Markets for pollution rights
a. have never been tried in the United States
b. assign property rights to those who value them least
c. allow the government to assign property rights
d. enable those who value them most to pollute
e. are less efficient than pollution standards
QUESTION 2The marginal revenue product curve slopes downward only if the firm is a price searcher in the product market.
a. True
b. False
QUESTION 3The price of a pollution right is
a. determined by consumers
b. determined by government
c. a user charge
d. determined by supply and demand
e. a subsidy
QUESTION 4Marginal revenue product is measured in dollars per unit of output.
a. True
b. False
QUESTION 5A pollution tax
a. is itself a form of negative externality
b. is a positive externality used to offset a negative one
c. is a price per unit of discharge of pollution
d. is a tax on pollution control equipment
e. may cause a common pool problem
QUESTION 6Suppose the marginal product of the second worker hired by a firm is 3, and the price of the last unit produced is 7 . Which of the following is true of the marginal revenue product of the second worker?
a. It must equal 21.
b. It must be less than or equal to 21.
c. It must be greater than or equal to 21.
d. It equals 21 only if the firm is a price searcher (e.g., monopoly).
e. We can conclude nothing about marginal revenue product.
QUESTION 7A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?
a. The pollution will be created by those least willing and able to pay the damages.
b. The pollution will be created by those most willing and able to pay for the right to pollute.
c. The funds collected by the government will be enough to compensate any individuals harmed by the pollution.
d. Pollution will increase from zero to 1,000 units per day.
e. There will be no incentive for polluters to try to sneak emissions past government monitoring devices.
QUESTION 8Private markets can allocate resources optimally
a. under all circumstances
b. only if property rights are well defined and can be easily enforced
c. whenever property rights are well defined, regardless of whether they can be easily enforced
d. whenever property rights can be easily enforced, regardless of whether they are well defined
e. whenever there is no government intervention in the market
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