Question

1. Which of the following is an example of the source function of the environment?

A. Trees absorb some of the carbon dioxide emitted by human activity

B. Wetlands reduce the pollution levels in water

C. Winds carry air pollution away from a city

D. Humans harvest fish from the oceans

E. Bacteria break down discarded wastes

2. What is the primary external input into the broader ecological circular flow model?

A. Pollution

B. Solar energy

C. Fossil fuels

D. Geophysical cycles

E. Factors of production

3. What is the key reason that Malthusian predictions have not come true so far?

A. Increasing productivity per capita

B. Increasing population

C. Increasing natural capital

D. Increasing population density

E. Definition of property rights

4. Which one of the following statements is true regarding the rate of global population growth over the last 40 years?

A. Population has grown at a faster rate than agricultural production and energy use

B. Population has grown faster than energy use but not agricultural production

C. Population has grown faster than agricultural production but not energy use

D. Population, energy use, and agricultural production have all grown at about the same rate

E. Population has grown at a slower rate than agricultural production and energy use

5. Which one of the following is not a possible way to internalize externalities?

A. Eliminate government intervention

B. Raise taxes

C. Create subsidies

D. Create a system of tradable permits

E. Create new regulations

6. The efficient price of a license fee is determined by the difference between ...

A. Marginal revenue and marginal cost

B. Average revenue and marginal cost

C. Total revenue and total cost

D. Average revenue and total cost

E. Total revenue and marginal cost

7. Valuing environmental services based on estimating the value of different characteristics of market goods is called ...

A. Travel cost method

B. Contingent valuation

C. Hedonic pricing

D. Production function valuation

E. Avoided cost valuation

8. Which one of the following statements about national accounting is false?

A. Gross National Product does not account for natural capital depreciation

B. Net investment is gross investment minus depreciation

C. Capital depreciation accounts for wearing-out of human-made capital over time

D. A negative net investment implies a decline in national wealth

E. Net National Product does not account for capital depreciation

9. User costs will be incorporated into a market if ...

A. Interest rates are positive

B. Discount rates are zero

C. Resource owners foresee future shortages

D. Government intervention is eliminated

E. Discount rates are positive

10. Hotelling’s rule states that...

A. The net price of a resource is constant

B. The net price of a resource rises at a rate equal to the interest rate

C. The net price of a resource declines at a rate equal to the interest rate

D. The price of a resource depends on the allocation of property rights

E. The price of a resource is efficient as long as all user costs are internalized

11. Transferable permits are likely to result in less inefficiency, relative to a pollution tax, when...

A. The marginal costs of damage are steep and the marginal costs of pollution reduction are relatively stable

B. The marginal costs of damage are steep and the marginal costs of pollution reduction are steep

C. The marginal costs of damage are relatively stable and the marginal costs of pollution reduction are relatively stable

D. The marginal costs of damage are relatively stable and the marginal costs of pollution reduction are steep

E. The marginal costs of damage are elastic and the marginal costs of pollution reduction are also elastic

12. Which one of the following statements is false regarding a transferable pollution permit system?

A. Each firm will operate in an economically efficient manner

B. Total pollution levels in a region can be set by the government

C. The price of a permit will vary with changes in technology

D. The system is preferable to a pollution tax in all situations

E. Social benefits can be maximized

13. If a large percentage of people in a country are young, this is a sign that ...

A. The country has significant population momentum

B. The country is in the first stage of the demographic transition

C. The country’s population will shortly stabilize

D. The country’s population is declining

E. The country is in the last stage of the demographic transition

14. Which one of the following statements about the demographic transition theory is false?

A. Population levels are relatively stable in the first and last stages of the demographic transition

B. The demographic transition theory states that death rates will decrease before birth rates decrease

C. Many industrial countries have entered the third or fourth stage of the demographic transition

D. The demographic transition process has occurred at very different rates in different parts of the world

E. The demographic transition theory suggests that continued exponential population growth is possible with constant economic growth

15. Which one of the following policies would not reduce water use?

A. Full marginal-cost pricing

B. Microirrigation technology

C. Reusing wastewater for industrial uses

D. Subsidizing irrigation systems

E. Removing water subsidies

16. Which one of the following statements is false?

A. Carbon dioxide is a stock pollutant

B. Without the natural greenhouse effect, life could exist on earth

C. The atmosphere is an example of a global commons

D. Global carbon dioxide concentrations in the atmosphere have increased since the Industrial Revolution

E. Global climate change results from ozone layer depletion

17. Which one of the following statements regarding carbon taxes is false?

A. Carbon taxes would have the most impact on coal prices

B. Carbon taxes would reduce negative environmental externalities

C. Carbon taxes would not set the exact level of carbon emissions

D. The effect of a carbon tax depends on the elasticity of demand for fossil fuels

E. A revenue-neutral carbon tax implies an increase in income taxes and/or other taxes

18. The elasticity of demand for carbon-based fuel sources is ...

A. Low in the short term but higher in the long term

B. High in the short term but lower in the long term

C. High in both the long and short term

D. Low in both the long and short term

E. Zero in the short term and positive in the long term

19. Which one of the following statements is false?

A. The World Bank currently screens all projects for potential environmental impacts.

B. World Bank loans are often coupled with grants from other organizations

C. World Bank funding for environmental projects has steadily increased since 1994

D. World Bank projects include both a ‘brown’ and a ‘green’ agenda

E. World Bank loans must eventually be repaid

20. Which one of the following statements is true?

A. Strong sustainability assumes that most resources can be substituted for one another

B. Strong sustainability is easier to achieve that weak sustainability

C. Instituting strong sustainability would require extensive government intervention in markets

D. Strong sustainability is supported by traditional economic theory

E. Strong sustainability dictates that no non-renewable resources be used