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21 Cards in this Set
- Front
- Back
The optimal level of pollution abatement is the level at which the _____ of abatement equals the _____ of abatement.
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marginal benefit, marginal cost
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The marginal cost of abatement typically _____ (increases/decreases) with the level of abatement.
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increases
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In the case of sulfur dioxide pollution, the marginal benefit curve is _____ (positively sloped/negatively sloped/horizontal/vertical).
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horizontal.
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What is the private cost of production?
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The production cost borne by a producer, which typically includes the costs of labor, capital, and materials.
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What is the external cost of production?
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is the cost incurred by someone other than the producer.
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What is social cost of production?
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is the sum of the private cost and the external cost.
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What is pollution tax?
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a tax or charge equal to the external cost per unit of pollution.
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The private cost of production includes the amount a firm pays for _____, _____, and _____.
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cost of labor, capital, and materials.
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The external cost of production is the cost incurred by _____.
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someone other than producer.
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The social cost of production equals the _____ cost plus the _____ cost.
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private cost, external cost.
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A pollution tax will decrease the amount of pollution a firm generates if the tax exceeds the _____of abatement.
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marginal cost,
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compared to a pollution tax, a uniform-abatement policy is _____ (more/less) efficient because it does not exploit differences in _____ across firms.
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less, abatement cost
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The "command" part of a command-and-control pollution policy specifies a _____ for each firm.
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a certain volume of pollution and requires the abatement be done with a particular technology
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A command-and-control policy is likely to be inefficient because it requires firms to use ________.
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the same abatement technologies.
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A pollution tax will decrease the amount of pollution a firm generates if the tax exceeds the _____of abatement.
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marginal cost,
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compared to a pollution tax, a uniform-abatement policy is _____ (more/less) efficient because it does not exploit differences in _____ across firms.
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less, abatement cost
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The "command" part of a command-and-control pollution policy specifies a _____ for each firm.
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a certain volume of pollution and requires the abatement be done with a particular technology
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A command-and-control policy is likely to be inefficient because it requires firms to use ________.
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the same abatement technologies.
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What is marketable permits?
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A system under which the government picks a target pollution level for a particular area, issues just enough pollution permits to meet the pollution target, and allows firms to buy and sell the permits; also know as a cap and trade system.
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A decrease in the supply of marketable pollution permits will shift the supply curve for permits to the _____ and _____ the equilibrium price of permits.
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left, increasing
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A technological advance that decreases abatement cost will _____ the demand for marketable pollution permits and ______ the equilibrium price.
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decrease, decrease
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