Question 1

Which legislation focuses on toxic waste dumps?

Accepted Answer

The Superfund law of 1980, also known as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), focuses on cleaning up toxic waste dumps and hazardous substance releases.

Question 2

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.The supply curve represents the amount of ______

Accepted Answer

The supply curve in the market for pollution rights represents the amount of toxins that can be dumped into the river without reducing the water quality below a certain level. This means that firms can only supply a certain amount of pollution before it becomes harmful to the environment, and the supply curve reflects this limit. The other choices are not accurate descriptions of the supply curve in this market.

Question 3

Markets for pollution rights _____

Accepted Answer

Markets for pollution rights allow firms that value the right to pollute the most to purchase these rights, thus enabling them to pollute within the limits set by the market.

Question 4

The Coase solution to the problem of externalities _____

Accepted Answer

The Coase solution only works when bargaining costs are low. This means that the affected parties can negotiate a mutually beneficial agreement without incurring significant transaction costs. If bargaining costs are too high, it may be difficult for the parties to reach an agreement, and externalities may persist.

Question 5

Federal efforts to address the common-pool problems of air,water,and ground pollution are coordinated by the _____

Accepted Answer

The EPA is the federal agency responsible for coordinating efforts to address pollution in air, water, and ground. It was established in 1970 under the Environmental Protection Agency Act and is charged with protecting human health and the environment by enforcing environmental laws and regulations. The other options listed primarily focus on specific areas of environmental management and do not have the same level of responsibility for addressing pollution problems.

Question 6

The government passes a new law allowing only 1,000 tons of pollutants per day to be discharged and simultaneously sells 1,000 transferable rights to emit one ton each of pollutants per day.Which of the following is true?

Accepted Answer

The sale of transferable rights to emit pollutants will create a market for these rights, which will be bought by those industries or companies that are the most willing and able to pay for them. This means that those who can afford to pay for the right to pollute will be the ones discharging pollutants, rather than those who cannot afford to compete in the market. Therefore, pollution will be created by those most willing and able to pay for the right to pollute.

Question 7

Exhibit 17.7
 
-Refer to Exhibit 17.7,which shows the optimal allocation of pollution rights to firms polluting a river.If the government sells the right to pollute the river,_____

Accepted Answer

The optimal allocation of pollution rights to firms polluting a river is shown in Exhibit 17.7. The point where the marginal benefit of pollution by the last firm equals the marginal cost of pollution reduction is where the firms will emit a total quantity of Q₁ units of the pollutant at a price of P₁ each. Therefore, if the government sells the right to pollute the river, firms will emit Q₁ units of the pollutant at a price of P₁ each. Therefore, the correct choice is D.

Question 8

A metal-stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.It would cost the factory $5 million to move,and it would cost the day care center $1 million to move.Sound insulation for the factory costs $1 million,while insulation for the day care center costs $200,000.The court initially determines that the day care center has the property right.But,on appeal,the factory is awarded the property right.Which of the following is likely to be true according to the Coase theorem?

Accepted Answer

According to the Coase theorem, if property rights are clearly defined and transaction costs are low, then the parties involved will negotiate and reach an efficient outcome regardless of initial property rights. In this scenario, the factory has been awarded property rights, but the day care center still has a cost-effective option to mitigate the noise problem by buying insulation for the factory. This would be consistent with the Coase theorem as it would lead to an efficient outcome without the need for either party to move or incur significant costs. Therefore, option A is the best choice.

Question 9

According to EPA estimates,compliance with pollution-control regulations cost U.S.producers and consumers _____ in 2015.

Accepted Answer

According to the EPA, compliance with pollution-control regulations cost U.S. producers and consumers over $300 billion in 2015.

Question 10

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.An increase in demand indicates ______

Accepted Answer

An increase in demand shifts the demand curve to the right, leading to an increase in the equilibrium price of pollution rights. This indicates an increase in the price of the right to pollute. It does not necessarily imply a fall in pollution, reduced environmental damage, an increase in the benefit of cleaning up the pollution or an increase in the cost of cleaning up the river.

Question 11

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.Which of the following could not have caused an increase in the demand for pollution rights?

Accepted Answer

A decrease in the cost of pollution abatement equipment would likely reduce the demand for pollution rights, as firms would find it cheaper to reduce pollution rather than buy rights.

