5

Student: ___________________________________________________________________________

1. Determining a target level of environmental quality is an example of _______.

A. positive policy analysis
B. positive economics
C. normative policy analysis
D. benefit-cost analysis
2. For certain pollutants with a(n) _______, emissions or ambient quality up to a certain level cause
_________ damages.
A. threshold; no
B. ambient concentration; no
C. threshold; severe
D. ambient concentration; severe
3. A marginal damage function that becomes vertical at high levels of emissions represents _______.
A. a threshold
B. an infinite ambient concentration
C. a toxic pollutant
D. an environmental catastrophe
4. A(n) ________ shows how damages are related to the concentration of a waste product contained in the
ambient environment.
A. emission damage function
B. ambient damage function
C. marginal damage function
D. ambient concentration
5. For a marginal damage cost function equal to: MD = 0.8E, the marginal damage cost of the 50th unit of
emissions is _______.
A. $4
B. $40
C. $1,000
D. $2,000
6. In the following figure, the marginal damage cost of the 25th unit of emissions is equal to _______.

A. $10
B. $25
C. $125
D. $250
7. In the following figure, the total damage cost of 25 units of emissions is equal to _______.

A. $10
B. $125
C. $250
D. $625
8. In the following figure, the uncontrolled level of emissions is _______.

A. 80
B. 40
C. 160
D. impossible to determine from the information provided
9. In the following figure, the marginal abatement cost of abating the 20th unit of emissions is _______.

A. $40
B. $200
C. $400
D. impossible to determine from the information provided
10. In the following figure, the total abatement cost of abating 20 units of emissions is _______.

A. $40
B. $400
C. $800
D. impossible to determine from the information provided
11. Suppose there are three polluting sources with MAC1 = 100 - 4E, MAC2 = 80 - 2E and MAC3 = 60 -
0.5E. When MAC equals $10, the aggregate level of abatement for these sources would be _______.
A. 175 units
B. 157.5 units
C. 212.5 units
D. impossible to determine from the information provided
12. Suppose there are three polluting sources with MAC1 = 75 - 0.25E, MAC2 = 120 - 4E and MAC3 = 50 -
0.5E. When MAC equals $20, the aggregate level of abatement for these sources would be _______.
A. impossible to determine from the information provided
B. 150 units
C. 305 units
D. 555 units
13. For a firm with more than one source of output with differing cost structures, its ________ will be
minimized when its ________ are equalized across sources.
A. marginal production costs; production levels
B. total production costs; production levels
C. total production costs; marginal production costs
D. marginal production costs; total production costs
14. For a firm with more than one source of emissions, the ________ states that the total costs of abating a
given abatement target will be minimized when the marginal costs of abatement are ________ across
sources.
A. equimarginal principle; equalized
B. law of one price; equalized
C. equimarginal principle; minimized
D. Coase theorem; equalized
15. Under what circumstances would a firm with more than one source of emissions minimize its total costs
of abatement by setting abatement levels equal at each source?
A. This method will always result in the firm minimizing its total abatement costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.
16. Under what circumstances would a firm with more than one source of production minimize its total costs
of production by setting production levels equal at each source?
A. This method will always result in the firm minimizing its total production costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.
17. The study of what ought to be such as determining the socially efficient level of emissions is known as
normative economics.
True False
18. Describing and explaining economic events that have taken place in the real world is known as positive
economics.
True False
19. For a single, non-accumulative pollutant, when no threshold exists the marginal damage function begins
at the origin.
True False
20. The height of the marginal damage curve at a particular level of emissions shows how much total
damages change if there is a small change in the quantity of emissions.
True False
21. The least costly way of achieving reductions in emissions for a group of polluting sources is depicted by
the aggregate marginal abatement cost function of the group of sources.
True False
22. The equimarginal principle can only be applied at the level of one firm with multiple plants all producing
the same good and pollutant.
True False
23. Briefly define positive and normative economics and give an example of each concept.

24. Draw a diagram of the marginal abatement cost curve described by: MAC = 100 - 2E. What is the
uncontrolled level of emissions? What is the marginal abatement cost of the 40th unit of abatement? What
is the total abatement cost of 40 units of abatement?

