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Chapter12_env_protection
Question1

1/1point

Command-and-control regulation is a body of law that

a) fails to consider private costs of firms.

b) specifies allowable quantities of pollution.

c) details which pollution-control technologies must be used.

d) can include both b and c.

Questio
n2

1/1
point

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

a) remained unchanged.

b) steadily improved.

c) steadily declined.

 d) remained a non-issue.
Questio
n3

1/1
point

A pollution charge is a form of tax imposed on

a) low-income market-orientated industries.

b) the quantity of pollution that a firm emits.

c) pollution control technologies.

d) every economy in the world.

Questio
n4

1/1
point

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

a) envirodiversity

b) biodiversity

c) duodiversity

d) ecodiversity
Chapter12_env_protection_negative_externalities
Question5

1/1point

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

 a) social costs of industrial pollution to become unavoidable business costs.

b) firms to take the social costs of pollution into account.

c) firms to increase their costs by installing specified anti-pollution equipment.

d) the EPA to oversee all environmental laws and all of the above.
Questio
n6

1/1
point

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

a) each would create less pollution

b) each would lower production to decrease pollution levels

c) their supply curves will represent all of those social costs

the price of goods will rise and a and b above

d)

Questio
n7

1/1
point

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

regulations generally

a) accept the goal of reducing pollution.

b)
question the regulations as being the best policy tools for meeting reduction goals.

c) assert that these laws are clear of the usual fine print, loopholes and exceptions.

d) lack flexibility and a and b above.

Chapter12marketablepermits
Question8

1/1point

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

a) fresh water resources

b) endangered species

c) harmful affects of acid rain

d) greenhouse gas emissions

Questio
n9

1/1
point

The challenge of preserving biodiversity,

a) any nation itself can reduce emissions to solve global warming.

b) any nation acting alone can protect biodiversity around the world.

c) includes the full spectrum of animal and plant genetic material.

d)
a nation can protect biodiversity within its own borders and c.

Questio
n10

1/1
point

If market-oriented environmental tools offer a mechanism or providing either the same

environmental protection at lower cost, or providing a greater degree of environmental protection
for the same cost, then this ___________ will arise for ________________ .

a) spillover; only the high-income countries

b) trade-off; all countries around the globe

c) spillover; market-oriented countries

d) trade-off; command-oriented countries

Questio
n11

1/1
point

Why was the Clean Air Act amended in 1990?

a) to reduce sulfur dioxide emissions from electric power plants to half of 1980 levels

b) to reduce sulfur dioxide emission through command-and-control regulations

to reduce sulfur dioxide emissions from electric power plants to half of 1970 levels
c)

d) so flat fees for excessive pollution could be determined by the federal government
Questio

1/1

n12

point

Environmentalist groups act to directly reduce of emissions by

a) buying marketable emission permits and not re-selling them.

buying, trading, and re-selling marketable emission permits.

b)

c) allowing a limited amount of pollution to occur.

d) allowing a declining amount of pollution to occur.

Chapter12problems
Question13

0/1point

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

100

120

75

80

10

100

50

55

30

90

30

40

55

85

25

30

80

80

20

20

100

65

15

The equilibrium price and quantity when social costs are taken into account are

a) Price = $30, Quantity = 20

b) Price = $30, Quantity = 80

c) Price = $40, Quantity = 55

d) Price = $55, Quantity = 30

Chapter13randomselection
Question14

1/1point

An individual who wants others to pay for public goods, but plans to use those goods for their own
purposes, is often referred to as a ______________ .

a) free rider

b) tax evader

c) nonexcludable

 d) excludable
Questio
n15

1/1
point

If IMSmartCos research and development project succeeds, then

a)

market competition will ultimately discourage commercialization of the new

technology.

their success will be temporary because they will inevitably fall behind other
b) innovative competitors.

they will need to find a less expensive way to add even more desirable
c) characteristics.

competitors may find a way to adapt and copy the underlying idea without incurring
d) R&D costs.
Questio
n16

1/1
point

In order for a good to be classified as ______________ , when one person uses the good, others
are also able to use it.

a) nonrivalrous

b) unrivalrous

c) nonexcludable

d)
unexcludable

Questio
n17

1/1
point

Government has a variety of policies that allow inventors to _____________________ , such as

the granting patents and __________________ .

a) protect their inventions; limited copyrights during the inventor's lifetime

b) receive an increased rate of return; subsidization of research and development

c) receive a reasonable rate of return; lifetime intellectual property rights.

d) register their inventions; unlimited copyrights during the inventor's lifetime

Questio
n18

1/1
point

A highly innovative firm operating in a competitive market will usually have

a) a permanent edge over its competitors.

b) vast numbers of competitors catching up to its innovations.

c) a lack of ability to earn reasonable profits.

some time before competitors catch up to its innovations.

d)

Chapter13investsinnewtechnology
Question19

1/1point

If an alternative policy could encourage both _____________________, instead of

________________________, consumers would benefit.

a) invention and monopoly; invention and public funding

b) invention and monopoly; invention and competition

invention and competition; invention and public funding

c)

d) invention and competition; invention and monopoly

Questio
n20

1/1
point

One reason some economists doubt that patent protection encourages innovation is that
economic studies show that inventors receive only __________________ of the total economic
value of their inventions in countries that ______________ .

a) one-half to two-thirds; previously had few patents

b) one-third to one-half; already had patents

c) one-half to two-thirds; had existing patents

d) one-third to one-half; previously had no patents

Questio
n21

1/1
point

Some studies done by economists have found that the original inventor receives
_________________________________________________ from innovations, while other
businesses and new product users receive the rest of the benefit.

a) one-quarter to one-third of the total economic benefits

b) one-quarter to one-half of the social and economic benefits

c) one-third to one-half of the total economic benefits

d) one-quarter to one-third of social and economic benefits

Questio
n22

1/1
point

For a negative externality, the __________________________ than the costs imposed on society
as a whole.

a) private benefits of an action are more

b) social costs of an action are less

c) social benefits of an action are more

d) private costs of an action are less

Chapter13copyright
Question23

1/1point

A complementary approach to supporting R&D that does not involve the governments close
scrutiny of particular R&D projects is to give firms

a) the option to fund all R&D projects through colleges or universities.

 b) a permanent monopoly over all their inventions that never expires.

assurance that antitrust authorities challenge cooperative R&D efforts.

c)

d) a reduction in corporate taxes based on amount of R&D performed.

Questio
n24

1/1
point

Which of the following represents one of the methods that the government uses to promote
technology?

a) provision of a greater number of public goods

b) maintenance of stable regulated financial markets

c) protection of intellectual property

creation of public colleges and universities

d)

Chapter13problems
Question25

0/1point

A drug company is deciding how much to invest in Research and Development into finding a cure
for the common cold. The table below shows the companys demand for financial capital for R&D
of this cold drug, based on its expected rates of return from selling the cure. Every investment has
an additional 4% social return: that is, an investment that pays at least a 5% return to the drug
company will create at least a 9% return for society as a whole.

Estimated Rate of Return

Value of R&D Projects That Provide at Least This High a

Private Rate of Return to the Drug Company (measured

in millions of dollars)

10%

$220

9%

$228

8%

$238

7%

$250

6%

$264

5%

$280

4%

$298

3%

$308

If the opportunity cost of financial capital for the drug company is 7%, the drug company will
invest ___ in R&D if it receives both the private and the social benefits of this investment.

a) $264

b) $228
c)
$308

d) $250