Market failure occurs when an unregulated market

1. Market failure occurs when an unregulated marketa. does not produce the efficient output level.b. does not produce the optimal price and output combination.c. is missing the price for a good or service..d. generates a price for good that does not include all of the social costs of producing or consuming the good.e. All of the above are correct.2. Markets fail due to which of the following?a. government regulation.b. government taxation.c. the inability of an unregulated market to produce the optimal output.d. a and b are both correct.e. All of the above are correct.3. Which of the following may correct market failure.a. government regulation.b. government taxation.c. government ownership of a natural monopoly.d. All of the above are correct.e. None of the above are correct.4. Pollution is an example of what type of market failure?a. A negative externality.b. A positive externality.c. A public good.d. Market power.5. A hydro-electric dam is an example of which type of market failure.a. A negative externality.b. A positive externality.c. A natural monopoly.d. Market power.e. A hydro-electric dam is not a market failure.6. The depletion of the ozone layer is best characterized as which type of market failure?a. A negative externality.b. A positive externality.c. A natural monopoly.d. Market power.e. A hydro-electric dam is not a market failure.7. Pollution is an example of a market failure becausea. it generates a harmful cost on people who are neither the producers of thepollution nor consumers of the good that produced the pollution.b. it generates uncompensated benefits for third parties.shui c. it is non-rival.d. it is non-exclusivee. All of the above are correct.8. If there is no governmental intervention goods that produce pollution will generate a price thata. includes all social costs but not all of the private costs.b. includes all private costs but not all of the social costs.c. includes all of the private and social costs, but not the governmental costs.d. includes all of the private and social costs, but not all of the market costs.9. If the government intervenes to correct a negative externality the goal will be toa. externalize more benefits to balance the external costs.b. lower the price of the good to compensate the consumers for the external cost.c. internalize the external costs of the good.d. All of the above are correct.10. When an external cost is internalizeda. the price of the good will rise.b. the price of the good will fall.c. the price of the good will remain the same, but output will fall.d. the price of the good will remain the same, but output will rise.11. When the external cost of pollution is internalized, thena. pollution will rise.b. pollution will fall.c. pollution will remain unchanged but, but consumers will not have to pay for it.d. the government will have to pay for it.12. Which of the following can be used to internalize the external costs of pollution?a. a tax on the emissions.b. a tax on the production of the good associated with the pollution.c. regulations that require specific technologies to be used to lower the release of the pollution.d. emission standards that limit the concentration or the amount of a pollutant that can be released.e. All of the above.13. In environmental economics the optimal level of pollution is defined asa. zero pollution.b. a constantly declining level of pollution.c. the level of pollution where the social benefits of pollution are greater thanthe private costs of production.d. the level where decreasing pollution any more will be more costly to society than the benefit society gains from the additional reduction in pollution.14. A Pigouvian tax seeks to taxa. a public good at the rate that the public good is beneficial.b. a production at the rate of the external damage caused by the production.c. an external cost at the rate of social benefit of the good.d. a positive externality at the rate of the social benefit.15. An appropriate intervention for a positive externality, such as residential solar panels, would bea. building regulations requiring their use.b. a Pigouvian tax.c. a quota establishing a minimum number of units produced.d. a subsidy to lower the private costs and raise the social costs of purchasing the panels.Valuation16. When estimating the value of a forest, the value of all products and recreational activities that are based in the forest would be considered aa. non-use value.b. indirect use-valuec. direct use value.d. existence value.e. option value.17. When estimating the value of a forest, the value of all future products and recreational activities that are based in the forest would be considered aa. use value.b. indirect use-valuec. direct use value.d. existence value.e. option value.18. When estimating the value of a forest, the value of preserving the forest as wildlife refuge for future generations to enjoy would be considered aa. bequest value.b. indirect use-valuec. direct use value.d. existence value.e. option value.19. When estimating the value of a forest, the value of ecological services that are based in the forest such as water storage and oxygen generation would be considered aa. non-use value.b. indirect use-valuec. direct use value.d. existence value.e. option value.20. Total Economic Value is an accounting method used to estimate the value of an environmental resource by adding alla. its use and non-use values.b. its the direct and indirect values.c. the its production costs with the replacement costs.d. its the direct and indirect use values.21. In order to estimate the value of standing timber in a forest the most appropriate technique would bea. the habitat equivalency or mitigation cost technique.b. production or replacement cost technique.c. market valuation based upon estimated board-feet times the prices perboard-foot.d. the travel cost method.e. contingent valuation method.22. In order to estimate the value of an ecological service such as the fish and avian hatchery services provided by a wetlands damaged by the release of hazardous chemicals the most appropriate technique would bea. the habitat equivalency or mitigation