Practice Exam Flashcards
Which one of the following is the best example of an externality?
A. Harvesting trees increase the profits of a timber company
B. Pollution adversely affects people living near a factory
C. Trees in a national forest are unavailable for harvest
D. A ski resort provides a benefit to those who visit it
B. Pollution adversely affects people living near a factory
From an economic perspective, there is “too little” pollution in a market if…
A. The marginal costs of pollution exceed the marginal benefits
B. The marginal benefits of pollution exceed the marginal costs
C. The net social benefits of pollution are zero
D. The profits of businesses are not maximised
B. The marginal benefits of pollution exceed the marginal costs
Which one of the following statements is false?
A. The initial assignment of property rights affects equity.
B. A Pigouvian tax is used to internalise pollution costs
C. The socially optimal level of pollution maximises profits
D. The optimal level of pollution is unlikely to be zero
C. The socially optimal level of pollution maximises profits
What cannot be a valid explanation for the change in the marginal cost curve of producing cars in the figure below?
(On the graph MC shifts to the left, so higher prices, lower quantity)
A. The introduction of import duties to prevent carbon leakage
B. A labour strike
C. Technologies that use production inputs more efficiently
D. An environmental tax on steel production
C. Technologies that use production inputs more efficiently
What is the main ajivantage of a system of tradeable permits relative to a carbon tax?
A. The price of the permits is known with certainty
B. It encourages technological innovation
C. The resulting level of emissions is known with certainty
D. It results in a lower level of price increases to consumers
C. The resulting level of emissions is known with certainty
The figure shows the Gordon model of optimal fish catch. Which statement about it is correct?
A. E1 corresponds to the maximum sustainable yield
B. Under Open Access new fisher people enter until E1 is reached
C. E2 is associated with a lower fish stock than E1
D. E1 is the economic optimum
B. Under Open Access new fisher people enter until E1 is reached
The value of the benefit in the picture below is discounted at a rate of % (blue) and % (red) per year.
(Blue goes from 300 to 980 and red from 100 to 1000)
A. 0.5% (blue) ; 1% (red)
B. 5% (blue) ; 10% (red)
C. 10% (blue) ; 5% (red)
D. 1% (blue): 0.5% (red)
B. 5% (blue) ; 10% (red)
Which one of the following is not an effect of freer international trade?
A. Overall praduction levels are likely to increase
B. Small-scale farms replaced with large-scale industrial farms
C. Pollution exported to countries with low emissions standards
D. Environmentally friendly technologies are less likely transferred across countries
D. Environmentally friendly technologies are less likely transferred across countries
Which of the following statements about water resources is not correct?
A. Average cost pricing of water is not economically efficient
B. Water markets allow for the transfer of water from low value users to high value users of water
C. A declining block rate structure of water pricing promotes water conservation
D. Public well water has a high degree of non-excludability and a low degree of non-rivalry
C. A declining block rate structure of water pricing promotes water conservation
A Which of the following statements about the performance of the EU ETS is right?
A. Patent registration is a bit higher among regulated companies (under the EU ETS) than unregulated companies
B. Companies under the EU ETS experience severe carbon leakage issues
C. Windfall profits in the power generation sector are small
D. The EU ETS has led to a large reduction in GHG emissions.
A. Patent registration is a bit higher among regulated companies (under the EU ETS) than unregulated companies
Which statement about the economic costs of climate change is not correct?
A. Percentage income losses from climate change are
generally higher in poorer countries compared with richer countries
B. The Stern Review used a lower discount rate and estimated higher economic costs from climate change than most previous studies
C. The uncertainty distribution of the total economic costs of climate is symmetrical, which means it is just as likely to have higher or lower costs than the central cost estimate
D. The statistical method for estimating economic costs of climate change assumes that current relationships between the economy and climate are representative for the future
C. The uncertainty distribution of the total economic costs of climate is symmetrical, which means it is just as likely to have higher or lower costs than the central cost estimate
