econ 2100 test 2 dinkar

hedonic price method

a good or service can be values for characteristics it possesses

averting expenditure example

air purifier

the damage function method estimates all aspects of incremental benefits (T/F)

False

damage function menthod

measures benefits based on a technical relationship between an environmental containment and its observed damages

averting expenditure method

uses changes in spending on goods that are substitutes for environmental quality to measure willingness to pay

existance value example

if an individual derives utility from the preservation of an endangered species

the market price of a house depends on several attributes including the environmental quality around the house, so the environmental quality has a

implicit price

Capital Cost

does not vary based on the amount of abatement

the incremental cost of a policy is the difference between the total social cost after the policy and the total social cost before the policy (T/F)

true

Economic costs

provide a more accurate measure of resource utilizations

implicit costs

are rarely captures in analyses

the accounting cost of an environmental policy is 100$ and the implicit costs are 400$ Then what is the accurate measure of resource utilization associated with this policy

300$

why is a gas tax not considered a better alternative to a carbon tax

it is not broad based

united states first opted to (partially) ban the use of CFC's in 1978 (T/F)

true

the production of ozone depleting substances can be modeled as a negative externality (T/F)

true

A controversy in the climate change debate is the predicted response to increased production of greenhouse gases (T/F)

true

In the US market for CFCs the phaseout of CFC will lead to a ____ in price of CFC

increase

which pollution charges have been commonly proposed to tackle carbon dioxide emissions

gas tax, carbon tax, Btu tax

climate change _____ due to human activities

might be

the major issues associated with global air pollution

climate change and ozone depletion

the most likely explanation agreed on by scientists as the cause of ozone depletion is

CFC- chlorofluorocarbons

If an abatement standard is set to satisfy allocative efficiency on a national scale, that standard would not be optimal at the regional level unless the national MSB and MSC functions were identical to those at the regional level? (T/F)

true

an environmental standard that specifies a pollution limit along with the equipment to be used to achieve that limit is called a performance based standard (T/F)

false

The marginal cost of enforcement (MCE) must be added vertically to the MAC(market) to derive the marginal social cost (MSC) of abatement function (T/F)

true

In a deposit refund system the deposit makes the polluter internalize the externality caused by improper waste dispoal by absorbing the cost of any damage it might generate in advance (T/F)

true

according to the cost- effective abatement criteria all polluting sources would abate pollution up to the point where their individual total abatement cost (TAC) levels were equal (T/F)

false

a pollution charge can be implemented as an emission charge (T/F)

true

In a cap and trade system with two polluters with different costs of marginal abatement (MAC) the high cost polluter will buy (identify the strict condition) a permit from the low cost polluter as long as....

price charged by the low cost polluter is lower than the MAC of the high cost polluter

market based instruments are a secondary form of control when it comes of environmental problems (T/F)

true

pollution charge

the most commonly used market based instrument to control pollution internally is a

For a pigouvian tax to be effective the unit tax must be equal to the marginal external cost at the socially efficient output level (T/F)

true