Question_Doc14_15Dec_5th

Question # 00005671 Posted By: smartwriter Updated on: 12/22/2013 02:19 PM Due on: 12/31/2013
Subject Business Topic General Business Tutorials:
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13) The optimal quantity of air pollution is

A) whatever amount of pollution is produced by the profit maximizing firm.

B) found by equating the marginal benefits from further reductions in pollution and the marginal

costs of further reductions in pollution.

C) found by setting the quantity of air pollution equal to the quantity of water pollution.

D) a meaningless concept since monetary values cannot be attached to problems associated with

pollution.

14) Which of the following statements concerning pollution is correct?

A) Economic efficiency requires that pollution be completely eliminated.

B) Economic efficiency dictates that the optimal amount of pollution arises at the point at which

price equals private marginal cost.

C) Pollution should be reduced to the point at which the marginal benefit from further reduction

equals the marginal cost of further reduction.

D) Pollution should be reduced to the extent necessary to return production to the production

possibilities frontier.

15) In economic analysis, the optimal level of pollution

A) is always zero.

B) arises at the point at which the marginal benefit from further reduction equals the marginal

cost of further reduction.

C) occurs at the point at which demand crosses the private cost supply curve.

D) should be determined by the private market without any government intervention.

16) From an economic standpoint, the amount of pollution should be

A) zero.

B) the amount that allows firms to maximize profits.

C) the amount where firms are earning a normal rate of return on investment.

D) at the point at which the marginal benefit from further reduction equals the marginal cost of

further reduction.

17) The optimal amount of pollution is not zero because

A) it has been found that pollution in moderate amounts actually has positive benefits.

B) there are no benefits to anyone from having zero pollution.

C) zero pollution would be too costly.

D) we don't have the political structure that could accomplish the goal.

18) The marginal benefit of pollution abatement

A) increases at an increasing rate as abatement increases.

B) decreases as pollution abatement increases because of the law of diminishing marginal utility.

C) increases as pollution abatement increases because of the law of increasing marginal returns.

D) is constant as pollution abatement increases.

19) The costs of pollution abatement

A) increase at an increasing rate with the increase in pollution abatement.

B) increase at a decreasing rate with the increase in pollution abatement.

C) decrease at an increasing rate with the increase in pollution abatement.

D) decrease at a decreasing rate with the increase in pollution abatement.

20) Refer to the above figure. The marginal cost of pollution abatement is curve

A) (1).

B) (2).

C) (3).

D) (4).

21) Refer to the above figure. The marginal benefit of pollution abatement is curve

A) (1).

B) (2).

C) (3).

D) (4).

22) Refer to the above figure. If the marginal cost curve for pollution abatement shifts to the

right, everything considered, the

A) degree of air quality or cleanliness will also decrease.

B) the degree of air quality or cleanliness will stay unchanged.

C) the degree of air quality will improve.

D) the marginal cost of pollution abatement has nothing to do with air quality.

23) Refer to the above figure. Suppose the marginal benefit and the marginal cost curves of

pollution abatement are normally shaped. Technological change that made it easier to produce in

a "cleaner" fashion would cause

A) curve (4) to shift out, increasing the optimal amount of pollution abatement.

B) curve (3) to shift up, raising the marginal benefits and costs and reducing the amount of

pollution abatement.

C) curve (2) to shift out, increasing the optimal amount of pollution abatement.

D) curve (1) to shift out, increasing the optimal amount of pollution abatement.

24) Refer to the above figure. Suppose the marginal benefit and the marginal cost curves of

pollution abatement are normally shaped. Suppose the equilibrium is for a factory in Los

Angeles. What would happen if the same factory were in the middle of Nevada?

A) The marginal cost curve (1) would shift to (2) and there would be no difference in the level of

abatement.

B) The marginal cost curve (2) would shift to the left and there would be less abatement in

Nevada.

C) The marginal benefit curve (4) would shift to the left and there would be less abatement in

Nevada.

D) The marginal benefit curve (2) would shift to the right and there would be more abatement in

Nevada.

25) The marginal cost curve of pollution abatement is

A) downward sloping.

B) upward sloping.

C) horizontal.

D) vertical.

26) Technological change that makes it easier to produce in a "cleaner" fashion would cause

A) the marginal cost curve of pollution abatement to shift left, increasing the degree of air

quality.

B) the marginal cost curve of pollution abatement to shift right, increasing the degree of air

quality

C) the marginal benefit curve of pollution abatement to shift right, increasing the degree of air

quality

D) the marginal benefit curve of pollution abatement to shift left, increasing the degree of air

quality

27) Suppose people value clean air more as their incomes increase, then

A) the marginal cost curve of pollution abatement to shift left, increasing the degree of air

quality.

B) the marginal cost curve of pollution abatement to shift right, increasing the degree of air

quality

C) the marginal benefit curve of pollution abatement to shift right, increasing the degree of air

quality

D) the marginal benefit curve of pollution abatement to shift left, increasing the degree of air

quality

28) The marginal cost curve of pollution abatement

A) slopes upward because of the law of diminishing product.

B) slopes upward because firms will maximize profits.

C) slopes downward because of the law of diminishing marginal utility.

D) slopes downward because of the law of diminishing returns.

29) The optimal amount of air pollution is

A) found by equating the marginal benefits from reducing pollution by one more unit with the

marginal costs of reducing pollution by an additional unit.

B) found by equating the total benefits from reducing pollution by one more unit with the total

costs of reducing pollution by an additional unit.

C) found by setting the marginal benefits from reducing pollution by one more unit equal to zero.

D) a meaningless concept since we cannot monetize the environment.

