ECO 2620 Midterm 2 Material

Non-rival

A characteristic of public goods is that use of the good by one person does not reduce its availability to others. The term for this characteristic is... a. Non-exclusive b. Transferable c. Non-rival d. Perfectly elastic e. Free-rider

The marginal costs of damages are relatively stable and the marginal costs of pollution reduction are steep

A pollution tax would be preferable to a system of transferable permits when... Select one: a. The marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable b. The marginal costs of damages are steep and the marginal costs of pollution reduction are steep c. The marginal costs of damages are relatively stable and the marginal costs of pollution reduction are relatively stable d. The marginal costs of damages are relatively stable and the marginal costs of pollution reduction are steep e. The marginal costs of damages are elastic and the marginal costs of pollution reduction are also elastic

Marginal cost of pollution reduction curve and marginal cost of damage curve

A preference for either taxes or permits to regulate pollution is dependent on the relative shape of what two curves? Select one: a. Total cost of damage curve and total cost of pollution reduction curve b. Marginal revenue of pollution control curve and marginal cost of damage curve c. Marginal cost of pollution reduction curve and marginal cost of damage curve d. Marginal benefit of pollution curve and marginal revenue of pollution curve e. Marginal utility of pollution curve and marginal cost of regulation

All firms have similar equipment and technology

An emissions standard will work best in which of the following cases? a. The marginal cost of pollution reduction curve is relatively flat b. The marginal cost of pollution reduction curve is relatively steep c. All firms have similar equipment and technology d. The health effects of a pollutant are relatively unknown e. Firms have very different equipment and technology

Standards

Annual automobile emissions testing is an example of which type of pollution policy? a. Tradable permits b. Pollution taxes c. Pollution subsidies d. Setting property rights e. Standards

Increase at an exponential rate

As emissions levels increase at a steady rate for a stock pollutant, accumulations ... a. Decrease at a steady rate b. Decrease at an exponential rate c. Remain constant d. Increase at a steady rate e. Increase at an exponential rate

Health and other impacts continue to increase

As emissions levels stabilize for a stock pollutant ... a. Health and other impacts also stabilize b. Health and other impacts begin to decrease c. Health and other impacts continue to increase d. Health and other impacts may increase or decrease e. Health and other impacts are reduced to zero

Whenever the discount rate is positive

Assuming economic efficiency is maximized, when will more of a resource tend to be used in the first time period (as compared to future time periods)? a. Whenever the discount rate is positive b. Whenever the marginal net benefits in the present are positive c. Whenever the discount rate is zero d. Whenever the user costs are positive in the present e. Whenever the marginal net benefits in the future are negative

Decreasing

At a market equilibrium, the marginal net benefit curve is ... a. Horizontal b. Vertical c. Increasing d. Decreasing e. Maximized

The company or the community

Consider a factory that emits chemicals into a river, thus polluting the water supply of a downstream community. The Coase Theorem states that the socially optimal, or efficient, solution can be achieved by assigning property rights to _____________________. a. the company. b. the community. c. the company and the community, jointly. d. the company or the community. e. a government regulator.

The supply curve would shift to the right.

Consider a graph illustrating the upward sloping supply curve for coffee. What would you expect to happen if the government decided to levy a 75-cents per gallon subsidy on coffee? a. There would be a movement up along the supply curve. b. There would be a movement down along the supply curve. c. The supply curve would shift to the left. d. The supply curve would shift to the right. e. None of the above.

None of the above.

Consider the market for automobile transportation services, which are produced by taxicabs, buses, and companies like Uber and Lyft. Suppose that the federal government imposes a tax on producers of transportation services, and a separate tax on consumers of transportation services. What would you expect to happen to the equilibrium quantity and price of transportation services? a. The equilibrium quantity decreases and the equilibrium price decreases. b. The equilibrium quantity decreases and the equilibrium price increases. c. The equilibrium quantity increases, and the change in the equilibrium price is ambiguous. d. The equilibrium quantity increases and the equilibrium price increases. e. None of the above.

