is easily reversible.
C)pose no significant long-term hazards.
D)are far more dangerous than older forms of pollution.