Environmental Economics An Introduction 7th Edition By Field Test Bank

ISBN-13: 978-0078021893, ISBN-10: 9780078021893

Chapter 10

Decentralized Policies:  Liability Laws, Property Rights, and Voluntary Action

Multiple Choice Questions

1. When people can negotiate with each other to come up with mutually satisfactory ways to deal with environmental externalities with little or no involvement of the government this is referred to as ________.
   A.moral suasion
   B. an incentive-based approach
   C. a decentralized approach
   D. a centralized approach

Difficulty: Easy

2. ________ suggest(s) that in the presence of an externality bargaining can achieve the socially efficient equilibrium regardless of the initial allocation of property rights.
   A.Liability laws
   B. The Coase theorem
   C. The legal doctrine of standing
   D. The burden of proof

Difficulty: Easy.

3. Suppose both a chemical company and a commercial fishery operate on the same river. According to the Coase theorem the socially efficient level of emissions can be reached through bargaining between the two parties if ________ has the right to use the river.
   A.just the chemical company
   B. just the fishery
   C. either the chemical company or the fishery
   D. the regulator

Difficulty: Easy.

4. Which of the following is NOT a reason why private bargaining can fail to achieve the socially optimal level of emissions?
   A.The resource is an open-access good making it difficult to assign property rights.
   B. Net social gains depend on the initial assignment of property rights.
   C. Restrictions on use prevent property owners from capturing social values.
   D. Transaction costs are too high due to the necessity to include many parties in the negotiations.

Difficulty: Moderate

5. Goods that give the same level of pleasure as ordinary goods but that involve less environmental damage in either their production, use or disposal are known as ________.
   A.generic goods
   B. luxury goods
   C. green goods
   D. environmental goods

Difficulty: Easy.

6. Liability laws are one of the ways to ________ an externality.
   A.internalize
   B. eliminate
   C. increase
   D. privatize

Difficulty: Easy.