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ENVIS - Environmental Economics Centre - Quiz

 

 

 

         

Quiz 6

 

1. In comparing a subsidy for pollution control with a tax on pollutant emissions ,

(i)Both subsidy and tax result in the same marginal conditions for pollution emissions.

(ii)The subsidy results in excess production in the polluting industry, in both short and long run.

 A. 

Only (ii) is true

 B.  

Only (i) is true

 C.  

Both (i) and (ii) hold good.

 D.  

None hold good.

    

2. If a Monopolist is the sole producer of a goods in a market, and also produces pollution as a by - product :

(i) A Pigovian fee will make matters worse.
(ii) A Pigovian fee will make matters better.
(iii) A Pigovian fee will raise cost of production and thus reduce output of the monopolised good even more, which increases the efficiency associated with monopoly.
(iv)A Pigovian fee will lower the cost of production and thus reduce output of monopolised good even more, which will increase the inefficiency associated with the monooly.
(v)A Pigovian fee will raise cost of production and thus reduce output of the monopolised good even more, which increases the ineffficiency associated with monopoly.

 A. 

Only (i) and (ii) hold good.

 B.  

Only (i) and (v) hold good.

 C.  

Only (ii) and (iv) hold good.

 D.  

Only (iii) and (ii) hold good.

    

3. In Command and Control regulation  system the regulator

(i) makes the pollution control decisions for the firm, reducing firms choice.
(ii) gives greater certainity as to how much pollution will be emitted.
(iii) Very less expensive than efficient alternatives.

 A. 

(i) and (ii) hold good.

 B.  

(ii) and (iii) hold good.

 C.  

(i) and (iii) hold good.

 D.  

All the three hold good.

    

4. Pollution control system through Economic Incentives

(i) Places decision making for pollution control in the hands of those most familiar with pollution control options - polluters.
(ii) Keeps cost high so no scope for innovation.
(iii) Keeps cost low and also to spur innovation.

 A. 

None of them hold good.

 B.  

(i) and (ii) and (iii) hold good.

 C.  

(ii) and (iii) hold good.

 D.  

(i) and (iii) hold good.