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Economics Chapter 12 Test Bank
Multiple Choice Questions
1. The term ______________________ refers to a market exchange that affects a third party
who is outside or external to the exchange.
A. social costs
B. spillover
C. market failure
D. private costs
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
2. Using the term "spillover" is a less formal means of describing
A. an externality.
B. social costs.
C. private costs.
D. market failure.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. ______________________ describes a situation where a third party, outside the transaction,
suffers from a market transaction by others.
A. Negative externality
B. Positive externality
C. A spillover
D. A market failure
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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4. A positive externality arises in a situation where a third party, outside the transaction,
A. fails to allocate resources efficiently.
B. suffers from a market transaction by others.
C. benefits from a market transaction by others.
D. pays a pollution tax to balance social costs.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. ______________________ include both the private costs incurred by firms and also costs
incurred by third parties outside the production process.
A. Social costs
B. Private costs
C. Market costs
D. External costs
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. Market failure describes a situation in which the market itself ______________________ in a
way that balances social costs and benefits.
A. remains outside the transaction
B. incurs the costs outside the production process
C. fails to allocate resources efficiently
D. avoids externalities
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Command-and-control regulation is a body of law that
A. fails to consider private costs of firms.
B. specifies allowable quantities of pollution.
C. details which pollution-control technologies must be used.
D. can include both b and c.
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Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
8. A pollution charge is a form of tax imposed on
A. the quantity of pollution that a firm emits.
B. pollution control technologies.
C. every economy in the world.
D. low-income market-orientated industries.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
9. Property rights are the legal rights of ownership on which others are
A. allowed to infringe by paying the property owner's pollution tax.
B. able to enforce use of pollution-control technologies.
C. able to specify allowable quantities of pollution.
D. not allowed to infringe without paying compensation.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
10. Which of the following is used to describe the full spectrum of animal and plant genetic
material?
A. ecodiversity
B. biodiversity
C. envirodiversity
D. duodiversity
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. Which of the following is an example of economic output that can injure the environment?
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A. gold mine discharging arsenic into a natural lake it’s using for a tailings pond
B. paper mill discharging raw chemical waste into a river
C. excessive clear cutting of wood resources by logging companies
D. radio-active waste leaking into a river, and all of the above
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
12. The problem of pollution typically arises in ______________________ economies around
the world.
A. high-income
B. low-income
C. high or low-income
D. middle income
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
13. The problem of pollution arises in primarily ______________________ economies around
the world.
A. command-oriented
B. market-oriented
C. middle income
D. both a and b
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
14. Which of the following have historically been more willing to sacrifice their environmental
quality for some additional economic output?
A. high-income, market-oriented economies
B. low incomes and command economies
C. the United States
D. European Union
Answer: B
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Economics Chapter 12 Test Bank
Multiple Choice Questions
1. The term ______________________ refers to a market exchange that affects a third party
who is outside or external to the exchange.
A. social costs
B. spillover
C. market failure
D. private costs
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
2. Using the term "spillover" is a less formal means of describing
A. an externality.
B. social costs.
C. private costs.
D. market failure.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. ______________________ describes a situation where a third party, outside the transaction,
suffers from a market transaction by others.
A. Negative externality
B. Positive externality
C. A spillover
D. A market failure
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
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4. A positive externality arises in a situation where a third party, outside the transaction,
A. fails to allocate resources efficiently.
B. suffers from a market transaction by others.
C. benefits from a market transaction by others.
D. pays a pollution tax to balance social costs.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. ______________________ include both the private costs incurred by firms and also costs
incurred by third parties outside the production process.
A. Social costs
B. Private costs
C. Market costs
D. External costs
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
6. Market failure describes a situation in which the market itself ______________________ in a
way that balances social costs and benefits.
A. remains outside the transaction
B. incurs the costs outside the production process
C. fails to allocate resources efficiently
D. avoids externalities
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Command-and-control regulation is a body of law that
A. fails to consider private costs of firms.
B. specifies allowable quantities of pollution.
C. details which pollution-control technologies must be used.
D. can include both b and c.
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Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
8. A pollution charge is a form of tax imposed on
A. the quantity of pollution that a firm emits.
B. pollution control technologies.
C. every economy in the world.
D. low-income market-orientated industries.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
9. Property rights are the legal rights of ownership on which others are
A. allowed to infringe by paying the property owner's pollution tax.
B. able to enforce use of pollution-control technologies.
C. able to specify allowable quantities of pollution.
D. not allowed to infringe without paying compensation.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
10. Which of the following is used to describe the full spectrum of animal and plant genetic
material?
A. ecodiversity
B. biodiversity
C. envirodiversity
D. duodiversity
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. Which of the following is an example of economic output that can injure the environment?
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A. gold mine discharging arsenic into a natural lake it’s using for a tailings pond
B. paper mill discharging raw chemical waste into a river
C. excessive clear cutting of wood resources by logging companies
D. radio-active waste leaking into a river, and all of the above
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
12. The problem of pollution typically arises in ______________________ economies around
the world.
A. high-income
B. low-income
C. high or low-income
D. middle income
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
13. The problem of pollution arises in primarily ______________________ economies around
the world.
A. command-oriented
B. market-oriented
C. middle income
D. both a and b
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
14. Which of the following have historically been more willing to sacrifice their environmental
quality for some additional economic output?
A. high-income, market-oriented economies
B. low incomes and command economies
C. the United States
D. European Union
Answer: B
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