Chapter 13

Which of the following statements describes an observed long-term trend?

Economic growth is accompanied by more efficient use of scarce resources

Which economist proposed that resources can be managed by users rather than governments?

Elinor Ostrom

______ are examples of market failure caused by "spillovers" or unintended by-products of a market transaction.

Externalities

Other things equal, an increase in the marginal benefits from abatement should:

cause a reduction in pollution.

Government requirements that automobile companies improve gasoline mileage every year is an example of:

command and control policies.

The tragedy of the commons is MOST associated with:

common property resources.

Inoculations for children against infectious diseases:

create an external benefit.

One criticism regarding actions to combat climate change is that _____ countries desire that more efforts be taken, while _____ countries focus more on economic growth.

developed; developing

One of the difficulties of creating an economic analysis of greenhouse gases is that:

global warming is a cumulative process

A _____ discount rate means the value today of a future payoff will be _____.

higher; less

In general, air pollution is ____, and greenhouse gases are _____.

localized; unlocalized

Combating emissions that lead to global warming differs from other types of pollution abatement because the process of combating global warming is:

long run and cumulative

If an entrepreneur opens an adult day care center that produces positive externalities, the equilibrium quantity of day care that is produced will be:

lower than socially optimal.

Global warming is an example of:

market failure

One of the major difficulties in determining the costs and benefits of big public projects is:

measuring the nonmarket aspects of the projects

The live band nearby makes it difficult for patrons of a restaurant to hold a conversation. This is an example of:

negative externality

Carbon dioxide emissions are considered to be a negative public good because:

nobody can have less of them because somebody else has more; and nobody can be excluded from their destructive consequences

An over-the-air radio station that plays music for free is a(n) ____ good, while a streaming radio service that charges a subscription fee is a(n) _____ good.

nonexcludable; excludable

A news website that can be accessed by many paid subscribers simultaneously is MOST likely:

nonrival and excludable.

Externalities are the impacts:

on third parties.

An advantage of tradable permits over command and control policies is that:

policy makers do not need to know abatement costs to produce an optimal outcome

______ would be MOST likely to have a free rider problem.

public tv

When positive externalities are present, the social demand curve lies to the _______ of the private demand curve and the private market _________________ the good.

right; underproduces

A physical DVD disc is a(n) ____ good, while a streaming video that can be used by multiple paying users is _____

rival; nonrival

Sales are down this month at Dusty's Smoke House. It is a competitive firm with fixed costs of $3,000, variable costs of $500, and sales revenue is equal to $5,000. A new government regulation requires that it install a new dust collector. This requires a monthly cost of $2,000 to maintain. Dusty should

shut down

If marginal abatement costs are lower than the marginal damage caused by pollution:

society would be better off if emissions were reduced.

Which of the following is both finite and nonrenewable?

soil

All of the following are considered private goods, EXCEPT:

street lights.

Government will likely have to bear the financial burden of climate change because:

technology is the solution to global warming and technology is a public good

The Patagonian toothfish is an example of:

the tragedy of the commons.

When negative externalities exist, an unregulated market will produce ______ of the good and the price will be ______ when compared to the socially optimal production.

too much; too low

Which of the following is NOT a market-based environmental policy approach?

vehicle fuel economy standards

The socially optimal pollution is:

where the marginal benefits of pollution abatement equal its marginal costs

Market demand for public goods is sometimes better referred to as the:

willingness to pay curve.