Deck 17: Externalities, the Environment, and Natural Resources

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

The opportunity cost of a completely clean environment is not worth the price for most people.

Answer 3

True

Question 4

Environmental problems occur exclusively in capitalist economies.

Question 5

Increasing GDP generally causes increases in problems of waste disposal.

Question 6

Pollution is a relatively new phenomenon.

Question 7

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

Question 8

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

Question 9

Centrally planned economies like China produce relatively little pollution.

Question 10

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

Question 11

Environmental destruction is peculiar to centrally planned economies.

Question 12

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

Question 13

The "edifice complex" is based on the idea that bigger is better.

Question 14

Externalities can create a threat to environmental quality.

Question 15

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

Question 16

Pollution is an example of a negative externality.

Question 17

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

Question 18

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

Question 19

Individuals and government have been contributors in harming the environment.

Question 20

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

Question 21

Voluntary programs are dependable ways to protect the environment.

Question 22

A pollution tax penalizes inefficient firms.

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

Rising prices will discourage consumption and encourage conservation.

Question 38

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

Question 39

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

Question 40

Emissions permits are sometimes referred to as a "license to pollute."

Question 41

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 42

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

Question 43

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

Question 44

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 45

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 46

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

Question 47

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

Question 48

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 49

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 50

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

Question 51

Price controls on resources generally lead to surpluses.

Question 52

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 53

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 54

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

Question 55

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

Question 56

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

Question 57

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 58

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

Question 59

Dwindling resources encourage the development of substitute products.

Question 60

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 61

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 62

Contrary to most thinking, governments play ____ in causing pollution.

A) almost no role
B) a large but decreasing role
C) a major role
D) a reconstructive role

Question 63

Individuals play ____ in causing pollution.

A) almost no role
B) a large but decreasing role
C) a major role
D) a reconstructive role

Question 64

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 65

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 66

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 67

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 68

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 69

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

A) a large part of the land is now declared "ecologically hazardous."
B) life expectancies are among the lowest in the industrialized world.
C) high levels of pollution contribute to severe health problems.
D) All of the above are correct.

Question 70

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 71

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 72

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 73

Recycling in the United States in recent years

A) has decreased in spite of increased fees for dumping trash.
B) has remained unchanged, and increased fees for dumping may help.
C) has increased with increased fees for dumping trash.
D) has increased with no help from increased fees for dumping trash.

Question 74

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 75

The environmental problems of the former Soviet Union

A) were caused by a lack of central planning in the economy.
B) were caused by the communist utopian vision.
C) were caused by market forces operating in the socialist system.
D) stem from industrialization and not the communist planning system itself.

Question 76

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 77

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 78

Major contributors to pollution are

A) individuals.
B) firms.
C) government.
D) All of the above are correct.

Question 79

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.

Question 80

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.