User costs

Costs imposed on future users of a resource are called ... a. Transactions costs b. Social costs c. Private costs d. Depletion costs e. User costs

Small and grow as the level of pollution rises

Damages from air pollution include adverse effects on human health and ecosystems, and reduced visibility. The first few units of pollution cause relatively little damage because ecosystems can process and break down a certain amount of pollution, and the levels are generally too low to have significant health impacts. Eventually, levels become high enough to start causing damage such as asthma, noticeable reductions in visibility, and ecological degradation. A small amount of automobile exhaust on a clear day may be a minor annoyance, but the same amount added to a smoggy area at rush hour could trigger significant breathing and health problems. Thus the marginal external damages of pollution, MEDP, start off ___________________. a. small and grow as the level of pollution rises. b. large and shrink as the level of pollution rises. c. large and shrink as the level of pollution falls. d. small and grow as the level of pollution falls. e. None of the above.

Increase as the discount rate is raised

Economic theory states that the optimal depletion rate will ... a. Imply the extraction of all of a resource now as long as interest rates are positive b. Increase as the discount rate is raised c. Decrease as the discount rate is raised d. Always ignore benefits to future generations e. Always create excessive pollution

Reduce; reducing

Environmental policies like corporate average fuel economy (CAFE) standards and mandatory technology like catalytic converters _____________________ fuel consumption and emissions without necessarily _________________ the number of automobiles sold. a. increase; reducing b. increase; increasing c. reduce; reducing d. reduce; increasing e. None of the above.

Driving subsidies to automobile drivers

Externalities can be positive or negative. An example of a positive externality is the third-party benefits from solar energy production such as reduced emissions, cleaner air, and the "warm glow" some people experience from engaging in sustainable activities. An example of a negative externality is the emissions produced from driving gasoline powered motor vehicles such. These emissions have been shown to adversely effect the environment, agriculture, and human productivity, morbidity, and mortality. Which of the following policies would NOT incentivize consumers or producers to internalize external costs of the activities they engage in? (Hint: it may be helpful to think of supply and demand graphs.) a. Driving subsidies to automobile drivers. b. Production subsidies to manufacturers of solar energy equipment such as photovoltaic cells and batteries. c. Driving taxes to automobile drivers. d. Consumption subsidies to buyers of solar energy equipment such as photovoltaic cells and batteries. e. None of the above.

Emissions standards

For a pollutant like lead, which causes health effects to local residents even at very low levels, which regulatory approach would be most effective for eliminating any health threats? a. Emissions standards b. Tradable permits c. Pollution taxes d. Pollution subsidies e. Ecolabeling

The marginal benefits of a polluting activity exceed the marginal costs

From an economic perspective, there is "too little" pollution in a market if ... a. The profits of businesses are not maximized b. The marginal benefits of a polluting activity exceed the marginal costs c. The marginal costs of a polluting activity exceed the marginal benefits d. The net social benefits of pollution are zero e. The net private benefits of pollution are zero

The net price of a resource rises at a rate equal to the interest rate

Hotelling's rule states that ... a. The net price of a resource is constant b. The net price of a resource rises at a rate equal to the interest rate c. The net price of a resource declines at a rate equal to the interest rate d. The price of a resource depends on the allocation of property rights e. The price of a resource is efficient as long as all user costs are internalized

The marginal costs of pollution reduction decrease and the marginal costs of pollution damage increase

How do the marginal costs of pollution reduction and the marginal costs of pollution damage change as pollution levels increase? Select one: a. The marginal costs of pollution reduction remain constant and the marginal costs of pollution increase b. The marginal costs of pollution reduction increase and the marginal costs of pollution damage increase c. The marginal costs of pollution reduction increase and the marginal costs of pollution damage decrease d. The marginal costs of pollution reduction decrease and the marginal costs of pollution damage increase e. The marginal costs of pollution reduction decrease and the marginal costs of pollution damage decrease

Add user costs to the supply curve

How do we adjust a current-period market graph to incorporate user costs? a. Subtract the user costs from the supply curve b. Add the user costs to the supply curve c. Subtract the user costs from the demand curve d. Add the user costs to the demand curve e. Add the user costs to both the supply curve and the demand curve

5,000 acres

If 10,000 people are willing to spend a maximum of $20 each to preserve one acre of rainforest, how many acres of rainforest could be preserved, assuming it costs $40 per acre to preserve the rainforest? a. Zero acres b. 1,000 acres c. 5,000 acres d. 10,000 acres e. There is not enough information to answer the question Feedback

The price will be too low and the quantity produced will be too high

If producing a good generates pollution (a negative externality), from a social perspective ... a. The price will be too low and the quantity produced will be too low b. The price will be too low and the quantity produced will be too high c. The price will be too high and the quantity produced will be too low d. The price will be too high and the quantity produced will be too high e. The price will be too low but the quantity produced will be correct

Reducing current consumption to save some resources for the future may be optimal

