Question_Doc14_15Dec_5th

Question_Doc14_15Dec_5th

Question

13) The optimal quantity of air pollution is

A) whatever amount of pollution is produced by the profit
maximizing firm.

B) found by equating the marginal benefits from further
reductions in pollution and the marginal

costs of further reductions in pollution.

C) found by setting the quantity of air pollution equal to
the quantity of water pollution.

D) a meaningless concept since monetary values cannot be
attached to problems associated with

pollution.

14) Which of the following statements concerning pollution
is correct?

A) Economic efficiency requires that pollution be completely
eliminated.

B) Economic efficiency dictates that the optimal amount of
pollution arises at the point at which

price equals private marginal cost.

C) Pollution should be reduced to the point at which the
marginal benefit from further reduction

equals the marginal cost of further reduction.

D) Pollution should be reduced to the extent necessary to
return production to the production

possibilities frontier.

15) In economic analysis, the optimal level of pollution

A) is always zero.

B) arises at the point at which the marginal benefit from
further reduction equals the marginal

cost of further reduction.

C) occurs at the point at which demand crosses the private
cost supply curve.

D) should be determined by the private market without any
government intervention.

16) From an economic standpoint, the amount of pollution
should be

A) zero.

B) the amount that allows firms to maximize profits.

C) the amount where firms are earning a normal rate of
return on investment.

D) at the point at which the marginal benefit from further
reduction equals the marginal cost of

further reduction.

17) The optimal amount of pollution is not zero because

A) it has been found that pollution in moderate amounts
actually has positive benefits.

B) there are no benefits to anyone from having zero
pollution.

C) zero pollution would be too costly.

D) we don’t have the political structure that could
accomplish the goal.

18) The marginal benefit of pollution abatement

A) increases at an increasing rate as abatement increases.

B) decreases as pollution abatement increases because of the
law of diminishing marginal utility.

C) increases as pollution abatement increases because of the
law of increasing marginal returns.

D) is constant as pollution abatement increases.

19) The costs of pollution abatement

A) increase at an increasing rate with the increase in
pollution abatement.

B) increase at a decreasing rate with the increase in
pollution abatement.

C) decrease at an increasing rate with the increase in
pollution abatement.

D) decrease at a decreasing rate with the increase in
pollution abatement.

20) Refer to the above figure. The marginal cost of
pollution abatement is curve

A) (1).

B) (2).

C) (3).

D) (4).

21) Refer to the above figure. The marginal benefit of
pollution abatement is curve

A) (1).

B) (2).

C) (3).

D) (4).

22) Refer to the above figure. If the marginal cost curve
for pollution abatement shifts to the

right, everything considered, the

A) degree of air quality or cleanliness will also decrease.

B) the degree of air quality or cleanliness will stay
unchanged.

C) the degree of air quality will improve.

D) the marginal cost of pollution abatement has nothing to
do with air quality.

23) Refer to the above figure. Suppose the marginal benefit
and the marginal cost curves of

pollution abatement are normally shaped. Technological
change that made it easier to produce in

a “cleaner” fashion would cause

A) curve (4) to shift out, increasing the optimal amount of
pollution abatement.

B) curve (3) to shift up, raising the marginal benefits and
costs and reducing the amount of

pollution abatement.

C) curve (2) to shift out, increasing the optimal amount of
pollution abatement.

D) curve (1) to shift out, increasing the optimal amount of
pollution abatement.

24) Refer to the above figure. Suppose the marginal benefit
and the marginal cost curves of

pollution abatement are normally shaped. Suppose the
equilibrium is for a factory in Los

Angeles. What would happen if the same factory were in the
middle of Nevada?

A) The marginal cost curve (1) would shift to (2) and there
would be no difference in the level of

abatement.

B) The marginal cost curve (2) would shift to the left and
there would be less abatement in

Nevada.

C) The marginal benefit curve (4) would shift to the left
and there would be less abatement in

Nevada.

D) The marginal benefit curve (2) would shift to the right
and there would be more abatement in

Nevada.

25) The marginal cost curve of pollution abatement is

A) downward sloping.

B) upward sloping.

C) horizontal.

D) vertical.

26) Technological change that makes it easier to produce in
a “cleaner” fashion would cause

A) the marginal cost curve of pollution abatement to shift
left, increasing the degree of air

quality.

B) the marginal cost curve of pollution abatement to shift
right, increasing the degree of air

quality

C) the marginal benefit curve of pollution abatement to
shift right, increasing the degree of air

quality

D) the marginal benefit curve of pollution abatement to
shift left, increasing the degree of air

quality

27) Suppose people value clean air more as their incomes
increase, then

A) the marginal cost curve of pollution abatement to shift
left, increasing the degree of air

quality.

B) the marginal cost curve of pollution abatement to shift
right, increasing the degree of air

quality

C) the marginal benefit curve of pollution abatement to
shift right, increasing the degree of air

quality

D) the marginal benefit curve of pollution abatement to
shift left, increasing the degree of air

quality

28) The marginal cost curve of pollution abatement

A) slopes upward because of the law of diminishing product.

B) slopes upward because firms will maximize profits.

