ENVIRONMENTAL ECONOMICS CH 1 AND CH2

The Circular Flow Model explicitly accounts for environmental impacts such as pollution.

• TRUE

• FALSE

Pollution can be completely eliminated if proper environmental policies are implemented.

• TRUE

• FALSE

Anthropogenic pollutants are those that originate from natural sources, such as volcanic eruptions.

• TRUE

• FALSE

Which law states that energy cannot be created or destroyed?

• Law of Diminishing Returns
  

• First Law of Thermodynamics
  

• Second Law of Thermodynamics
  

• Law of Supply and Demand

What type of pollution originates from non-stationary sources such as vehicles?

• Point source pollution
  

• Nonpoint source pollution
  

• Stationary source pollution
  

• Localized pollution

Allocative efficiency occurs when:

• Resources are distributed such that MB = MC
  

• Total revenue equals total costs
  

• Firms minimize their production costs
  

• The government regulates all prices

Producer surplus represents:

• The additional benefit to consumers from buying at a lower price
  

• The net gain to sellers, measured as the difference between market price and marginal cost
  

• The total revenue generated by firms
  

• The sum of all consumer expenditures in the market

A shortage in a market occurs when:

• Demand exceeds supply at the current price
  

• Supply exceeds demand at the current price
  

• The government imposes a price floor
  

• Production costs are lower than equilibrium price

A market is defined as the interaction between producers and consumers for the exchange of a well-defined commodity.

• TRUE

• FALSE

The willingness to pay (WTP) reflects the marginal benefit a consumer derives from consuming an additional unit of a good.

• TRUE

• FALSE