Question 12

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.The shift of the demand curve from D to D' indicates that ______

Accepted Answer

The shift of the demand curve from D to D' for pollution rights indicates that producers want to discharge more pollutants into the river, as they are now willing to pay more for the right to pollute, reflecting an increased demand for pollution rights.

Question 13

If producers cannot afford the fees for pollution rights,then _____

Accepted Answer

If producers cannot afford the fees for pollution rights, they will have to find a cheaper way to deal with their pollution. This may involve investing in cleaner technologies or finding alternative ways to produce their goods that generate less pollution. It is not ethical, nor legal, to adopt ways to pollute without getting detected, buy pollution rights illegally, or sell their pollution rights. They will not be able to use their pollution rights if they cannot afford the fees to obtain them.

Question 14

According to the Coase theorem,_____ in order to solve a negative externality problem efficiently.

Accepted Answer

The Coase theorem states that if property rights are well-defined and transaction costs are low, private bargaining will lead to an efficient outcome, regardless of the initial assignment of property rights. Therefore, bargaining costs must be low for Coase theorem to work efficiently.

Question 15

Which federal law governs solid waste disposal?

Accepted Answer

The Resource Conservation and Recovery Act (RCRA) of 1976 is the federal law that governs solid waste disposal. RCRA sets up a framework for the proper management of non-hazardous and hazardous solid waste, including how they are generated, transported, treated, stored, and disposed of.

Question 16

About _____ of the pollution control expenditures in the United States goes toward cleaner air and cleaner water,and _____ goes toward disposing of solid waste.

Accepted Answer

The majority of pollution control expenditures in the United States are allocated towards achieving cleaner air and water, with a significant portion, but less than half, dedicated to solid waste disposal.

Question 17

The equilibrium permit price of a pollution right is _______

Accepted Answer

The equilibrium permit price of a pollution right is determined by supply and demand for pollution rights. The supply of the pollution rights is determined by the government while the demand is determined by the polluting firms. The price at which the supply of pollution rights equals the demand for pollution rights is the equilibrium permit price.

Question 18

Which of the following would happen if the government increased the quantity of pollution rights to be sold,other things equal?

Accepted Answer

If the government increased the quantity of pollution rights to be sold, there would be an increase in supply of pollution rights. This increase in supply would lead to a decrease in the price of pollution rights (since there are more available). As the price falls, firms would be able to buy the rights at a lower cost and would be inclined to pollute more, increasing the amount of pollution. Therefore, the answer is D.

Question 19

Exhibit 17.7
 
-Refer to Exhibit 17.7,which shows the optimal allocation of pollution rights to firms polluting a river.If the government does not charge firms for polluting the river,the ______

Accepted Answer

If the government does not charge firms for polluting, they will emit the quantity where the marginal cost of pollution is zero, which is typically the maximum quantity, Q₂, at a price of P₀ each.

Question 20

Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold.Other things equal,______

Accepted Answer

Reducing the number of pollution rights decreases the supply of these rights, leading to a higher price for the remaining rights. This higher cost incentivizes firms to pollute less, thus reducing the overall amount of pollution.

Quiz 17: Externalities and the Environment

Which legislation focuses on toxic waste dumps?

Exhibit 17.6 -Refer to Exhibit 17.6,which shows the market for pollution rights.The supply curve represents the amount of ______

Markets for pollution rights _____

The Coase solution to the problem of externalities _____

Federal efforts to address the common-pool problems of air,water,and ground pollution are coordinated by the _____

The government passes a new law allowing only 1,000 tons of pollutants per day to be discharged and simultaneously sells 1,000 transferable rights to emit one ton each of pollutants per day.Which of the following is true?

Exhibit 17.7 -Refer to Exhibit 17.7,which shows the optimal allocation of pollution rights to firms polluting a river.If the government sells the right to pollute the river,_____

According to EPA estimates,compliance with pollution-control regulations cost U.S.producers and consumers _____ in 2015.

Exhibit 17.6 -Refer to Exhibit 17.6,which shows the market for pollution rights.An increase in demand indicates ______

Exhibit 17.6 -Refer to Exhibit 17.6,which shows the market for pollution rights.Which of the following could not have caused an increase in the demand for pollution rights?

Exhibit 17.6 -Refer to Exhibit 17.6,which shows the market for pollution rights.The shift of the demand curve from D to D' indicates that ______