C) slopes downward because of the law of diminishing
marginal utility.

D) slopes downward because of the law of diminishing
returns.

29) The optimal amount of air pollution is

A) found by equating the marginal benefits from reducing
pollution by one more unit with the

marginal costs of reducing pollution by an additional unit.

B) found by equating the total benefits from reducing
pollution by one more unit with the total

costs of reducing pollution by an additional unit.

C) found by setting the marginal benefits from reducing
pollution by one more unit equal to zero.

D) a meaningless concept since we cannot monetize the
environment.

30) Which of the following statements is true about the
optimal quantity of pollution?

A) It equals zero.

B) Pollution abatement should continue up to the point where
marginal cost equals the average

total cost.

C) Trade-offs exist between producing a cleaner environment
and producing other goods and

services.

D) Firms should be allowed to determine the
profit-maximizing amount of pollution abatement.

31) Why is the optimal quantity of pollution not less than
the point at which the marginal benefit

equals the marginal cost?

A) The point of intersection occurs at a low level of
pollution.

B) There are no external costs below that level.

C) Below that point firms will have to reduce the quantity
that they are currently producing and

lower the price.

D) Below that point the value that people place on less
pollution is less than the cost of reducing

the pollution.

32) In the above figure, the optimal level of pollution
cleanup is

A) Q1.

B) Q2.

C) Q3

D) Q4

33) In the above figure, if a firm is cleaning up Q4 units
of pollution, it is an

A) efficient solution, because marginal social benefits are
greater than marginal social costs.

B) efficient solution, because marginal social benefits are
equal to marginal social costs.

C) inefficient solution, because marginal social benefits
are greater than marginal social costs.

D) inefficient solution, because marginal social costs are
greater than marginal social benefits.

34) In the above figure, if a firm is cleaning up Q2 units
of pollution, it is an

A) efficient solution, because marginal social benefits are
greater than marginal social costs.

B) efficient solution, because marginal social benefits are
equal to marginal social costs.

C) inefficient solution, because marginal social benefits
are greater than marginal social costs.

D) inefficient solution, because marginal social costs are
greater than marginal social benefits.

35) In the above figure, if a firm is cleaning up Q3 units
of pollution, it is an

A) efficient solution because marginal social benefits are
greater than marginal social costs.

B) efficient solution because marginal social benefits are
equal to marginal social costs.

C) inefficient solution because marginal social benefits are
greater than marginal social costs.

D) inefficient solution because marginal social costs are
greater than marginal social benefits.

36) According to economic analysis, the optimal quantity of
pollution exists at the point at which

the

A) total benefit of pollution control is equal to the total
cost.

B) marginal benefit of pollution control is equal to the
marginal cost.

C) level of pollution is at zero.

D) level of pollution is acceptable to the society.

37) Pollution

A) creates a negative externality.

B) is increased when property rights are defined.

C) is the result of capitalism.

D) exists because air and water are privately owned
resources.

38) The idea that it takes 90 percent of your time to clean
up the last 10 percent of your house

illustrates that

A) the marginal cost of cleaning up slopes downward.

B) the marginal cost of cleaning up slopes upward.

C) the marginal benefit of cleaning up is constant.

D) the marginal benefit of cleaning up slopes upward.

39) The marginal benefit of the pollution abatement curve

A) has a zero slope.

B) has a positive slope.

C) slopes upward.

D) slopes downward.

40) Voluntary agreements about cleaning up pollution attempt
to

A) internalize externalities.

B) internalize private costs.

C) externalize social costs.

D) externalize private costs.

41) Generally, as levels of pollution are reduced,

A) marginal benefits from the reduction decrease.

B) marginal benefits from the reduction increase.

C) marginal costs from the reduction decrease.

D) marginal cost from the reduction are constant.

.

42) Generally, as levels of pollution are reduced,

A) marginal benefits from the reduction increase.

B) marginal costs from the reduction increase.

C) marginal costs from the reduction stay the same.

D) marginal costs from the reduction decrease.

43) The level of pollution at which the marginal benefits
equal the marginal cost of cleaning up

is always

A) the zero pollution level.

B) the optimal quantity of pollution.

C) the pollution maximum.

D) the pollution minimum.

.

44) In the above figure,

A) the optimal degree of air cleanliness is less than 100
percent.

B) the marginal cost curve slopes up because of the law of
diminishing returns.

C) Neither A nor B are correct.

D) Both A and B are correct.

45) The optimal quantity of pollution in the above figure

A) is defined as the level where the marginal benefit is at
a maximum.

B) is where the optimal degree of air cleanliness is 100
percent.

C) is the level of pollution at which the marginal benefit
equals the marginal cost.

D) cannot be determined.

46) The above table shows marginal costs and marginal
benefits of clean air in a particular

industrial area. In the table, when the quantity of clean
air is at 25 percent,

A) the quantity of polluted air is 25 percent.

B) the marginal benefit of clean air exceeds the marginal
cost.

C) the marginal benefit of clean air is less than the
marginal cost.

D) the quantity of clean air is optimal.