If we are trying to maximize economic efficiency, which one of the following statements is true? a. Reducing current consumption to save some resources for the future may be optimal b. Maximizing current consumption is optimal c. Consumption should always be divided equally among time periods d. Consumption rates should rise at a rate equal to the rate of interest e. Consumption rates in a time period are not related to interest rates

Where social marginal benefits intersect with the social marginal costs

In a market supply and demand graph, the socially efficient outcome occurs ... a. Where the private marginal benefits intersect with the social marginal costs b. Where the private marginal benefits intersect with the private marginal costs c. Where the social marginal benefits intersect with the social marginal costs d. Where the social marginal benefits intersect with the private marginal costs e. Where externalities are maximized

The marginal net benefit in the first time period is set equal to the present value of marginal net benefits in the second time period

In a two time-period example, economic efficiency is maximized when ... Select one: a. The marginal net benefits are maximized in both time periods b. The discount rate is set equal to the marginal benefits c. The marginal net benefit in the first time period is set equal to the present value of marginal net benefits in the second time period d. The marginal net benefits in the first period are set equal to the discount rate in the second time period e. The marginal net benefits in the first period are set equal to the user costs in the second time period

Whenever the discount rate is zero and the marginal net benefit curves are equal

In a two-period model, the same quantity of a resource will be used in both time periods ... a. Whenever the discount rate is set equal to the rate price is increasing b. Whenever the discount rate is zero and the marginal net benefit curves are equal c. Whenever the discount rate is zero d. Whenever the supply constraint is binding e. Whenever Hotelling's rule applies

Absence; economically

In the ________________ of externalities, the market equilibrium is ______________ efficient because it maximizes the net social benefit. a. absence; ecologically b. presence; ecologically c. absence; economically d. presence; economically e. absence; environmentally

All of the above.

In the absence of externalities, which of the following is true of economic efficiency? a. It occurs where marginal costs of production equal marginal benefits of consumption. b. It occurs where quantity supplied is equal to quantity demanded. c. It maximizes the total net benefits to consumers and producers. d. All of the above. e. None of the above.

Are uniformly mixed and regional in effect

Market-based regulations tend to work best with pollutants that ... a. Are non-uniformly mixed and local in effect b. Have threshold effects c. Are uniformly mixed and regional in effect d. Cause non-point source pollution e. Have non-linear and local effects

Tradable pollution permits

Permits that allow a firm to emit a specific amount of pollution are called ____________________. a. Pigouvian or pollution taxes b. tradable pollution permits c. pollution standards d. technology-based regulations e. None of the above.

Flow pollutants

Pollutants that have a short-term impact and then dissipate are called ... a. Stock pollutants b. Flow pollutants c. Cumulative pollutant d. Global pollutants e. Transferable pollutants

Technology based regulations

Pollution regulation by requiring firms to implement specific equipment or actions is known as _____________. a. Pigouvian or pollution taxes b. tradable pollution permits c. pollution standards d. technology-based regulations e. None of the above.

All of the above.

Since 1990, the aggregate emissions of criteria air pollutants have decreased 59 percent despite a. population increasing 24 percent. b. gross domestic product (or aggregate production in the USA) increasing 65 percent. c. vehicle-miles traveled increasing 40 percent. d. energy consumption increasing 15 percent. e. All of the above. f. None of the above.

False

Supply and demand is an economic tool that analyzes the total costs and benefits of alternative policies to different groups, such as producers and consumers. a. True b. False

MNB = 80 - 3Q

Suppose a demand schedule is P = 100 - Q and a supply schedule is P = 20 + 2Q. What is the marginal net benefit curve? a. MNB = 80 - Q b. MNB = 80 - 3Q c. MNB = 80 + Q d. MNB = 120 - Q e. MNB = 120 - 3Q

The factory is required to pay increased property taxes to the city

Suppose a factory pollutes a river that a downstream city relies on for drinking water. The level of pollution is not economically efficient. Which one of the following is not a possible means to increase economic efficiency in this case? a. Government regulation requires a reduction in pollution levels b. The factory is taxed for each unit of pollution c. Property rights in pollution are clearly assigned to the factory d. Property rights in pollution are clearly assigned to the city e. The factory is required to pay increased property taxes to the city

Zero acres

Suppose that 10,000 people are willing to spend a maximum of $20 each to preserve one acre of rainforest. A conservation group mails out a request to each person asking him or her to mail in $40 to preserve one acre of rainforest. How many acres of rainforest will be preserved with this program? a. Zero acres b. 1,000 acres c. 5,000 acres d. 10,000 acres e. There is not enough information to answer the question

Less; consumers

Suppose that the government imposes a tax on producers equal to the value of the externalities imposed by the good or service. A ______________ elastic demand curve means consumers are less responsive to changes in price and the tax burden will fall more heavily on ______________. a. more; government b. more; consumers c. less; producers d. less; consumers e. None of the above.

