FSU PUP 3002 Exam 3 Questions and Answers Latest Update 2025-2026
Negative externality - Answers the harm, cost, or inconvenience suffered by a third party
because of actions by others
Tools for correcting externalities - Answers 1. Consumption Tax
2. Subsidy
3. Output Standards
inefficient outcome - Answers When too much of a certain good is produced or consumed
relative to the overall costs and benefits to society.
deadweight loss - Answers the fall in total surplus that results from a market distortion, such as
a tax
carbon tax - Answers a fee that the government charges polluters for each unit of greenhouse
gas they emit
consumption tax - Answers a plan in which people are taxed not on what they earn but on what
they spend
Pigouvian Tax - Answers a tax imposed on an activity that creates a negative externality
positive externality - Answers a benefit received by someone who had nothing to do with the
activity that generated the benefit
subsidy - Answers payments from the government to an institution or individual in return for a
behavioral choice
output standard - Answers outright bans or limitations on the amount of a given externality (ex:
air pollution) that may be produced
Intensity - Answers How strongly people feel about certain political issues.
stability - Answers how much volatility we observe in citizen attitude over time
Salience - Answers the relative importance of a given issue relative to other issues
National Environmental Policy Act - Answers (1970) Environmental Impact Statements must be
done before any project affecting federal lands can be started
Created Council on Environmental Quality
Environmental Protection Agency (EPA) - Answers an independent federal agency established to
, coordinate programs aimed at reducing pollution and protecting the environment
Clean Air Act - Answers 1970- law that established national standards for states, strict auto
emissions guidelines, and regulations, which set air pollution standardds for private industry
cradle-to-grave approach - Answers Requires manufacturers to take back electronic products at
the end of their useful lives and repair, remanufacture, or recycle them
Clean Water Act - Answers (1972) set maximum permissible amounts of water pollutants that
can be discharged into waterways; aims to make surface waters swimmable and fishable
principal-agent theory - Answers Analyses of how policy makers (principals) can control actors
who work for them (agents) but have far more information
Moral Hazard - Answers the agents not bearing the entire costs of their poor task performance
Adverse Selection - Answers Principals cannot be confident that the bureaucrats tasked with
carrying out the policy at hand possess similar preferences
ex post control - Answers -wait for an agent to misbehave, then punish
-if agents view this as credible, they will attempt to avoid punishment by fulfilling the principals
demands
Ex ante control - Answers Actions that a principal takes prior to an agents action to incentivize a
desired behavior
Technical Uncertainty - Answers the uncertainty the agency has in its estimate of the policy
consequences of a given choice
procedural uncertainty - Answers the uncertainty about what type of choice the agency is likely
to make
weather - Answers The condition of Earth's atmosphere at a particular time and place.
climate - Answers Variations in average weather over long to extremely long periods of time
greenhouse effect - Answers Natural situation in which heat is retained in Earth's atmosphere by
carbon dioxide, methane, water vapor, and other gases
Risk Management - Answers The process after the assessment that more explicitly allows for
the introduction of politics into its decisions
determines whether the risks associated with the substance worth regulating despite the
economic costs of doing so
Negative externality - Answers the harm, cost, or inconvenience suffered by a third party
because of actions by others
Tools for correcting externalities - Answers 1. Consumption Tax
2. Subsidy
3. Output Standards
inefficient outcome - Answers When too much of a certain good is produced or consumed
relative to the overall costs and benefits to society.
deadweight loss - Answers the fall in total surplus that results from a market distortion, such as
a tax
carbon tax - Answers a fee that the government charges polluters for each unit of greenhouse
gas they emit
consumption tax - Answers a plan in which people are taxed not on what they earn but on what
they spend
Pigouvian Tax - Answers a tax imposed on an activity that creates a negative externality
positive externality - Answers a benefit received by someone who had nothing to do with the
activity that generated the benefit
subsidy - Answers payments from the government to an institution or individual in return for a
behavioral choice
output standard - Answers outright bans or limitations on the amount of a given externality (ex:
air pollution) that may be produced
Intensity - Answers How strongly people feel about certain political issues.
stability - Answers how much volatility we observe in citizen attitude over time
Salience - Answers the relative importance of a given issue relative to other issues
National Environmental Policy Act - Answers (1970) Environmental Impact Statements must be
done before any project affecting federal lands can be started
Created Council on Environmental Quality
Environmental Protection Agency (EPA) - Answers an independent federal agency established to
, coordinate programs aimed at reducing pollution and protecting the environment
Clean Air Act - Answers 1970- law that established national standards for states, strict auto
emissions guidelines, and regulations, which set air pollution standardds for private industry
cradle-to-grave approach - Answers Requires manufacturers to take back electronic products at
the end of their useful lives and repair, remanufacture, or recycle them
Clean Water Act - Answers (1972) set maximum permissible amounts of water pollutants that
can be discharged into waterways; aims to make surface waters swimmable and fishable
principal-agent theory - Answers Analyses of how policy makers (principals) can control actors
who work for them (agents) but have far more information
Moral Hazard - Answers the agents not bearing the entire costs of their poor task performance
Adverse Selection - Answers Principals cannot be confident that the bureaucrats tasked with
carrying out the policy at hand possess similar preferences
ex post control - Answers -wait for an agent to misbehave, then punish
-if agents view this as credible, they will attempt to avoid punishment by fulfilling the principals
demands
Ex ante control - Answers Actions that a principal takes prior to an agents action to incentivize a
desired behavior
Technical Uncertainty - Answers the uncertainty the agency has in its estimate of the policy
consequences of a given choice
procedural uncertainty - Answers the uncertainty about what type of choice the agency is likely
to make
weather - Answers The condition of Earth's atmosphere at a particular time and place.
climate - Answers Variations in average weather over long to extremely long periods of time
greenhouse effect - Answers Natural situation in which heat is retained in Earth's atmosphere by
carbon dioxide, methane, water vapor, and other gases
Risk Management - Answers The process after the assessment that more explicitly allows for
the introduction of politics into its decisions
determines whether the risks associated with the substance worth regulating despite the
economic costs of doing so
