Question

1) Knowing that government regulators operate in a world of incomplete information: Select ALL that apply.

a. Liberals emphasize market failures over government failures.

b. A conservative perspective holds that government should not try to fix market failures.

c. Conservatives argue that a hands-off (laissez-faire) attitude is generally best.

d. Liberals view active government as unnecessary.

e. Conservatives emphasize market failure over government failure.

2) Suppose in the market for cigarettes the elasticity of demand is 0.1 implying that demand is ___________, and the elasticity of supply is 2 implying that supply is ___________. The government decides to tax cigarette producers in hopes of raising prices and reducing the quantity demanded. The tax burden falls heaviest on ___________.

a. Inelastic; Elastic; Producers

b. Elastic; Inelastic; Consumers

c. Inelastic; Elastic; Consumers

d. Inelastic; Inelastic; Producers

e. Elastic; Inelastic; Producers

3) In the social welfare function SW=U_Al(X_Al, P)+U_Jo(r*X_Jo, r*P) let X be a normal good, P stand for pollution, and r reflect discounting, with Al and Jo both being exposed to a negative externality from pollution. Further assume that Jo is not yet born, but is impacted by the pollution since it lasts 100's of years. This SW function: Select ALL that apply.

a. Pays special attention to pollution victims.

b. Follows a pure Efficiency Standard.

c. Follows a Sustainability Standard.

d. Follows a Safety Standard.

e. Pays special attention to future generations.

4) Why is it more likely for a dirty factory to locate in a poor area rather than a wealthy area? Select ALL that apply.

a. It is cheaper for the factory to compensate the community for negative externalities if required to.

b. It is more efficient.

c. Wealthy individuals have a lower monetary benefit for environmental quality.

d. Poor individuals don't care about the environment.

e. Poor individuals have a lower monetary benefit for environmental quality.

5) A "safe" level of environmental harm: Select ALL that apply.

a. Is the same across all types of harm.

b. Is defined by the EPA according to a mortality risk of one in a million.

c. Is typically defined by mortality risk.

d. Can be clearly stated for all health risks.

e. Is universally agreed upon.

f. Is often determined on a case-by-case basis.

6) At the efficient level of pollution: Select ALL that apply.

a. Net benefits of reduction are maximized.

b. The total costs and benefits of reduction are equal.

c. A potential Pareto improvement exists.

d. The marginal benefits and costs of reduction are equal.

e. It is impossible to make one person better-off without making another person worse-off.

Answer 1

Hi! Welcome to Chegg!

Due to presence of Chegg policy, I am answering one question.

2) Suppose in the market for cigarettes the elasticity of demand is 0.1 implying that demand is ___________, and the elasticity of supply is 2 implying that supply is ___________. The government decides to tax cigarette producers in hopes of raising prices and reducing the quantity demanded. The tax burden falls heaviest on ___________.

Ans: c. Inelastic; Elastic; Consumers

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