Question

Question 1:

The annual income that can be consumed without diminishing the total capital assets of a nation is

purchasing power parity income.

sustainable national income.

environmental capital stock.

per capita income.

Question 2:

Maintaining the rainforest is very important because

of its absorptive capacity for CO2 emissions.

of maintaining agricultural production of countries dependent on the rainforest such as Brazil.

ensuring a successful land reform policy.

encouraging rainforest settlement of the poor

Question 3:

Which of the following leads to an underallocation of resources to a specific economic activity?

External benefits

Marginal costs

External costs

Marginal benefits

Question 4:

The free-rider problem plagues public goods because

once public goods are produced it is not possible to exclude anyone from consuming these goods.

the public doesn't care about public goods.

public goods are not produced by profit-maximizing firms and hence can be produced only at a loss to society.

policymakers ignore opportunity costs in making decisions

Question 5:

Which of the following methods could be used to correct for external costs?

Require firms in the industry to install pollution control devices.

Impose a tax or an effluent fee on the offenders.

Have the offender clean up the pollution it caused.

All of the above would be appropriate.

Question 6:

To correct for a negative externality, a government might impose a uniform tax related only to the physical quantity of pollution if

the economic damages are zero.

the administrative costs are high.

the cost of ascertaining the actual economic costs are relatively small.

the economic damages associated with the pollution are different across different locations.

Question 7:

In order to internalize the externality due to pollution, the government should impose a tax based on

the size of the firm causing the pollution.

the physical amount of pollution.

the value of the pollution-causing business activity.

the economic damage associated with the pollution.

Question 8:

In a market for emission permits, firms that emit over their allowed limits

pay a price of these emissions.

are forced to shut down.

are taxed by the government for the amount of emissions.

receive a subsidy for the amount of emissions.

Question 9:

The 1997 Kyoto Protocol was signed by

more than three dozen nations.

all nations in the world.

only the United States and the European Union.

only nations in Asia.

Question 10:

The problem of overfishing in waters that are commonly owned can be solved by

subsidizing fishing.

establishing property rights for fishing in the waters.

the use of the Coase Theorem.

allowing the market to ration fish.