ARE

Total pollution is currently 40 tons per month (20 tons from each firm). A permit is required to release pollutants (one permit for one ton of pollution emission). According to the data in the table, if the government initially distributed 10 permits to each firm,

Firm 1 is willing to purchase one permit for $25.00; Firm 2 is willing to sell one permit for $6.875

total pollution is currently 40 tons per month (20 tons from each firm). A permit is required to release pollutants (one permit for one ton of pollution emission). According to the data in the table, if the government initially distributed 10 permits to each firm,

Firm 1 is willing to sell one permit for $27.50; Firm 2 is willing to purchase one permit for $6.25

Total pollution is currently 40 tons per month (20 tons from each firm). A permit is required to release pollutants (one permit for one ton of pollution emission). According to the data in the table, if the government initially distributed 10 permits to each firm, the amount of pollution reduction from each firm would be

Firm 1: 10 tons; Firm 2: 10 tons

When a tax on each unit of pollution is imposed, a firm will

Reduce pollution until the MAC is exactly equal to the amount of the tax

A pollution permit trading system

is used to combat acid rain in the United States

Total pollution is currently 40 tons per month (20 tons from each firm). A permit is required to release pollutants (one permit for one ton of pollution emission). According to the data in the table, if the government initially distributed 10 permits to each firm, Firm 1 would be willing to sell one permit for

$27.50

The present value of $525 received one year from today, assuming an annual rate of return (discount rate) of 5% is

$500

According to the data in the table, if the government initially distributed 10 permits (one permit for one ton of pollution emission) to each firm, and a permit was required to release any pollution, Firm 2 would be willing to sell one permit for

$6.875

If the value of an environmental benefit realized two years from today is $970.20, and the annual rate of return is 5 percent, then its present discounted value is

$880

According to the graph, when the costs of waste disposal for products that are sold in glass, aluminum cans, and other recyclable products are not considered, the amount of improper waste

30%

According to the graph, when the costs of waste disposal for products that are sold in glass, aluminum cans, and other recyclable products are considered, the amount of improper waste

40%

According to the graph, when the marginal costs (MC) of production using raw (virgin) materials does not include the externality costs of production, the amount recycled would be

40%

A tax on each unit of production that generates a negative externality could be called

A Pigouvian tax

Which one of the following techniques is an example of supply-side economic valuation?

Avoided cost valuation

Which one of the following valuation techniques is not based on the value of marketed goods or services?

Contingent valuation

The Benefit Cost Ratio is estimated as

BCR = Benefits/Costs

A deposit refund system is effective because it

Both a and b

Which one of the following statements is true?

Discounting will decrease the magnitude of future costs and benefits

According to the graph, when the costs of waste disposal for products that are sold in glass, aluminum cans, and other recyclable products are considered, to internalize the externality costs, the amount of the deposit fee should be

Equal to the distance between MSCIW and MPCIW, which is a to b

Environmental subsidies may be used to

Increase demand due to a positive externality

If the government imposes a tax on each unit of pollution and the abatement standard is high enough that the firm must pay the tax on some of its pollution, a technological advancement in pollution abatement will

Increase the amount of pollution abatement by the firm and decrease its total costs

according to the graph, the appropriate deposit to prevent improper waste disposal can be found by equating

MSCIW to MSBIW

One method for determining whether or not to invest in a project is the Net Present Value. A project should not be invested in if the

NPV <0

One method for determining whether or not to invest in a project is the Net Present Value. A project should be invested in if the

NPV > 0

The social welfare criterion used for Benefit Cost Analysis requires that

Net Benefits = Total Benefits - Total Costs

The Benefit Cost Ratio can be used to determine which projects to fund. A project should be funded if

PVB/PVC > 1

In a permit trading system, a firm with high costs to reduce emissions would likely benefit from

Purchasing permits from lower cost firms

When comparing a permit trading system to the use of a pollution charge

a pollution charge generates revenue for the government on all units of pollution not abated

Among the chief concerns about the use of benefit-cost analysis is that

all of the above

Averting costs as a method for estimating nonmarket values could include the

all of the above

Direct use values of nature could include

all of the above

It is desirable to value the environment so we have an idea about the

all of the above

Major categories of market-based instruments include

all of the above

Contingent Valuation Methods (CVM), Travel Cost Methods (TCM) and Hedonic Pricing Methods are all

demand curve approaches

In the final phase of benefit-cost analysis, one of the steps that is generally conducted is to

determine if an option is feasible

Developing the marginal social benefit (MSB) or total social benefit (TSB) curves allows economists to

estimate the potential value of an environmental policy

In the multiple-polluter case for a pollution permit system, suppose Firm 1 and Firm 2 face marginal abatement cost functions of MAC1 = 4.5A1 and MAC2 = 2.25A2, respectively. If the government issues each firm tradeable pollution permits such that each has to abate 10 units of pollution, then, based on this allocation,

firm 2 has an incentive to buy a permit if the price is below $22.50

The present value of net benefits (PVNB) is

found as (PVB - PVC )

An economist estimates the value of a nature preserve by calculating the price premium people pay for houses located adjacent to the preserve. This is an example of what type of economic valuation?

hedonic pricing

In the single-polluter case, suppose a firm faces an emission charge implemented as a marginal tax (MT) of 12 and that its MAC = 0.8A. Based on this information, the firm

should abate pollution for all abatement levels up to 15 units

A "Potential Pareto Improvement" occurs when

society is better off if and only if the gainers could compensate the losers with a little left over.

An example of environmental services that may have a value not considered in the market is

the pollination of fruit orchards by honeybees

A larger discount rate is an indication that

the present is more important than the future

Which of the following are reasons economists discount the benefits and costs of projects

uncertainty about the future

Indirect use of nature could include

using wetlands as a natural filter for urban drinking water

A discount rate that is less than zero indicates that

we should suffer now because the future is more important than the present

A smaller discount rate is an indication that

what happens in the future important