25. Draw a diagram of the marginal abatement cost curve described by: MAC = 90 - 3E. What is the
uncontrolled level of emissions? What is the marginal abatement cost of the 10th unit of abatement? What
is the total abatement cost of 10 units of abatement?
26. Let MAC1 = 80 - 2E and MAC2 = 50 - E. Graph each function and graphically derive the aggregate MAC
curve.

The following diagram presents the marginal damage cost (MDC) and marginal abatement cost (MAC)
curves for a particular industry.

27. What is the socially efficient level of emissions for this industry?

28. What is the socially efficient level of abatement for this industry?

29. What is the total damage cost at the socially efficient level of emissions for this industry?
30. What is the total abatement cost at the socially efficient level of emissions?

31. What is the total social cost at the socially efficient level of emissions?
 5 Key
1. Determining a target level of environmental quality is an example of _______.
A. positive policy analysis
B. positive economics
C. normative policy analysis
D. benefit-cost analysis
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #1
Learning Objective: 05-01 Distinguish between positive and normative economics.
2. For certain pollutants with a(n) _______, emissions or ambient quality up to a certain level cause
_________ damages.
A. threshold; no
B. ambient concentration; no
C. threshold; severe
D. ambient concentration; severe
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #2
Learning Objective: 05-02 Define the marginal damage function and distinguish among four different shapes and what each means.
3. A marginal damage function that becomes vertical at high levels of emissions represents _______.
A. a threshold
B. an infinite ambient concentration
C. a toxic pollutant
D. an environmental catastrophe
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #3
Learning Objective: 05-02 Define the marginal damage function and distinguish among four different shapes and what each means.
4. A(n) ________ shows how damages are related to the concentration of a waste product contained in
the ambient environment.
A. emission damage function
B. ambient damage function
C. marginal damage function
D. ambient concentration
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #4
Learning Objective: 05-02 Define the marginal damage function and distinguish among four different shapes and what each means.
5. For a marginal damage cost function equal to: MD = 0.8E, the marginal damage cost of the 50th unit
of emissions is _______.
A. $4
B. $40
C. $1,000
D. $2,000
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #5
Learning Objective: 05-03 Distinguish between marginal and total damages and illustrate their derivation graphically.
6. In the following figure, the marginal damage cost of the 25th unit of emissions is equal to _______.

A. $10
B. $25
C. $125
D. $250
Difficulty: Easy
Field - Chapter 05 #6
Learning Objective: 05-03 Distinguish between marginal and total damages and illustrate their derivation graphically.
7. In the following figure, the total damage cost of 25 units of emissions is equal to _______.

A. $10
B. $125
C. $250
D. $625
Difficulty: Easy
Field - Chapter 05 #7
Learning Objective: 05-03 Distinguish between marginal and total damages and illustrate their derivation graphically.
8. In the following figure, the uncontrolled level of emissions is _______.

A. 80
B. 40
C. 160
D. impossible to determine from the information provided
Difficulty: Easy
Field - Chapter 05 #8
Learning Objective: 05-04 Interpret the meaning of the marginal abatement cost curve and illustrate graphically the distinction between marginal and total costs of
abatement.
9. In the following figure, the marginal abatement cost of abating the 20th unit of emissions is _______.

A. $40
B. $200
C. $400
D. impossible to determine from the information provided
Difficulty: Easy
Field - Chapter 05 #9
Learning Objective: 05-04 Interpret the meaning of the marginal abatement cost curve and illustrate graphically the distinction between marginal and total costs of
abatement.
10. In the following figure, the total abatement cost of abating 20 units of emissions is _______.

