ECON 40 Ch 17 Quiz

Identify the correct statement.

a. Members of the public are rationally ignorant about pollution legislation.-

Coase's solution of assigning property rights may not be enough when _____.

a. a large number of people are involved in a transaction-

An inflexible approach that requires a polluter to adopt particular technologies to reduce emissions by specific amounts is known as a(n):

a. command-and-control environmental regulation.

A key characteristic of a renewable natural resource is that:

a. it can be used periodically for an indefinite period of time.

The marginal social cost curve:

a. lies above the marginal private cost curve.

When there are positive externalities in the consumption of a good, _____.

a. marginal social benefit exceeds marginal private benefit

A renewable resource such as fish that is also an open-access good is:

a. rival but nonexcludable.-

If pollution can be easily monitored and polluters easily identified, _____.

a. the government can assign pollution rights to find an efficient solution to the pollution problem

A key reason why pollution and other negative externalities arise is that:

a. there are no practical, enforceable property rights to open-access resources.-

According to the Coase theorem, an efficient solution to an externality problem can be achieved:

a. when any one of the parties to a transaction is assigned the property right.-

_____ is an example of an exhaustible resource.

b. Crude oil-

Which of the following is true of an open-access resource?

b. Private property rights cannot be easily assigned-

Which of the following is true of pollution regulations?

b. They are not always in accord with the public interest.

One of the ways government can help internalize external benefits is by:

b. subsidizing consumption that produces external benefits.

Smog is:

b. the most visible form of air pollution, and automobile emissions account for 40 percent of it.-

The Coase theorem holds true only when

b. transaction costs are low.-

Externalities are the:

b. unintended side effects of actions that are themselves useful and purposeful.-

From an economic standpoint, which of the following is true of the Clean Air Act of 1970?

c. It recognized the atmosphere as an economic resource with alternative uses and gave Americans the right to breathe air of a certain quality.-

Which of the following offers positive external benefits in consumption?

c. Public education

According to an Environmental Protection Agency (EPA) study, _____.

c. air pollution is lower outdoors than indoors in the United States-

An open-access good is often subject to _____.

c. the common-pool problem-

The market for pollution rights represents the _____.

d. economic efficiency approach to environmental regulation-

Marginal social cost equals marginal _____ cost plus marginal _____ cost and reflects the true marginal cost to society of an additional unit of production.

d. private; external

An open-access good is subject to:

d. the common-pool problem because people harvest a resource as long as the marginal benefit of extracting a resource exceeds its marginal cost.-