False

Tax can fall disproportionately on certain income groups. High-income households (HH) are impacted by gasoline taxes the most. a. True b. False

A groundwater aquifer

The "tragedy of the commons" is most likely to occur with which one of the following goods? a. A national forest b. A mineral ore deposit c. A public highway d. A groundwater aquifer e. A city park

As long as property rights are well defined and no transaction costs exist, an efficient allocation will result

The Coase Theorem states that...

Optimal; reduced

The ______________ level of production occurs when the externality is fully internalized and can be _____________ over time as we develop better pollution control technologies. a. minimum; increased b. minimum; reduced c. optimal; increased d. optimal; reduced e. market; reduced

Is abused by excessive pollution

The ability of natural environments to absorb wastes a. is called the sponge function. b. is abused by excessive pollution. c. imposes negative externalities on wildlife. d. is replenished by flow pollutants. e. All of the above.

Total; consumers

The area under the market demand curve shows the _____________ benefit to _____________. a. total; consumers b. marginal; consumers c. total; producers d. marginal; producers e. equilibrium; consumers

True

The balancing of marginal costs and marginal benefits to obtain an efficient outcome is known as the equimarginal principle. a. True b. False

Marginal revenue equals marginal cost

The economic optimum production level for a common property resource occurs where ... a. Total revenue equals total costs b. Average revenue equals marginal cost c. Average revenue equals average cost d. Marginal revenue equals total costs e. Marginal revenue equals marginal cost

Total revenue and marginal cost

The efficient price of a license fee is determined by the difference between ... a. Marginal revenue and marginal cost b. Average revenue and marginal cost c. Total revenue and total cost d. Average revenue and total cost e. Total revenue and marginal cost

None of the above.

The incentive for people to avoid paying for a resource when the benefits they obtain from the resource are unaffected by whether they pay is known as ___________________. a. the Coase Theorem. b. an upstream tax. c. the holdout effect. d. free market environmentalism. e. None of the above.

The total pollution reduction from an emissions tax can not be known for sure

The main disadvantage of an emissions tax is that ... a. The total pollution reduction from an emissions tax can not be known for sure b. Firms lack the flexibility to pursue different technologies c. Firms do not have an incentive to reduce pollution d. Firms can not be behave in an economically-efficient manner e. Differences among firms are not incorporated into the policy

True

The marginal external damages of pollution, MEDP, curve could also be viewed as the marginal benefits of pollution abatement. a. True b. False

Average revenue equals marginal cost

The open access equilibrium for a common property resource occurs at the point where ... a. Average revenue equals marginal cost b. Total social benefits are maximized c. Total private benefits are maximized d. Marginal revenue equals marginal cost e. Marginal revenue equals total costs

Neither economically efficient nor ecologically sustainable

The open access equilibrium is usually ... a. Economically efficient but ecologically unsustainable Incorrect b. Economically efficient and ecologically sustainable c. Economically inefficient but ecologically sustainable d. Neither economically efficient nor ecologically sustainable e. Highly profitable for resource users

Tom, Harry, Mary

The price of coffee rose sharply last month, while the quantity sold remained the same. Each of five people suggests an explanation: TOM: Demand increased, but supply was perfectly inelastic. DICK: Demand increased, but it was perfectly inelastic. HARRY: Demand increased, buy supply decreased at the same time. LARRY: Supply decreased, but demand was unit elastic. MARY: Supply decreased, but demand was perfectly inelastic. Who could possibly be right?

The Coase Theorem

The proposition that if property rights are well defined and there are no transaction costs, an efficient allocation of resources will result even if externalities exist, is known as __________________________. a. transaction costs b. Hartwick's rule c. the Coase Theorem d. Coase's Law e. the Hayes Theorem

To monitor compliance with National Ambient Air Quality Standards

The purpose of the network of air quality monitoring stations across the United States is a. to monitor compliance with National Ambient Air Quality Standards. b. to monitor compliance with the National Emissions Inventory. c. to monitor compliance with the Environmental Protection Agency. d. to monitor compliance with the Air Quality Index. e. to impose environmental responsibility on business and industry. f. None of the above.

