Midterm EC3545 Spring, 1998
True False (assume question relates to U.S., unless indicated otherwise; 1 pt each; NOTE: if any part of the question is false, the entire question is false)
1. Technological advance is the principal cause of environmental problems, since new technologies are generally dirtier than those they replace.
2. Materials used in ordinary production processes are not a concern, since any residuals can readily be converted into energy according to the familiar equation E=MC2.
3. From the perspective of a typical environmentalist, it could be desirable to control emissions even when transactions giving rise to them (e.g. steel production) do not involve externalities. (HINT: What are "externalities?")
4. The amount of pollution per unit of GNP tends to get smaller the lower is GNP.
5. TSP and SOx are of concern primarily because they interact in the presence of sunlight to produce ozone.
6. Ozone at ground level (e.g. in Los Angeles) is harmful, while ozone in the stratosphere is beneficial.
7. Atmospheric levels of CO2 are lower now than they were in the 1960s.
8. Walking through Grand Central Station in New York City exposes you to more radiation than you would be exposed to walking the same distance around a nuclear power plant.
9. CO and HC emissions have decreased greatly, far moreso than is the case with NOx.
10. The most common measure of emissions into water is BOD.
11. Water in acid-rain-polluted lakes may have a pH as high as 9.5, as compared to rain water with a pH of 7.5.
12. In terms of actual trends in both air and water quality, the boomsters appear to be correct over recent decades, since growth in income and population have resulted in generally cleaner air and water in the U.S.
13. At the economist's social optimum (when all externalities are internalized), environmental damages will have been eliminated.
14. At the economist's optimal environmental quality, the marginal health benefits of clean-up would be less than the marginal costs of clean-up.
15. Environmental trade-offs (costs and benefits) are inevitable, since we appear to never have everything that we want (wants are unlimited relative to resources available to satisfy those wants).
16. While there are many positive and negative features of voting as a means of deciding public issues, one desirable feature of voting is that it does allow a minority of people with very large, real environmental demands to obtain the environmental goods they desire.
17. There is far less water available in aquifers lying beneath the surface of the earth than in surface reservoirs.
18. It was argued in class that point-source discharges are relatively over-controlled when compared to non-point sources of water pollution.
19. Graves argued in class that "rationality," comparing the advantages with the disadvantages of alternative courses of action and choosing actions with the highest net advantage, is the approach generally recommended by economists for determining relative amounts of environmental and ordinary goods.
20. The environmental policy emphasis on uniform nationwide standards (unvarying over time or space) was argued in class to be inappropriate, since the nature of most pollution is such that damages vary importantly according to where and when pollution occurs (despite any regional or global damages that might additionally exist).
21. "Public goods" are goods having the properties of being non-excludable and non- rivalrous.
22. Optimal environmental controls cause the prices of many goods to increase, hence they may make us collectively "worse off."
23. If our primary concern is economic efficiency, we should only recycle when the benefits exceed the costs of recycling.
24. An environmental change that benefits household residents, but harms producing firms, will cause rents to rise, but will have an ambiguous effect on wages.
Make up your own T-F question below (you will get a point, and, if it's good it may appear on the final):
25.
SHORT Answer essays: (five points each; answer 8 of 10)
1. Why were some countries in Africa (S. Africa, Botswana, et al.) unwilling
to sign the CITES treaty which encouraged banning the sales of ivory? Do
they dislike their elephants? Under what conditions would you be for
and against an ivory boycott at the consumer level?
2. In class, the role of "perceptions" was discussed extensively. What
approach to environmental benefit estimation would you recommend if benefits
are perfectly perceived (and why)? What approach would you recommend
if the impact of environmental quality on peoples' utility were not perceived
at all (and why)?
3. Describe in some detail the nature of the "Cost" of environmental
control policies (i.e. what were the main cost categories discussed in
the context of Box 1 of the five-box diagram?)
4. Relative to wages and rents in some completely average city, what would you expect wages and rents to be (higher or lower, respectively) in each of the following types of cities:
a) a city nice for consumers and average for firms
b) a city nice for firms and average for consumers
c) a city nice for both firms and consumers
d) a city nice for consumers but bad for firms
e) a city nice for firms but bad for consumers
5. Some people (e.g. the late Julian Simon and Herman Kahn among boomsters)
think "we" are getting better off over time. Others (e.g. Paul Ehrlich,
Meadows and other doomsters) think "we" are getting worse off over time.
It is, of course, possible that both groups are correct, depending on preferences
for specific goods by particular people. Consider, however, a "representative"
person--what general considerations would guide your thinking about whether
such a person is getting better off or worse off over time (HINT: first
define what you mean by "better" or "worse" off).
6. Why do environmental problems (e.g. air pollution, endangered species,
etc.) tend to occur in public good media? (HINT: "your" air, a public good,
is more likely to be polluted than is "your" land--why?)
7. Economists in their role as economists can discuss the benefits and
costs of various policies (and to whom those benefits and costs accrue)--but
does even a perfectly accurate assessment of these benefits and
costs (and their distribution) allow economists to say we should
or should not adopt a particular policy? Discuss.
8. "Pareto-efficient" actions have benefits greater than costs. "Kaldor-efficient"
actions also have benefits greater than costs. Why was it argued in class
that taking Pareto-efficient actions is not particularly controversial,
while pursuing Kaldor-efficient actions is often quite controversial?
9. In the five-box diagram "Benefits" are taken up in Box 3--list the
three main approaches described in class discussion (HINT: the third of
these approaches has three sub-components)
10. Write a question of your own choosing that I have not yet asked--perhaps
one you were hoping I would ask. Answer it (remember that the harder the
question, the less "good" the answer has to be and conversely).