Question

Question 1

A pollution tax allows regulators to set the __________of pollution in a given geographic area.

10 points   

Question 2

If a government chooses a scheme of pollution control using marketable permits as a main tool to manage the environment, then the reduction in pollution __________.

will take place in the firms where the cost of doing so is the least expensive

should take place in every firm based on the length of time the firm has to comply with regulations

is initiated at the household level

charges are refundable as an incentive to participate

none of the choices are correct

10 points   

Question 3

Which of the following are effective forms of market oriented environmental regulation?

better defined property rights

marketable permits

cap-and-trade

marginal cost pricing

pollution charges

10 points   

Question 4

Which of the following are criticisms of command and control regulation?

marked oriented tools, such as pollution taxes, are more effective at giving firms incentives to pollute

command and control policy comes with a significant time lag

regulated firms lack the incentive to improve beyond the baseline standards

command and control regulations are subject to loopholes

there is a lack of flexibility with command and control regulation

10 points   

Question 5

Beverly the beekeeper decides to locate her mild mannered bees on a plot of land located between an avocado orchard and a middle school for teens with bad attitudes. A positive externality that could transpire is

the bees helping to pollinate the orchard, leading to more fruit

the bees enroll in school and learn how to read

the honey the bees produce

the possibility of the bees stinging teens who sag their pants too far below the waist

the cost of the bee hives to Beverly, the beekeeper

10 points   

 

Answer 1

1) A pollution tax allows regulators to set the LIMITS of pollution in a given geographic area.

2) If a government chooses a scheme of pollution control using marketable permits as a main tool to manage the environment, then the reduction in pollution will take place in the firms where the cost of doing so is the least expensive.

Marketable permits are used by firms after they make sure that controlling pollution and buying permits will not exceed their cost structures.

3) The effective forms of market oriented environmental regulation include marketable permits, better-defined property rights and pollution charges.

4) Criticisms of command and control regulation :

a. Regulated firms lack the incentive to improve beyond the baseline standards

b. Command and control regulations are subject to loopholes

c. There is a lack of flexibility with command and control regulation

5) Positive externality that could transpire :

a. The bees helping to pollinate the orchard leading to more fruit

b. The honey the bees produce

Positive externality is the benefit received by third parties in the process of an economic transaction.