Vertically adding the demand curves for the good

The socially optimal provision of a public good can be obtained by ... a. Privatizing the good b. Vertically adding the demand curves for the good c. Horizontally adding the demand curves for the good d. Eliminating access to the good e. Allowing open access to the good

Non-rival and non-exclusive

The two characteristics of a public good are: a. Non-rival and inelastic b. Non-exclusive and non-priced c. Non-rival and non-priced d. Non-exclusive and inelastic e. Non-rival and non-exclusive

Zero

Total net benefits are maximized when marginal net benefits are ... a. Maximized b. Minimized c. Zero d. Equal to the discount rate e. Equal to price

The marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable

Transferable permits are likely to result in less inefficiency, relative to a pollution tax, when ... Select one: a. The marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable b. The marginal costs of damages are steep and the marginal costs of pollution reduction are steep c. The marginal costs of damages are relatively stable and the marginal costs of pollution reduction are relatively stable d. The marginal costs of damages are relatively stable and the marginal costs of pollution reduction are steep e. The marginal costs of damage are elastic and the marginal costs of pollution reduction are also elastic

When the marginal net benefits in the current period are always greater than the marginal net benefits in the future

Under which one of the following conditions will economic theory indicate that all of a resource should be consumed in the current period? Select one: a. Whenever the discount rate is positive b. When the marginal net benefits in the current period are always greater than the marginal net benefits in the future c. When substitute resources are available d. When the marginal net benefits in the future are not discounted e. When the users costs are positive Feedback

Nothing!

What does the Coase theorem say about equity?

An inverted U-shape

What is the typical shape of a total product curve? a. An S-shape b. A U-shape c. An inverted U-shape d. A constantly increasing line e. A constantly decreasing line

None of the above.

Which of the following is the term that defines the relationship between price and quantity supplied? a. negative b. law of demand c. ceteris paribus d. equilibrium e. willingness to pay f. willingness to accept g. marginal benefit h. None of the above.

All of the above

Which of the following policies could be used to move the open-access equilibrium (OAE) of a common property fishery to the maximum economic yield (MEY)? a. Quotas b. Individual tradeable quotas or permits c. License fees d. All of the above. e. None of the above.

None of the above

Which of the following statements is true? a. If price decreases and demand is relatively elastic then the total expenditure by consumers will decrease. b. If price increases and demand is relatively inelastic then the total expenditure by consumers will decrease. c. Total expenditure by consumers is constant along a linear demand curve. d. All of the above. e. None of the above

Guaranteeing sufficient supplies for future users

Which one factor below does not influence how a resource should be allocated over time to maximize economic efficiency? a. Guaranteeing sufficient supplies for future users b. The discount rate c. The future marginal net benefit curve d. The current marginal net benefit curve e. The supply of the resource

An ocean

Which one of the following goods can be considered a global commons? a. A National Park b. A river c. An ocean d. A herd of deer e. A diamond mine

A golf course

Which one of the following is least likely to be considered a public good? a. An interstate highway b. A national park c. Wildlife d. A river e. A golf course

Equity considerations

Which one of the following is not a barrier to an efficient allocation of resources? a. Equity considerations b. Free rider effects c. Transactions costs d. Holdout effects e. Poorly defined property rights

A global stock pollutant

Which one of the following pollutant types is most difficult to regulate? a. A local flow pollutant b. A regional flow pollutant c. A local stock pollutant d. A regional stock pollutant e. A global stock pollutant

Public goods may provide psychic benefits

Which one of the following statements about public goods is true? a. Problems with public goods can always be solved by charging a fee to use the good b. Public goods may provide psychic benefits c. Public goods will tend to be oversupplied d. Money to provide public goods is commonly collected from free riders e. Public goods are any goods owned or provided by governments

It has been successful at reducing levels of both criteria and toxic pollutants

Which one of the following statements best describes the results of the Clean Air Act in the United States? Select one: a. It has been successful at reducing levels of both criteria and toxic pollutants b. It has been unsuccessful at reducing levels of both criteria and toxic pollutants c. It has been successful in reducing levels of criteria pollutants, but levels of toxic pollutants have increased d. It has been successful in reducing levels of toxic pollutants, but levels of criteria pollutants have increased e. It is too early to judge whether the Clean Air Act has reduced pollution levels