A. $40
B. $400
C. $800
D. impossible to determine from the information provided
Difficulty: Easy
Field - Chapter 05 #10
Learning Objective: 05-04 Interpret the meaning of the marginal abatement cost curve and illustrate graphically the distinction between marginal and total costs of
abatement.
11. Suppose there are three polluting sources with MAC1 = 100 - 4E, MAC2 = 80 - 2E and MAC3 =
60 - 0.5E. When MAC equals $10, the aggregate level of abatement for these sources would be
_______.
A. 175 units
B. 157.5 units
C. 212.5 units
D. impossible to determine from the information provided
Accessibility: Keyboard Navigation
Difficulty: Moderate
Field - Chapter 05 #11
Learning Objective: 05-05 Show graphically how to aggregate marginal abatement cost curves.
12. Suppose there are three polluting sources with MAC1 = 75 - 0.25E, MAC2 = 120 - 4E and MAC3
= 50 - 0.5E. When MAC equals $20, the aggregate level of abatement for these sources would be
_______.
A. impossible to determine from the information provided
B. 150 units
C. 305 units
D. 555 units
Accessibility: Keyboard Navigation
Difficulty: Moderate
Field - Chapter 05 #12
Learning Objective: 05-05 Show graphically how to aggregate marginal abatement cost curves.
13. For a firm with more than one source of output with differing cost structures, its ________ will be
minimized when its ________ are equalized across sources.
A. marginal production costs; production levels
B. total production costs; production levels
C. total production costs; marginal production costs
D. marginal production costs; total production costs
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #13
Learning Objective: 05-06 Explain the equimarginal principle and how it applies to marginal abatement costs.
14. For a firm with more than one source of emissions, the ________ states that the total costs of abating a
given abatement target will be minimized when the marginal costs of abatement are ________ across
sources.
A. equimarginal principle; equalized
B. law of one price; equalized
C. equimarginal principle; minimized
D. Coase theorem; equalized
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #14
Learning Objective: 05-06 Explain the equimarginal principle and how it applies to marginal abatement costs.
15. Under what circumstances would a firm with more than one source of emissions minimize its total
costs of abatement by setting abatement levels equal at each source?
A. This method will always result in the firm minimizing its total abatement costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.
Accessibility: Keyboard Navigation
Difficulty: Moderate
Field - Chapter 05 #15
Learning Objective: 05-06 Explain the equimarginal principle and how it applies to marginal abatement costs.
16. Under what circumstances would a firm with more than one source of production minimize its total
costs of production by setting production levels equal at each source?
A. This method will always result in the firm minimizing its total production costs.
B. When each source has identical marginal cost of production structures.
C. When each source has identical marginal abatement cost structures.
D. When each source has identical marginal damage cost structures.
Accessibility: Keyboard Navigation
Difficulty: Moderate
Field - Chapter 05 #16
Learning Objective: 05-06 Explain the equimarginal principle and how it applies to marginal abatement costs.
17. The study of what ought to be such as determining the socially efficient level of emissions is known as
normative economics.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #17
Learning Objective: 05-01 Distinguish between positive and normative economics.
18. Describing and explaining economic events that have taken place in the real world is known as
positive economics.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #18
Learning Objective: 05-01 Distinguish between positive and normative economics.
19. For a single, non-accumulative pollutant, when no threshold exists the marginal damage function
begins at the origin.
TRUE

When no threshold exists, the very first unit of emissions has an impact on the environment.

Accessibility: Keyboard Navigation

Difficulty: Easy
Field - Chapter 05 #19
Learning Objective: 05-02 Define the marginal damage function and distinguish among four different shapes and what each means.
20. The height of the marginal damage curve at a particular level of emissions shows how much total
damages change if there is a small change in the quantity of emissions.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #20
Learning Objective: 05-03 Distinguish between marginal and total damages and illustrate their derivation graphically.
21. The least costly way of achieving reductions in emissions for a group of polluting sources is depicted
by the aggregate marginal abatement cost function of the group of sources.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #21
Learning Objective: 05-05 Show graphically how to aggregate marginal abatement cost curves.
22. The equimarginal principle can only be applied at the level of one firm with multiple plants all
producing the same good and pollutant.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Easy
Field - Chapter 05 #22
Learning Objective: 05-06 Explain the equimarginal principle and how it applies to marginal abatement costs.
23. Briefly define positive and normative economics and give an example of each concept.

Positive economics studies "what is" by describing or explaining events that actually occur in the
real world. An example of positive economics is the analysis of market data on actual prices and
sales volumes of a particular good (many other examples are possible here). Normative economics
studies "what ought to be" such as what the outcome of the economy or public policy ought to be
in order to satisfy a certain goal (eg., fairness, social efficiency, etc.). An example of normative
economics is designing an environmental policy that treats people of different income levels fairly
(again numerous other examples are possible).

Difficulty: Easy
Field - Chapter 05 #23
Learning Objective: 05-01 Distinguish between positive and normative economics.