Microeconomics Chapter 12

While the U.S. command-and-control environmental regulations initiated in the 1970s have been very effective at reducing pollution, some economists have difficulty with the legislation because

it is full of fine print and exceptions, and costly for some firms to comply with.

Why would a typical U.S. business fail to take the social costs of pollution into consideration during the development of their operating strategies?

it isn't required to pay any of the cost of cleaning up its pollution

The arguments presented by economists regarding U.S. environmental command-and-control regulations generally

lack flexibility and a and b above.

Low and middle-income societies correctly point out that high-income countries have historically

legitimately lacked moral standing in addition to all the above.

Which of the following have historically been more willing to sacrifice their environmental quality for some additional economic output?

low incomes and command economies

Around the world, the cities with the dirtiest air and water are typically found in ___________________________ .

low-income countries in Africa and Asia

A ___________________ would lead a large greenhouse gas emitter to reduce emissions by less.

lower pollution tax

A pollution charge gives the trucking industry an incentive to reduce its emissions, as long as the _____________ of reducing the emissions is _______________ .

marginal cost; less than the tax

An economist is more likely to identify __________________ as a more efficient and flexible way for society to _________________________.

marketable permits; allow a limited, declining amount of pollution to occur

The main categories of market-oriented approaches to pollution control are

marketable permits; better-defined property rights; pollution charges.

Environmentalist groups tend to prefer ________________ to ___________________.

marketable permits; pollution charges

Traditionally, policies for environmental protection in the U.S. have focused on __________________ pollutant could be emitted.

setting limits for how much of each

If pollutants are emitted into the air and water, what costs might be incurred as a result?

health injuries and all of the above

The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below. Price Quantity Demanded Quantity Supplied without Paying Social Costs Quantity Supplied after Paying Social Costs 30 80 80 20 The equilibrium price and quantity when only private costs are taken into account are

Price = $30, Quantity = 80

_______________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process.

Social costs

Bringing the nations of the world to act together in addressing environmental issues that spill over national borders requires _______________ between countries with _________________ .

a difficult set of negotiations; different income levels and sets of priorities

Market-oriented environmental policies are ________, and __________ will work better in some situations than in others.

a tool-kit; specific tools

Using the term "spillover" is a less formal means of describing

an externality.

A positive externality arises in a situation where a third party, outside the transaction,

benefits from a market transaction by others.

Which of the following is used to describe the full spectrum of animal and plant genetic material?

biodiversity

If a glass manufacturer has only a few ________________ of reducing pollutants, it will ____________________ .

costly ways; end up paying the pollution tax.

Market-oriented environmental tools _______________ for firms to take the social costs of pollution into account and ____________________ in reacting to these incentives.

create incentives; allow firms some flexibility

The property rights approach to environmental issues often becomes highly relevant in cases involving __________________.

endangered species

Which of the following will need to strike some balance between economic output and environmental quality as a prominent climate change priority?

every country

Why do U.S. economists commonly refer to externalities as an example of market failure?

externalities present a case where markets only consider some social costs

In addition to the current levels of air and water pollution, a list of important environmental issues would most likely include:

extinction of species and all of the above

Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits.

fails to allocate resources efficiently

Because of the nature of the comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government, these laws are typically referred to as ___________________.

positive regulations

Marketable permits can be viewed as a form of improved _______________.

property rights

Which of the following is an example of economic output that can injure the environment?

radio-active waste leaking into a river, and all of the above

Since 1969, when the Cuyahoga River in Ohio was so polluted that it spontaneously burst into flame, the overall quality of water in the U.S. has

steadily improved.

The comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government

stipulated mandatory use of particular pollution-control technologies.

To be effective, U.S. command-and-control environmental regulation required

the EPA to oversee all environmental laws and all of the above.

Which of the following has become the least willing to sacrifice their environmental quality for some additional economic output?

the European Union

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A positive externality that can result is

the bees helping to pollinate the orchard, leading to more fruit.

Some economists argue that if privately owned firms were required to pay the social costs of their pollution, the result would be:

the price of goods will rise and a and b above

If no externalities of pollution exist in a particular industry, the interaction of demand and supply _________________________ .

will coordinate social costs and benefits