ECON 310 Chapter 5 Study Quiz Answers
______1. The Hicks-Kaldor criterion is also referred to as
a. the criterion of potential pareto improvement.
b. the criterion of pareto improvement.
c. an alternative to opportunity cost measurements of resource use.
d. both a and c.
Answer: a
______2. Economic efficiency refers to ___________ while economic equity refers to ________.
a. government policy which maximizes production; government policy which maximizes income.
b. government environmental policy which achieves potential pareto improvement; government environmental policy which achieves maximum income.
c. government environmental policy which achieves potential pareto improvement; government environmental policy which achieves equitable distribution of economic benefits.
d. government policy which achieves equitable distribution of income; governmental policy which maximizes production.
Answer: c
______3. The above Lorenz curve illustrates an economy that has _________ . This information would be represented with a Gini coefficient which is ________ .
a. extremely unequal income distribution; close to 100.
b. extremely unequal income distribution; closer to 0 than to 100.
c. equitable income distribution; close to 100.
d. equitable income distribution; closer to 0 than to 100.
Answer: d
______4. An index of environmental health, as presented in your text, would
a. provide additional insight into the relationship between the macroeconomics and the environment.
b. give policy makers additional information in analysis of appropriate environmental policy.
c. require the use of conjoint analysis to estimate preference functions for individual consumers.
d. all of the above.
Answer: d
______5. One argument for the appropriate discount rate to use in cost-benefit analysis is to set the discount rate equal to
a. the market rate of interest because this reflects not only the real interest rate but also the risk free and inflation component of interest.
b. the risk-free real market rate of interest because the risk component and the inflation component are not appropriate when measuring societal costs and benefits.
c. the risk-free real market rate of interest because society should have a lower rate of time preference for money.
d. the market rate of interest because society should place more weight on the costs and benefits to future generations than on current generations.
Answer: b
______6. If a proposed project will yield $100 million each year for 5 years beginning in year 2 and will cost $200 million at the beginning of the first year and $50 million every year after that, the present value of net benefits associated with this project will be _______. Assume a discount rate of 5 percent.
a. will be a positive.
b. will be negative.
c. can not be determined without further information.
d. will be zero.
Answer: b
______7. An estimation of a marginal damage function requires information about
a. expected
costs and benefits associated with a project.
b. physical
effects associated with incremental increases in pollution, dose-response
relationships.
c. the
appropriate discount rate.
d. all
of the above.
Answer: b
______8. A marginal abatement cost function represents
a. the costs associated with reducing pollution to a lower level.
b. the increase in damage that results from an increase in the level of pollution.
c. the opportunity costs associated with production of a good or service.
d. includes the costs of labor, capital and energy needed to lessen the emission of pollution.
e. both
a and d.
Answer: e
______9. If society is composed of 2 polluters, with the marginal abatement costs of polluter 1 and 2, are represented by the following equations:
MAC(1) = 18 - E1
MAC(2) = 12 - E2
the unregulated level of pollution for each polluter is
a. 18 units by polluter 1 and 6 units by polluter 2.
b. 18 units by polluter 1 and 8 units by polluter 2.
c. 4 units by polluter 1 and 4 units by polluter 2.
d. none of the above.
Answer: a
______10. The belief
that environmental resources have an inherent right to exist in unaltered form
was advocated by Arne Ness. This
approach is referred to as
a. deep
ecology.
b. the
energy theory of value.
c. land
ethic of value.
d. none
of the above.
Answer: a