Test Bank on natural resource and environmental economics

Test Bank on natural resource and environmental economics Test Bank on natural resource and environmental economics 1. In 2013, most climate scientists believed that a. the evidence for global warming remained somewhat flimsy. b. carbon dioxide was the only human made source of the greenhouse effect. c. the earth was likely to warm over the next 50 years as a consequence of greenhouse gas pollution. d. belly button lint caused cancer. e. atmospheric carbon dioxide levels were likely to stabilize naturally within 20 years. 2. Negative feedback effects on global warming a. include exposure of dark earth as polar ice caps melt. b. would accelerate the warming trend. c. would slow down the warming trend. d. would result if higher CO2 levels reduced the capacity of the ocean to absorb CO2. e. are likely if the melting of frozen tundra increases the emission of methane gas into the atmosphere. 4 3. If global warming does occur, economic costs include a. enhanced agricultural productivity in cold climates. b. sea-level rise. c. enhanced agricultural productivity, especially in poor countries. d. a likely increase in the diversity of natural ecosystems, as warmer climates emerge. e. b and d. 4. Benefit-cost analysis of global warming a. has proven to be relatively uncontroversial. b. suggests that on net, controlling CO2 emissions will generate higher costs than benefits. c. is a scientific process, free of ethical decisions. d. calls for at least moderate reductions in greenhouse gas emissions. e. has created a consensus view among economists as to how fast new technologies can be developed. 5. Given that government regulators operate in a world of poor information, and are subject to political influence, a. conservatives nevertheless concede that government intervention to protect the environment is generally socially beneficial. b. conservatives seek an absolute minimum of government intervention. c. progressives have faith that a laissez-faire attitude is best for the environment. d. progressives view active government as both effective and necessary. e. b and d. 6. Incentive-based regulatory approaches, such as pollution taxes a. are viewed positively by most economists-- both progressive and conservative-- as a way to control pollution. b. provide less flexibility than traditional technology-based regulation. c. tend to hurt wealthier people more than poor people. d. would be sufficient, in the eyes of progressive economists, to control global warming. e. require that the government specify certain types of pollution control technology that firms must adopt. 1. The following are normative statements: a. If global warming occurs, sea-level rise is likely to pose a serious problem for some countries. b. Because of the costs associated with sea-level rise, carbon dioxide emissions should be cut to slow down global warming. c. Survey results indicate that a majority of the population agrees with the statement: global warming should be prevented regardless of the cost. d. If our goal is to slow down global warming, carbon dioxide emissions should be cut. 13 e. b,c, and d. 2. Economists believe that normative positions on environmental issues a. are a matter of opinion, and thus not amenable to study. b. can be better understood if all underlying assumptions are clearly stated. c. are only valid if based in utilitarian thought. d. are a matter of opinion, and thus not relevant to real life problems. e. should not differ if all parties are rational individuals. 3. From a utilitarian perspective, preserving rainforests to protect biodiversity a. is relatively unimportant. b. should not be done if it conflicts with profits. c. always makes sense if it actually protects endangered species. d. should be pursued if it increases overall human well-being. e. is definitely a bad idea if it leads to local people losing jobs and income. 4. Equal marginal utility of consumption a. means that Jo and Al receive the same level of utility from their overall consumption. b. means that Jo and Al receive the same level of utility from small increases or decreases in consumption. c. means that a one dollar increase to a rich individual just offsets the decrease in social welfare of a one dollar decrease to a poor individual. d. implies that policy-makers should be quite sensitive to the distribution of costs and benefits generated by environmental protection. e. b and c. 5. If Al is alive today, and Jo is not yet born, than the social welfare function SW=UAl(XAl)+UJo(w*XJo) a. reduces the value of Jo's consumption by a factor w. b. indicates that Al's consumption cannot come at Jo's expense. c. implies that an efficiency standard is called for. d. fails to take sustainability into account. e. restates Einstein's theory of relativity. 6. In the social welfare function SW=UAl(XAl, w*P)+UJo(XJo, w*P), let P stand for pollution, with Al and Jo both exposed. This SW function a. implies that a sustainability standard is called for. b. implies that an efficiency standard is called for. c. implies that a safety standard is called for. d. pays no special attention to pollution victims. 14 e. is generally less valid than the one in question 5. Multiple Choice 1. At the efficient level of pollution a. the total costs and benefits of reduction are equal. b. it is impossible to make one person better off without making another person worse off. c. net monetary benefits are maximized. d. the marginal benefits and costs of reduction are roughly equal. e. b,c, and d. 2. In moving from a less efficient to a more efficient level of pollution, a. additional pollution victims are always compensated. b. it is possible, but not necessary, to compensate additional pollution victims. c. compensation of additional pollution victims is neither possible nor necessary. d. safety is never compromised. e. the cost of pollution reduction is not a factor. 0 5 10 15 20 0 1 2 3 4 5 6 7 8 9 Tons of Gunk Removed MB and MC ($) MC of Reduction MB of Reduction 41 3. In the diagram above, 3 tons of gunk reduced is an inefficient level since a. reducing to 4 units will increase net monetary benefits by around $11. b. at 3 units, marginal benefits of reduction are high, at around $14. c. increasing pollution so that only 2 units are reduced will increase net monetary benefits by about $12. d. at 3 units, marginal costs of reduction are low. e. total costs of reduction at 3 units (3*$3) are less than total benefits (3*$14). 4. The total cost of reducing 7 units of gunk is a. about 7*$6. b. the area under the MC curve up to 7 units. c. area B. d. about 1/2*(7*$6). e. b and d. 5. The total benefit of reducing 7 units of gunk is a. area B. b. about $11*7 c. area B minus the area under the MC curve up to 7 units. d. equal to an aria in the opera Figaro. e. $130. 6. The shapes of the marginal benefit and cost curves indicate a. as pollution is reduced, the total benefits of pollution reduction eventually fall. b. as pollution is reduced, the total benefits of pollution reduction continue to rise. 42 c. as pollution is reduced, each additional unit brings fewer and fewer benefits. d. as pollution is reduced, each additional unit costs less and less to reduce. e. b and c. 7. The efficient pollution standard a. cannot be defended ethically, since it provides no special protection for pollution victims. b. cannot be defended ethically, since it allows current generations to benefit at the expense of future generations. c. is defended ethically by asserting that over time, most people will benefit from consistently maximizing the size of the measurable economic pie. d. cannot be defended ethically, since it puts no value on the consumption of nonmarket goods. e. a, b and d