30) Which of the following statements is true about the optimal quantity of pollution?

A) It equals zero.

B) Pollution abatement should continue up to the point where marginal cost equals the average

total cost.

C) Trade-offs exist between producing a cleaner environment and producing other goods and

services.

D) Firms should be allowed to determine the profit-maximizing amount of pollution abatement.

31) Why is the optimal quantity of pollution not less than the point at which the marginal benefit

equals the marginal cost?

A) The point of intersection occurs at a low level of pollution.

B) There are no external costs below that level.

C) Below that point firms will have to reduce the quantity that they are currently producing and

lower the price.

D) Below that point the value that people place on less pollution is less than the cost of reducing

the pollution.

32) In the above figure, the optimal level of pollution cleanup is

A) Q1.

B) Q2.

C) Q3

D) Q4

33) In the above figure, if a firm is cleaning up Q4 units of pollution, it is an

A) efficient solution, because marginal social benefits are greater than marginal social costs.

B) efficient solution, because marginal social benefits are equal to marginal social costs.

C) inefficient solution, because marginal social benefits are greater than marginal social costs.

D) inefficient solution, because marginal social costs are greater than marginal social benefits.

34) In the above figure, if a firm is cleaning up Q2 units of pollution, it is an

A) efficient solution, because marginal social benefits are greater than marginal social costs.

B) efficient solution, because marginal social benefits are equal to marginal social costs.

C) inefficient solution, because marginal social benefits are greater than marginal social costs.

D) inefficient solution, because marginal social costs are greater than marginal social benefits.

35) In the above figure, if a firm is cleaning up Q3 units of pollution, it is an

A) efficient solution because marginal social benefits are greater than marginal social costs.

B) efficient solution because marginal social benefits are equal to marginal social costs.

C) inefficient solution because marginal social benefits are greater than marginal social costs.

D) inefficient solution because marginal social costs are greater than marginal social benefits.

36) According to economic analysis, the optimal quantity of pollution exists at the point at which

the

A) total benefit of pollution control is equal to the total cost.

B) marginal benefit of pollution control is equal to the marginal cost.

C) level of pollution is at zero.

D) level of pollution is acceptable to the society.

37) Pollution

A) creates a negative externality.

B) is increased when property rights are defined.

C) is the result of capitalism.

D) exists because air and water are privately owned resources.

38) The idea that it takes 90 percent of your time to clean up the last 10 percent of your house

illustrates that

A) the marginal cost of cleaning up slopes downward.

B) the marginal cost of cleaning up slopes upward.

C) the marginal benefit of cleaning up is constant.

D) the marginal benefit of cleaning up slopes upward.

39) The marginal benefit of the pollution abatement curve

A) has a zero slope.

B) has a positive slope.

C) slopes upward.

D) slopes downward.

40) Voluntary agreements about cleaning up pollution attempt to

A) internalize externalities.

B) internalize private costs.

C) externalize social costs.

D) externalize private costs.

41) Generally, as levels of pollution are reduced,

A) marginal benefits from the reduction decrease.

B) marginal benefits from the reduction increase.

C) marginal costs from the reduction decrease.

D) marginal cost from the reduction are constant.

.

42) Generally, as levels of pollution are reduced,

A) marginal benefits from the reduction increase.

B) marginal costs from the reduction increase.

C) marginal costs from the reduction stay the same.

D) marginal costs from the reduction decrease.

43) The level of pollution at which the marginal benefits equal the marginal cost of cleaning up

is always

A) the zero pollution level.

B) the optimal quantity of pollution.

C) the pollution maximum.

D) the pollution minimum.

.

44) In the above figure,

A) the optimal degree of air cleanliness is less than 100 percent.

B) the marginal cost curve slopes up because of the law of diminishing returns.

C) Neither A nor B are correct.

D) Both A and B are correct.

45) The optimal quantity of pollution in the above figure

A) is defined as the level where the marginal benefit is at a maximum.

B) is where the optimal degree of air cleanliness is 100 percent.

C) is the level of pollution at which the marginal benefit equals the marginal cost.

D) cannot be determined.

46) The above table shows marginal costs and marginal benefits of clean air in a particular

industrial area. In the table, when the quantity of clean air is at 25 percent,

A) the quantity of polluted air is 25 percent.

B) the marginal benefit of clean air exceeds the marginal cost.

C) the marginal benefit of clean air is less than the marginal cost.

D) the quantity of clean air is optimal.

47) The above table shows marginal costs and marginal benefits of clean air in a particular

industrial area. In the table, when the quantity of clean air is at 75 percent,

A) the quantity of polluted air is 75 percent.

B) the marginal benefit of clean air exceeds the marginal cost.

C) the marginal benefit of clean air is less than the marginal cost.

D) the quantity of clean air is optimal.

48) In the above table, the optimal quantity of clean air is

A) 25 percent.

B) 50 percent.

C) 75 percent.

D) 100 percent.

49) The marginal cost of pollution abatement is the

A) additional cost to clean up an additional unit of pollution.

B) additional benefit from cleaning up an additional unit of pollution.

C) total social costs of pollution clean-up divided by total social benefits.

D) total social costs of pollution clean-up divided by the total units of clean-up.

50) The marginal benefit of pollution abatement is the

A) additional cost to clean up an additional unit of pollution.

B) additional benefit from cleaning up an additional unit of pollution.

C) total social costs of pollution clean-up divided by total social benefits.

D) total social costs of pollution clean-up divided by the total units of clean-up.

51) Explain how the optimal quantity of air pollution is determined.

.

52) "The optimal level of pollution is zero." Do you agree or disagree? Why?

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