The appropriate resource depletion tax will increase

Which one of the following statements is false if we increase the discount rate used to allocate a resource across two time periods? a. The resource will tend to be used up quicker b. The price of the resource will tend to rise faster c. Current consumption of the resource will increase d. The appropriate resource depletion tax will increase e. Future supplies of the resource will decrease

The "optimal" level of pollution maximizes industry profits

Which one of the following statements is false? a. A Pigouvian tax is used to internalize pollution costs b. Transactions costs could reduce the potential for parties in a dispute to reach an efficient agreement c. The assignment of initial property rights affects the equity of a situation d. The "optimal" level of pollution is unlikely to be zero e. The "optimal" level of pollution maximizes industry profits

Solving problems involving global commons is not possible because of free rider effects

Which one of the following statements is false? a. Global warming and ocean pollution are examples of global commons issues b. Solving problems with global commons usually requires international cooperation c. Problems with the global commons are becoming more prevalent as human economic activity increases d. Problems with global commons occur because countries view their global environmental impacts as externalities e. Solving problems involving global commons is not possible because of free rider effects

Market solutions are always economically efficient

Which one of the following statements is false? a. Market solutions are always economically efficient b. Problems with global commons are partly a result of free riding c. Public preferences are not always expressed in markets d. Public and private preferences may differ e. Public goods often tend to be undersupplied

User costs should always be set to zero to maximize economic efficiency

Which one of the following statements is false? a. User costs can be incorporated in a market by imposing a resource depletion tax b. Government intervention may not be necessary to internalize user costs c. Users costs should always be set to zero to maximize economic efficiency d. Incorporation of user costs will raise current prices e. Consideration of user costs will reduce current production

Under a system of transferable permits, technological progress will reduce overall pollution levels

Which one of the following statements is false? Select one: a. Technological progress will lower the price of transferable pollution permits b. Under a pollution tax, technological progress will reduce overall pollution levels c. Under a system of transferable permits, technological progress will reduce overall pollution levels d. A pollution tax creates an incentive for technological progress e. Under a system of transferable permits, technological progress can result in some firms increasing their pollution levels

Under a system of transferable permits, technological progress will reduce overall pollution levels

Which one of the following statements is false? Select one: a. Technological progress will lower the price of transferable pollution permits b. Under a pollution tax, technological progress will reduce overall pollution levels c. Under a system of transferable permits, technological progress will reduce overall pollution levels d. A pollution tax creates an incentive for technological progress e. Under a system of transferable permits, technological progress can result in some firms increasing their pollution levels

The economically optimal level of production occurs at the maximum sustainable yield

Which one of the following statements is false? Select one: a. The economically optimal level of production is less than the open-access equilibrium level of production b. The economically optimal level of production occurs at the maximum sustainable yield c. Charging a license fee for access to a common resource will reduce the production level below the open-access equilibrium d. The "tragedy of the commons" is more likely to occur as production effort increases e. A license fee will reduce the incentives for entry into a market

The use of discount rates becomes more problematic as longer time periods are considered

Which one of the following statements is true? Select one: a. Discount rates should always be set to zero to maximize efficiency b. Discount rates should be constant over time c. The use of discount rates will always maximize future benefits d. The use of discount rates becomes more problematic as longer time periods are considered e. High discount rates promote resource conservation

Polluting firms generally prefer emissions standards to a system of tradable permits

Which one of the following statements regarding transferable pollution permits is false? a. An equilibrium permit price will be obtained through the trading of permits b. Polluting firms generally prefer emissions standards to a system of tradable permits c. A system of tradable permits was set up under the 1990 Clean Air Act Amendments d. A system of tradable permits could be used to help reduce carbon dioxide emissions e. A system of tradable permits achieves a given level of pollution reduction at the lowest cost

Marginal revenue

Which one of the following variables is most likely to decline as production effort increases? a. Marginal cost b. Total revenue c. Marginal revenue d. Total costs e. Total production

Total costs

Which one of the following variables is most likely to increase as production effort is increased? a. Net revenue b. Marginal costs c. Marginal revenue d. Total costs e. Average revenue

Yes, as long as the marginal benefits of pollution reduction exceed the marginal costs

Will reducing pollution to zero in a particular industry be economically efficient? a. Never b. Always c. Yes, as long the marginal costs of pollution reduction exceed the marginal benefits d. Yes, as long as the marginal benefits of pollution reduction exceed the marginal costs e. Yes, as long as the total benefits of pollution reduction exceed the total costs