47) The above table shows marginal costs and marginal
benefits of clean air in a particular

industrial area. In the table, when the quantity of clean
air is at 75 percent,

A) the quantity of polluted air is 75 percent.

B) the marginal benefit of clean air exceeds the marginal
cost.

C) the marginal benefit of clean air is less than the
marginal cost.

D) the quantity of clean air is optimal.

48) In the above table, the optimal quantity of clean air is

A) 25 percent.

B) 50 percent.

C) 75 percent.

D) 100 percent.

49) The marginal cost of pollution abatement is the

A) additional cost to clean up an additional unit of
pollution.

B) additional benefit from cleaning up an additional unit of
pollution.

C) total social costs of pollution clean-up divided by total
social benefits.

D) total social costs of pollution clean-up divided by the
total units of clean-up.

50) The marginal benefit of pollution abatement is the

A) additional cost to clean up an additional unit of
pollution.

B) additional benefit from cleaning up an additional unit of
pollution.

C) total social costs of pollution clean-up divided by total
social benefits.

D) total social costs of pollution clean-up divided by the
total units of clean-up.

51) Explain how the optimal quantity of air pollution is
determined.

.

52) “The optimal level of pollution is zero.” Do
you agree or disagree? Why?

Question_Doc14_15Dec_5th


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Preview: the xxxxxxxx benefit xx cleaning up xxxxxx upward Answer: xxxx The xxxxxxxx xxxxxxx of xxx pollution abatement xxxxxxx has a xxxx slope xx xxx a xxxxxxxx slope C) xxxxxx upward D) xxxxxx downward xxxxxxx xxxx Voluntary xxxxxxxxxx about cleaning xx pollution attempt xxxx internalize xxxxxxxxxxxxx xx internalize xxxxxxx costs C) xxxxxxxxxxx social costs xx externalize xxxxxxx xxxxx Answer: xxxx Generally, as xxxxxx of pollution xxx reduced,A) xxxxxxxx xxxxxxxx from xxx reduction decrease xx marginal benefits xxxx the xxxxxxxxx xxxxxxxx C) xxxxxxxx costs from xxx reduction decrease xx marginal xxxx xxxx the xxxxxxxxx are constant xxxxxxx A 42) xxxxxxxxxx as xxxxxx xx pollution xxx reduced,A) marginal xxxxxxxx from the xxxxxxxxx increase xx xxxxxxxx costs xxxx the reduction xxxxxxxx C) marginal xxxxx from xxx xxxxxxxxx stay xxx same D) xxxxxxxx costs from xxx reduction xxxxxxxx xxxxxxx B43) xxx level of xxxxxxxxx at which xxx marginal xxxxxxxx xxxxx the xxxxxxxx cost of xxxxxxxx up is xxxxxxxx the xxxx xxxxxxxxx level xx the optimal xxxxxxxx of pollution xx the xxxxxxxxx xxxxxxx D) xxx pollution minimum xxx In the xxxxx figure,A) xxx xxxxxxx degree xx air cleanliness xx less than xxx percent xx xxx marginal xxxx curve slopes xx because of xxx law xx xxxxxxxxxxx returns xx Neither A xxx B are xxxxxxx D) xxxx x and x are correct xxxxxxx D45) The xxxxxxx quantity xx xxxxxxxxx in xxx above figureA) xx defined as xxx level xxxxx xxx marginal xxxxxxx is at x maximum B) xx where xxx xxxxxxx degree xx air cleanliness xx 100 percent xx is xxx xxxxx of xxxxxxxxx at which xxx marginal benefit xxxxxx the xxxxxxxx xxxx D) xxxxxx be determined xxxxxxx C46) The xxxxx table xxxxx xxxxxxxx costs xxx marginal benefits xx clean air xx a xxxxxxxxxx xxxxxxxxxx area xx the table, xxxx the quantity xx clean xxx xx at xx percent,A) the xxxxxxxx of polluted xxx is xx xxxxxxx B) xxx marginal benefit xx clean air xxxxxxx the xxxxxxxx xxxx C) xxx marginal benefit xx clean air xx less xxxx xxx marginal xxxx D) the xxxxxxxx of clean xxx is xxxxxxx xxxxxxx B47) xxx above table xxxxx marginal costs xxx marginal xxxxxxxx xx clean xxx in a xxxxxxxxxx industrial area xx the xxxxxx xxxx the xxxxxxxx of clean xxx is at xx percent,A) xxx xxxxxxxx of xxxxxxxx air is xx percent B) xxx marginal xxxxxxx xx clean xxx exceeds the xxxxxxxx cost C) xxx marginal xxxxxxx xx clean xxx is less xxxx the marginal xxxx D) xxx xxxxxxxx of xxxxx air is xxxxxxx Answer: C48) xx the xxxxx xxxxxx the xxxxxxx quantity of xxxxx air isA) xx percent xx xx percent xx 75 percent xx 100 percent xxxxxxx B49) xxx xxxxxxxx cost xx pollution abatement xx theA) additional xxxx to xxxxx xx an xxxxxxxxxx unit of xxxxxxxxx B) additional xxxxxxx from xxxxxxxx xx an xxxxxxxxxx unit