Chapter 12

Question 1

What is pollution considered?

Answer 1

Negative externality

Question 2

What occurs when there is market failure?

Answer 2

Inefficient output

Question 3

What are market-oriented environmental policies?

Answer 3

Create incentives for firms to reduce pollution.

Question 4

What do permits allow firms to do regarding pollution?

Answer 4

Emit half as much pollution

Question 5

When are marginal benefits of reducing pollution high?

Answer 5

Pollution is extensive

Question 6

What agreement resulted from the Durban climate conference negotiations?

Answer 6

Paris Climate Agreement

Question 7

What is included in social costs of production?

Answer 7

Private costs + external costs

Question 8

What happens when social costs exceed social benefits?

Answer 8

Too much product produced

Question 9

What are the three main categories of market-oriented approaches to pollution control?

Answer 9

Pollution charges, marketable permits, property rights

Question 10

How is it difficult to assign a monetary value to environmental benefits?

Answer 10

Difficult to assign value to subjective or non-personal benefits

Question 11

What does admitting to having an endangered species lead to?

Answer 11

Prohibits land use

Question 12

What do command-and-control regulations require companies to install?

Answer 12

Anti-pollution equipment

Question 13

What year was the Environmental Protection Agency (EPA) created?

Answer 13

1970

Question 14

What is a common charge related to cars?

Answer 14

Gasoline taxes

Question 15

Advantage of market-oriented environmental tools?

Answer 15

Lower cost for pollution reduction

Question 16

How does forcing the firm to pay external costs affect production?

Answer 16

Increases costs, shifts supply up

Question 17

What is a major drawback of command-and-control regulation?

Answer 17

No incentive for improvement

Question 18

What approach offers greater promise than command-and-control?

Answer 18

Incentives and flexibility

Question 19

Why can’t nations solve environmental problems alone?

Answer 19

Global cooperation required

Question 20

What can you evaluate using the production possibility frontier?

Answer 20

Tradeoff between output and environment

Question 21

What are externalities?

Answer 21

Effects on third parties

Question 22

What is a characteristic of command-and-control regulation?

Answer 22

Inflexible standards

Question 23

What do governments in ecotourism regions do to encourage conservation?

Answer 23

Share revenues with local communities

Question 24

What is the opportunity cost of increased environmental protection?

Answer 24

Less economic output

Question 25

How do externalities affect the supply curve?

Answer 25

Does not represent all social costs

Question 26

What would happen if firms paid social costs of pollution?

Answer 26

Less pollution, higher prices

Question 27

What will firms seek with a pollution tax?

Answer 27

Least expensive technologies