Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following policy tools is inefficient even when correctly administered?

   A.

   environmental standards

   B.

   emissions taxes

   C.

   tradable emissions permits

   D.

   Pigouvian taxes

   E.

   cap and trade programs

   Which of the following policy tools is inefficient even when correctly administered?

2. Question

   An efficient Pigouvian subsidy for a good is set equal to the good’s

   A.

   external cost.

   B.

   marginal social benefit.

   C.

   marginal external cost.

   D.

   marginal external benefit.

   E.

   price at which MSC = MSB.

   An efficient Pigouvian subsidy for a good is set equal to the good’s

3. Question

   Which of the following is true in the case of a positive externality?

   A.

   MSC > MSB

   B.

   MPB > MSC

   C.

   MSB > MPB

   D.

   MPB > MSB

   E.

   MSC > MPC

   Which of the following is true in the case of a positive externality?

4. Question

   One example of a source of external benefits is

   A.

   technology spillover.

   B.

   traffic congestion.

   C.

   pollution.

   D.

   subsidies for polluters.

   E.

   taxes on environmental conservation.

   One example of a source of external benefits is

5. Question

   Marginal social benefit equals marginal private benefit plus

   A.

   marginal external benefit.

   B.

   marginal private cost.

   C.

   total external benefit.

   D.

   total external cost.

   E.

   marginal social cost.

   Marginal social benefit equals marginal private benefit plus