Question 1

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

Accepted Answer

Market failure refers to situations where unregulated markets fail to allocate resources efficiently and equitably, leading to a welfare loss to society. This can occur due to various reasons such as externalities, public goods, information asymmetry, and market power. The market may not be able to provide the optimal level of output or price, resulting in inefficient allocation of resources.

Question 2

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

Accepted Answer

Policies that are flexible and easily adaptable to new information, technological innovation, and changing economic or social conditions are able to address new challenges and issues as they arise, making them more effective in achieving their intended outcomes. Moral superiority, political expediency, and fairness may also be important factors in policy-making, but flexibility is critical for long-term success.

Question 3

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.

Accepted Answer

Technological change for environmental improvement often produces public goods that are not fully accounted for in private markets. Because private markets prioritize profit and do not account for externalities, there is a tendency to undersupply public goods like environmental improvements. Therefore, private markets cannot be relied upon to drive sufficient technological change for environmental improvement, and public policy interventions are often necessary.

Question 4

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.

Accepted Answer

All of the choices listed are moral considerations that are commonly used to evaluate environmental policy.

Question 5

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

Accepted Answer

Polluting firms may overstate abatement costs to convince regulators to set higher emission targets, allowing them to pollute more than the socially efficient level.

Question 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.

Accepted Answer

A centralized policy puts a controlling administrative agency in charge of determining what is to be done. This means that decisions are made at a higher level and there is a central authority who is responsible for enforcing and implementing the policy. Choices B and C do not accurately describe a centralized policy.

Question 7

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

Accepted Answer

Programs C and D are the optimal choices as they have the highest efficiency scores for both Group X (low income) and Group Y (high income). Program A is not as efficient as Programs C and D for either income group, and Program B is not efficient for Group X (low income).

Question 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.

Accepted Answer

The answer of Cost effectiveness is an important piece of...

Question 9

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

Accepted Answer

All of the choices can potentially contribute to lowering abatement costs. Research and development can lead to the discovery of new technologies and methods that can reduce the cost of abating pollution. Education can increase public awareness and knowledge about environmental issues, which can lead to greater demand for environmentally-friendly products and services. Training can improve the skills and knowledge of workers involved in environmental protection, leading to more efficient and effective pollution control measures.

Question 10

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.

Accepted Answer

The two main steps in enforcement are monitoring to ensure compliance and sanctioning those who do not comply. Monitoring involves keeping an eye on activities to make sure they follow regulations or laws, while sanctioning involves taking punitive measures against those who do not comply. The other choices do not accurately represent the steps in enforcement.

Question 11

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

Accepted Answer

Accurate information about the costs of adaptation to pollution control measures is often considered private information because it is specific to individual firms or industries and not readily shared with the public or policymakers.

Question 12

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.

Accepted Answer

Hazardous waste sites are often located near low-income and minority communities, leading to disproportionate exposure to environmental contaminants. Indoor air pollution, lead exposure, and water pollution can also have disproportionate impacts, but they are not necessarily more prevalent among people of color and low-income people.

Question 13

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

Accepted Answer

Environmental economists use all three criteria (efficiency, fairness, and equity) to evaluate environmental policies. Efficiency refers to the ability of a policy to achieve environmental goals at the lowest possible cost. Fairness refers to the distribution of costs and benefits of the policy among different groups in society. Equity refers to the consideration of future generations and their ability to enjoy a clean and healthy environment. Therefore, all three criteria are important in evaluating the effectiveness of environmental policies.

Question 14

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.

Accepted Answer

A centralized policy means that a controlling administrative agency is responsible for determining what is to be done, as opposed to leaving it to individual decision makers. Therefore, option A is the best choice. B and C are incorrect as they do not accurately describe a centralized policy.

Question 15

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.

Accepted Answer

The paradox of sanctioning is that the greater the sanction (such as fines or jail time) the greater the deterrent effect it may have, but courts are often reluctant to apply such large sanctions. This can create a paradox as the goal of the sanction is to deter noncompliance, but the reluctance to apply large sanctions makes it less effective in achieving that goal. Option B refers to the problem of enforcement costs, which is a separate issue from the paradox of sanctioning. Option C is generally true, but is not directly related to the paradox of sanctioning.

Question 16

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.

Accepted Answer

Efficiency is about maximizing net benefits for society, which means that the benefits outweigh the costs. While distributing benefits equally and maximizing net income are important goals, they are not the defining characteristics of efficiency. Therefore, choice A is the best answer.

Question 17

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

Accepted Answer

If the regulatory agency underestimates the true abatement costs, it is likely to set stricter environmental regulations than would be socially optimal, believing that it is cheaper for firms to reduce emissions than it actually is. This leads to lower emissions than the socially efficient level, but because the policy is based on incorrect cost estimations, the overall damages (including the excessive costs of abatement) are higher than they would be at the socially efficient level of emissions.

Question 18

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.

Accepted Answer

A technology forcing policy sets pollution control targets that require firms to innovate and develop new technologies to meet the targets. This can lead to increased costs for firms, but also stimulates the development of cleaner technologies. Option A is incorrect because it specifies a particular technology, rather than requiring firms to develop their own solutions. Option C is incorrect because it only addresses technology firms, rather than all industries. Option D is incorrect because technology forcing policies do exist.

Question 19

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

Accepted Answer

The answer of Refer to the Table above. Group X...

Question 20

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

Accepted Answer

The materials balance equation is based on the principle of conservation of mass, which implies that if the amount of residuals entering one environmental medium is reduced, the amount entering other media must increase to account for the total quantity of residuals.

Quiz 9: Criteria for Evaluating Environmental Policies

In economics, the concept of market failure refers to

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

The rate of technological change for environmental improvement may be too slow because

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?

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 centralized policy requires that

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?

Cost effectiveness is an important piece of the evaluation of public policy because

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?

Two main steps in enforcement are

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, _____________.

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

Which of the following is a criterion used by environmental economists to evaluate environmental policies?

A centralized policy requires that

The paradox of sanctioning is

A program or policy is efficient if

A technology forcing policy is one that

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?

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 __________.