cost technique.b. production or replacement cost technique.c. market valuation.d. the travel cost method.e. contingent valuation method.23. In order to estimate the value of an ecological service such water filtration provided by a wetlands the most appropriate technique would bea. the habitat equivalency or mitigation cost technique.b. revealed preference.c. market valuation.d. the travel cost method.e. contingent valuation method.24. The valuation estimation technique based upon consumers actual market behavior is calleda. demand.b. non-demand.c. supply.d. stated preferencee. revealed preference.25. The valuation estimation technique based upon estimates of willingness to pay and willingness to accept as expressed in survey responses is calleda. demand.b. non-demand.c. supply.d. stated preferencee. revealed preference.26. One technique that can be used to estimate the value of a natural area based upon the actual use of the area isa. contingent valuation.b. defensive expenditures.c. travel cost.d. hedonic pricing.27. If an economist tries to estimate the value of water quality by totaling the amount of money households spend to avoid water of questionable quality the economist is using which technique?a. contingent valuation.b. defensive expenditures.c. travel cost.d. hedonic pricing.28. The travel cost technique of estimating the value of an natural areaa. totals all expenses made to avoid negative impacts on the resource.b. adds all expenses made to gain access to and use the natural area.c. sums the value of all of the positive attributes that contribute to theattractiveness of the natural area.d. totals all of the expressed willingness to pay to preserve the natural area.Benefit-Cost Analysis & Discounting29. If the total value of all the benefits from a project minus the total value of all of the costs of the project is negative thena. the project should not be implemented.b. the project should be implemented.c. the project should be expanded to generate more benefits.d. the project should be reduced to lower costs.30. If you subtract the value of all costs of a project from the value of all of the benefits of the project then you are calculating thea. Total Benefitb. Total Net Benefitc. Marginal Net Benefitd. Net Present Valuee. Benefit-Cost Ratio31. If you divide the total benefits of a project by the total costs of the project you are calculating thea. Total Benefitb. Total Net Benefitc. Marginal Net Benefitd. Net Present Valuee. Benefit-Cost Ratio32. If you divide the total benefits of a project by the total costs of the project and the value is greater than 1 then the project should bea. abandoned and not implemented.b. expanded to maximize the net benefit.c. reduced to minimize the costs.d. implemented.33. Humans and human institutionsa. have no time preference, since time cannot have value.b. prefer the present over the future, because the future is uncertain.c. prefer the future over the present, because the future is longer.d. value the future at the same rate as the present.34. The Present Value of a resource isa. the value today of the sum of a stream of future benefits provided by theresource.b. the value today of the sum stream of current benefits provided by the resource.c. the value in the future of the sum stream of current benefits provided by the resource.d. the value in the future of the sum stream of future benefits provided by the resource.35. The Net Present Value is thea. present value of all benefits minus the present value of all costs.b. sum of all benefits over time minus the sum of all costs over time.c. sum of (the value of all current benefits minus the value of all currentcosts) plus the sum of (the value of all future benefits minus the value of allfuture costs).d. All of the above are correct.36. Which of the following are examples of discounting?a. charging an interest rate to lend money.b. being willing to repay a loan plus interest in the future in order to gainaccess to money today.c. valuing a benefit today more than the same benefit in the future.d. valuing a cost in the future less than the same cost today.e. All of the above are examples of discounting.37. Although time discounting is rational, it can contribute to environmental problems. For example, restoration or preservation projects may be rejected becausea. relatively high current benefits can outweigh far lower future costs if thosecosts accrue slowly and far into the future if thosecosts accrue slowly and far into the future.b. relatively low current benefits can outweigh higher future costs.c. relatively low current costs can outweigh far higher future benefits if thosebenefits accrue slowly and far in the future.d. relatively high current costs can outweigh far lower future benefits if thosebenefits accrue slowly over a long period of time.38. Although time discounting is rational, it can contribute to environmental problems. For example, projects that produce large volumes of highly toxic wastes with extremely long half-lives, such as radioactive wastes can be implemented becausea. relatively high current benefits can outweigh far lower future costs if thosecosts accrue slowly and far into the future.b. relatively low current benefits can outweigh higher future costs if thosecosts accrue slowly and far into the future.c. relatively low current costs can outweigh far higher future benefits if thosebenefits accrue slowly and far in the future.d. relatively high current costs can outweigh far lower future benefits if thosebenefits accrue slowly over a long period of time.39. High discount ratesa. raise the present values of future impacts.b lower the present values of future impacts.c. result in the same values as current values, because the discount rate isused to make people equally well-off in the future.d. None of the above. Discount rates do not alter future values.40. Low discount ratesa. raise the present values of future impacts.b lower the present values of future impacts.c. result in similar values as current values, because future impacts arediscounted less.d. None of the above. Discount rates do not alter future values

 

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