Econ 350 Marietta College
Exam 3 Fall 2002
Part I: Each is worth 2 points.
1. Command and control regulations:
a) are appropriate when the optimal level of pollution is at or near zero.
b) are useful economic tools for encouraging appropriate environmental action.
c) are appropriate when monitoring costs are low.
d) are clearly more equitable than incentive-based programs.
2. Marketable pollution permits require a slightly more complex system when there are geographic
differences in pollution effects. One possible approach to designing a system of permits would be to:
a) use technology-based standards in conjunction with the permits.
b) auction off the permits one-by-one over time until all permits have been allocated.
c) simply give the permits away to polluters based on their historic emissions rate.
d) establish separate markets for each subregion.
3. Emission taxes are generally regarded as efficient since:
a) they raise the maximum amount of revenue possible for the IRS.
b) they encourage all pollution sources to completely eliminate their emissions.
c) they require environmental regulators to know the individual source marginal abatement cost functions.
d) they encourage all pollution sources to adjust their emissions so that the equimarginal principle is
satisfied.
4. Emission taxes are more likely to be effective when applied to:
a) nonpoint sources of pollution
b) point sources of pollution.
5. The two defining features of command-and-control regulation are:
a) cost-effectiveness and flexible standards.
b) monitoring and compliance.
c) uniform standards and technology-based regulations.
d) pollution taxes and marketable permits.
