51.Regulationstoreducepollution
a.causepollutionlevelstodropbelowtheregulatedamount.
b.areamorecostlysolutiontosocietythanacorrectivetax.
c.allowfirmswiththelowestcosttoreducepollutionbymorethanthosewithhighestcosts.
d.areabettersolutionfortheenvironmentthanacorrectivetax.
52.Acorrectivetax
a.causeseachfactorytoreducepollutionbythesameamount.
b.assigns alegal pollution limitfor firms.
c.placesapriceontherighttopollute.
d.costssocietymorethanpollutionregulations.
53.Acorrectivetax
a.canbeusedtointernalizeanegativeexternality.
b.imposedonsellersshiftsthesupplycurvetotheleft.
c.imposedonbuyersshiftsthedemandcurvetotheleft.
d.Alloftheabovearecorrect.
54.Mosteconomistsprefercorrectivetaxestoregulationasawaytocorrecttheproblemofpollutionbecause
a.themarket-basedsolutionislesscostlytosociety.
b.themarket-basedsolutioncanresultinagreaterreductioninpollution.
c.themarket-basedsolutionraisesrevenueforthegovernment.
d.Alloftheabovearecorrect.
55.Inrecentyears,theCanadianprovinceofBritishColumbiahasincreaseditscarbontax.Whichofthe followingstatementsiscorrect?
a.Despitetheincreaseinthecarbontax,emissionsofgreenhousegasesinBritishColumbiahavecontinuedtoincreaseatarapidrate.
b.Alongwiththeincreaseinthecarbontax,BritishColumbiahasdecreasedincome-taxratesonindividualsandcorporations.
c.Few,ifany,economistsfavorcarbontaxessuchastheonethatBritishColumbiahasimposed.
d.Alloftheabovearecorrect.
56.Whichofthefollowingstatementsiscorrect?
a.Taxesaremoredifficulttoadministerthanregulations.
b.Taxesprovideincentivesforfirmstoadoptnewmethodstoreducenegativeexternalities.
c.Command-and-controlpoliciesprovideincentivesforprivatedecisionmakerstosolvetheirproblemsontheirown.
d.Correctivetaxesdistortincentives.
57.Whichofthefollowingisnotaneffectivemethodofreducingnegativeexternalities?
a.relyingonvoluntarycompliance
b.taxingtheoutputofindustriesthatpollute
c.creatinglegalenvironmentalstandards
d.increasingpublicspendingoncleanupandreductionofpollution
58.Whatisthedifferencebetweencommand-and-controlpoliciesandmarket-basedpoliciestowardexternalities?
a.Command-and-controlpoliciesprovideincentivesforprivatedecision makerstosolvetheproblemsontheirown,whereasmarket-basedpoliciesregulatebehaviordirectly.
b.Command-and-controlpoliciesrelyontaxes,whereasmarket-basedpoliciesrelyonquotas.
c.Command-and-controlpoliciesregulatebehaviordirectly,whereasmarket-basedpoliciesprovideincentivesforprivatedecision makerstochangetheirbehavior.
d.Command-and-controlpoliciesareefficient,whereasmarket-basedpoliciesareinefficient.
59.Inmanycasessellingpollutionpermitsisabettermethodforreducingpollutionthanimposingacorrectivetaxbecause
a.itishardtoestimatethemarketdemandcurveandthuschargethe”right”correctivetax.
b.sellingpollutionpermitscreateanetincreaseinpollution.
c.Correctivetaxesdistortincentives.
d.Correctivetaxesprovidegreaterflexibilitytofirmsthatcanreducepollutionatalowcost.
60.Thedifferencebetweenacorrectivetaxandatradablepollutionpermitisthat
a.acorrectivetaxsetsthepriceofpollutionandapermitsetsthequantityofpollution.
b.acorrectivetaxcreatesamoreefficientoutcomethanapermit.
c.acorrectivetaxsetsthequantityofpollutionandapermitsetsthepriceofpollution.
d.apermitcreatesamoreefficientoutcomethanacorrectivetax.
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