Economics USA: 21st Century Edition

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1. Which of the following statements is MOST accurate? The problem of pollution is...

   	worldwide, though U.S. consumers contribute more to pollution per capita than consumers elsewhere.
   	a problem peculiar to societies with high levels of technological development.
   	primarily a U.S. problem.
   	most serious in countries where economic growth does not offset the costs of pollution.

   worldwide, though U.S. consumers contribute more to pollution per capita than consumers elsewhere.

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2. Which of the following is the BEST example of an external diseconomy?

   	Tongue and Groove Wood Processing plant dumps its waste into the Blue River, causing some fish downstream in the Beady Eye Hatchery to die.
   	Beady Eye Hatchery sues Tongue and Groove Wood Processing, with the result that T&G is required to restore the water in the Blue to its original state.
   	Tongue and Groove Wood Processing finds an alternate way to dispose of its waste.
   	Tongue and Groove compensates Beady Eye for the loss of its fish.

   This is the only example in which T&G causes damage to resources, thereby harming others in a way for which they are not compensated.

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3. Firms that pollute tend to overproduce MAINLY because

   	they are not restricted by government regulation.
   	the artificially low price they pay for resources makes production cheaper.
   	high production is their way of compensating consumers for pollution.
   	consumers will pay the cost of the pollution through higher prices.

   the artificially low price they pay for resources makes production cheaper.

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4. At present, the PRIMARY means by which government intervenes to control the nation’s pollution problem is through...

   	effluent fees.
   	private cost assessment.
   	tax credits for pollution-controls.
   	direct regulation.

   direct regulation.

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5. From an economist’s standpoint, probably the most sensible goal for our society is to...

   	live with the current pollution level since, realistically, there is little to be done.
   	continue searching for ways to minimize the sum of pollution and pollution control costs.
   	limit pollution to a point where pollution costs and pollution control costs match.
   	eliminate pollution, even if it means some cutback in economic growth.

   continue searching for ways to minimize the sum of pollution and pollution control costs.

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6. An economist would MOST LIKELY agree with which of the following statements? Pollution is MAINLY attributable to...

   	rapid advances in technology.
   	our lack of knowledge about how to use resources efficiently.
   	too much laxity among government regulatory agencies.
   	human choices.

   human choices.

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