Question :
101) Refer to Figure 17-7, which depicts a market for : 1384327
101) Refer to Figure 17-7, which depicts a market for tradable pollution permits. Improvements in firms’ abatement technology will be expected to
A) shift the supply curve to the right.
B) shift the supply curve to the left.
C) shift the demand curve to the right.
D) shift the demand curve to the left.
E) not have any impact on the equilibrium.
102) Refer to Figure 17-7, which depicts the market for tradable pollution permits. If there is an increase in firms’ marginal cost of pollution abatement,
A) firms decide to abate more pollution.
B) the price of pollution permits will fall.
C) firms will demand more pollution permits.
D) firms will demand fewer pollution permits.
E) firms require exactly Q* permits.
103) Refer to Figure 17-7, which depicts the market for tradable pollution permits. If the environmental organization called “Friends of the Earth” buys a large quantity of pollution permits and permanently decides not to use them, then
A) the demand curve shifts to the left, and the equilibrium price falls.
B) the supply curve shifts to the right, and the equilibrium price falls.
C) the supply curve shifts to the left, and the equilibrium price rises.
D) allocative efficiency is lost.
E) there is no impact on the equilibrium.
104) Refer to Figure 17-7, which depicts the market for tradable pollution permits. The amount of permits Q* is determined by
A) market forces.
B) large corporations.
C) the level of abatement technology.
D) the World Environmental Organization.
E) the relevant government.
105) Refer to Figure 17-7, which depicts the market for tradable pollution permits. The equilibrium price p*
A) equals the average abatement cost for firms.
B) equals the marginal abatement cost for each profit-maximizing firm.
C) is imposed by the government.
D) is not a function of the abatement technology.
E) is always equal to the subsidy provided by the government.
106) The main advantage of using market-based schemes for reducing pollution is that they
A) lead to greater fairness in the distribution of resources.
B) improve the moral fibre of producers and consumers.
C) lead to a more efficient use of scarce resources.
D) maximize the difference between marginal cost and marginal benefit.
E) minimize the difference between total cost and total benefit.
107) When comparing a system of emission taxes to a system of tradable pollution permits, the same amount of pollution could be abated in each as long as
A) the marginal cost of abatement was equal across all firms.
B) the marginal benefit of abatement curve was horizontal.
C) the emission tax rate, t, was applied equally to all firms.
D) the cap on emissions was chosen such that the equilibrium price of the permits, , could rise over time.
E) the cap on emissions was chosen such that the equilibrium price of the permits, , was equal to the emissions tax rate, t.
108) When designing a policy to reduce polluting emissions, policymakers are unlikely to know with certainty what the marginal cost of abatement is for each firm. If an emissions tax ($t per unit of emissions) is imposed, then policymakers
A) know what the reduction in emissions will be but do not know at what cost.
B) know with certainty what the reduction in emissions will be and at what cost.
C) know the per-unit cost imposed on firms but do not know what the reduction in emissions will be.
D) are uncertain about both the amount of emission reduction and the cost.
E) know with certainty what their tax revenues will be from the emissions tax.
109) When designing a policy to reduce polluting emissions, policymakers are unlikely to know with certainty what the marginal cost of abatement is for each firm. If policymakers set an emissions cap of X units, and issue tradable permits for this amount, then they
A) know what the reduction in emissions will be but do not know at what cost.
B) know with certainty what the reduction in emissions will be and at what cost.
C) know the per-unit cost imposed on firms but do not know what the reduction in emissions will be.
D) are uncertain about both the amount of emission reduction and the cost.
E) know with certainty what the equilibrium permit price will be.
110) In 2006, Professor Nicolas Stern of the United Kingdom stated “Climate change is the greatest market failure the world has ever seen.” Which of the following statements describes the biggest challenge to efforts to begin correcting this market failure?
A) We do not have precise estimates of the costs of reducing greenhouse gas emissions.
B) We do not have precise estimates of the costs of increased levels of e in the atmosphere.
C) Policy design must be coordinated among all major governments of the world, as the problem is truly a global one.
D) Each government around the world must choose its own level of emissions.
E) Climate change is too large a problem to be compared to a market failure.
