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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.

    

5. In a Competitive Permit Market
(i) The initial allocation of permits is not important.
(ii) The initial allocation of permit is important.
(iii) With market power on the part of any polluter, the initial distribution deos not matters.
(iv) With market power on the part of any polluter, the initial distribution matters.

 A. 

Only (i) holds good.

 B.  

(ii) and (iii) holds good.

 C.  

Only (i) and (iv) holds good.

 D.  

(ii) and (iv) holds good.

    

6. For a Regulator  operating under uncertainity on the marginal cost of pollution control , the realtive slopes of Marginal Saving (MS) and Marginal Damage (MD) curves provide guidance on choosing right instrument - emission fee on market permit.

(i) If marginal Damage is more steeply sloped than the Marginal saving from pollution Marketable Permits are preferred, otherwise emission Fees are preferred.
(ii) If Marginal Damage is less steeply sloped than Marginal Saving from pollution, marketable Permits and preferred , otherwise emission fees are preferred.
(iii) If marginal damage is more steply sloped than the Marginal Saving from pollution ,Emission Fees are preferred , otherwise Marketable permits are prefered.

 A. 

Only (ii) is right.

 B.  

Only (i) holds good.

 C.  

Both (i) and (iii) are right.

 D.  

Only (iii) is right.

    

7. When Marginal Savings are uncertain to the regulator

 A. 

A Marketable Permit system with a subsidy for emitting less than permitted and a penalty for emitting more than permitted will perform worse than either an emission fee alone or a marketable permit system alone.

 B.  

A Emission Fees system with a subsidy for emitting less than permitted and a Penalty for emitting more than permitted will perform worse than either an Emission Fee alone or a Marketable Permit system alone.

 C.  

A Emission Fee system with a subsidy for emitting less than permitted will perform better than either an emission fee alone or a marketable permit system alone.

 D.  

A Marketable permit system with Subsidy for Emitting less than permitted and a Penalty for emitting more than permitted will perform better than either an emission fe alone or marketable permit system alone.

    

8. In a competitive environment the first best strategy for a Country involved in trade is to

 A. 

Neither subsidizr but tax capital and to grant concession on environmental problems.

 B.  

Neither subsidize nor tax capital and to grant no concession on enviornmental protection.

 C.  

Subsidize, but no tax capital and no concession on environmental protectin.

 D.  

Subdizise , but tax capital and grant concession on environmental protection.

    

9. Because of the income effect on Demand for environmental quality , we would expect

 A. 

More lax environmental regulations in both rich and poorer countries.

 B.  

More stricter regulations in both rich and poor countries.

 C.  

Environmental regulations to be more lax in richer countries.

 D.  

Environmental regulations to be more lax in poorer countries.

    

  

 





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