The Economics Of Environmental Protection

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Questions Bank

Economic Issues and Concepts
Economic Theories,Data,and Graphs
Demand,Supply,and Price
Elasticity
Price Controls and Market Efficiency
Consumer Behaviour
Producers in the Short Run
Producers in the Long Run
Competitive Markets
Monopoly,cartels,and Price Discrimination
Imperfect Competition and Strategic Behaviour
Economic Efficiency and Public Policy
How Factor Markets Work
Labour Markets and Income Inequality
Interest Rates and the Capital Market
Market Failures and Government Intervention
The Economics of Environmental Protection
Taxation and Public Expenditure
What Macroeconomics Is All About
The Measurement of National Income
The Simplest Short-Run Macro Model
Adding Government and Trade to the Simple Macro Model
Output and Prices in the Short Run
From the Short Run to the Long Run: The Adjustment of Factor Prices
Long-Run Economic Growth
Money and Banking
Money,Interest Rates,and Economic Activity
Monetary Policy in Canada
Inflation and Disinflation
Unemployment Fluctuations and the Nairu
Government Debt and Deficits
The Gains From International Trade
Trade Policy
Exchange Rates and the Balance of Payments

All Questions

Question 1

Free

Multiple Choice

Economists generally view pollution as

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an economic "bad" that must be eliminated entirely.

a negative economy.

a negative externality.

a positive externality.

a non-excludable good.

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Question 2

Free

Multiple Choice

When firms in an industry have fully internalized a production externality,

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they produce at less than the optimal level of output.

they produce at more than the optimal level of output.

it is not possible to achieve allocative efficiency.

the marginal social cost is zero.

they bear the entire social marginal cost of production.

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Question 3

Free

Multiple Choice

If pollution is associated with the production of some good,then

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the marginal social cost is less than the marginal social benefit.

the price of the good is equal to firms' marginal private cost.

marginal social cost minus marginal private cost is negative.

marginal social cost minus marginal private cost is positive.

too little of the good is being produced by the firm.

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Question 4

Free

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.A negative externality is depicted because the

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marginal social cost is greater than the marginal social benefit.

marginal social cost is greater than the marginal private cost.

marginal social benefit to consumers is diminishing with greater output.

optimal level of output occurs where marginal private cost is positive.

optimal level of output occurs where marginal private benefit is positive.

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Question 5

Free

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The price that leads consumers to demand the socially optimal quantity of output is

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zero.

P₁.

P₂.

P₃.

not possible to know from the information given.

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Question 6

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The price that would occur in a competitive market in the absence of government intervention is

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P₁.

P₂.

P₃.

P₄.

not possible to know from the information given.

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Question 7

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The equilibrium output that would occur in a competitive market in the absence of government intervention is

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zero.

Q₁.

Q₂.

Q₃.

none of the above; there is no equilibrium output level.

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Question 8

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The socially optimal level of output is

Choose correct answer/s

zero.

Q₁.

Q₂.

Q₃.

none of the above; there is no optimal output level.

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Question 9

Multiple Choice

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.What is the marginal external cost at output level ?

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Question 10

Multiple Choice

When an external cost associated with the production of some good has been internalized,it means that

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the opportunity cost of production is passed on to the consumer.

the private cost of production is borne by the producer.

the external costs are incorporated into private decision making.

the consumer is bearing the net social benefits imposed by the producer.

the firm is ignoring social costs.

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Question 11

Multiple Choice

The social marginal cost of the production of snowmobiles

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is less than the marginal external cost of production.

is greater than the sum of the private marginal cost and external cost.

includes only the cost of the labour input.

includes the noise pollution imposed on those living near snowmobile trails.

includes only the opportunity cost of all capital equipment.

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Question 12

Multiple Choice

When a farmer in Manitoba produces fertilizer run-off that pollutes the local water system,

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the amount of farm output will not be profitable.

the amount of farm output produced will not be cost-effective.

the amount of farm output produced will be less than the efficient level.

the farm should stop producing agricultural products altogether.

the amount of farm output produced will exceed the efficient level.

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Question 13

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q = 10 + 2Q
MB = 35 - 0.5Q.
A competitive free market will produce output of units,and this amount is than the allocatively efficient level of output.

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5; less

10; less

15; more

20; more

25; more

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Question 14

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q
MC_S = 10 + 2Q
MB = 35 - 0.5Q
The marginal social cost at the competitive free-market equilibrium is

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10.

20.

25.

50.

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Question 15

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q
MC_S = 10 + 2Q
MB = 35 - 0.5Q.
The marginal external cost at the competitive free-market equilibrium is

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10.

15.

25.

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Question 16

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q
MC_S = 10 + 2Q
MB = 35 - 0.5Q.
The allocatively efficient level of output is ________ units.

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Question 17

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q
MC_S = 10 + 2Q
MB = 35 - 0.5Q.
The marginal external cost at the allocatively efficient level of output is

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10.

15.

20.

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Question 18

Multiple Choice

A paper mill discharges chemicals into a river which pollutes the shores of a downstream resort area.The private marginal cost,social marginal cost,and marginal benefit associated with the production of paper are given by the following equations: MC_P = 5 + Q
MC_S = 10 + 2Q
MB = 35 - 0.5Q.
The marginal external cost is ________ throughout the output range.

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zero

constant

increasing

decreasing

negative

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Question 19

Multiple Choice

Suppose a firm producing roof shingles imposes a negative externality on the surrounding area due to the noxious fumes emitted from the plant.The private marginal cost,social marginal cost and marginal benefit associated with the production of the shingles are given by the following equations: MC_P = 5 + 2Q
MC_S = 10 + 3Q
MB = 50 - Q
A competitive free market will produce units,at a price of per unit.

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20; $25

20; $40

15; $40

15; $35

10; $35

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Question 20

Multiple Choice

Suppose a firm producing roof shingles imposes a negative externality on the surrounding area due to the noxious fumes emitted from the plant.The private marginal cost,social marginal cost and marginal benefit associated with the production of the shingles are given by the following equations: MC_P = 5 + 2Q
MC_S = 10 + 3Q
MB = 50 - Q
The social marginal cost at the competitive equilibrium is ________ per unit.

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$13

$50

$55

$25

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The Economics Of Environmental Protection

Economists generally view pollution as

When firms in an industry have fully internalized a production externality,

If pollution is associated with the production of some good,then

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MCP,and the marginal cost to society,MCS,at each level of output of some good. FIGURE 17-1-Refer to Figure 17-1.A negative externality is depicted because the

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MCP,and the marginal cost to society,MCS,at each level of output of some good. FIGURE 17-1-Refer to Figure 17-1.The price that leads consumers to demand the socially optimal quantity of output is

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MCP,and the marginal cost to society,MCS,at each level of output of some good. FIGURE 17-1-Refer to Figure 17-1.The socially optimal level of output is

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MCP,and the marginal cost to society,MCS,at each level of output of some good. FIGURE 17-1-Refer to Figure 17-1.What is the marginal external cost at output level ?

When an external cost associated with the production of some good has been internalized,it means that

The social marginal cost of the production of snowmobiles

When a farmer in Manitoba produces fertilizer run-off that pollutes the local water system,

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.A negative externality is depicted because the

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The price that leads consumers to demand the socially optimal quantity of output is

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.The socially optimal level of output is

The figure below shows the marginal benefit to consumers,MB,the marginal cost to private firms,MC_P,and the marginal cost to society,MC_S,at each level of output of some good. FIGURE 17-1
-Refer to Figure 17-1.What is the marginal external cost at output level ?