- - Which one of the following could be a negative externality associated with the production and sale of bananas? (O The benefits of a diet high in potassium O The cost of filtering pesticides from runoff near banana farms O The cost of harvesting bananas O The cost of transporting bananas Question 2 1 pts From the perspective of economic efficiency, an unregulated market outcome in the presence of a negative externality results in (O the correct price and quantity. (O a price that is too high and a quantity that is too low. (O a price that is too low and a quantity that is too high. (O a price and quantity that are both too high. (O a price and quantity that are both too low. Question 3 1 pts Which one of the following statements about positive externalities is false? O Government intervention can never improve the efficiency of a market with positive externalities. O Unregulated markets produce too few goods or services associated with positive externalities. O A positive externality is a positive side effect of an economic transaction that affects those not directly involved in the transaction. O Installing a solar panel produces a positive externality. A Pigovian tax (O is always greater than the social marginal cost of producing a good. (O is a progressive income tax. (O is a proportional wealth tax. (O internalizes the negative externality from producing a good. (O allows firms to externalize some of the costs of production. Question 5 1 pts What areas in the graph below represent the externality damage from a negative externality without any regulation? Price Social Marginal Cost Supply Demand Quantity O D+E+F+G+H O C+D+G O A+B+C O D+E+F+G O D+E What areas in the graph below represent the externality damage from a negative externality with a Pigovian tax that internalizes the externality? Price, Social Marginal Cost Supply Quantity (O The Pigovian tax eliminates all damage from the negative externality. O A+B+C O D+E+F+G O D+E+F+G+H O D+E Question 7 1 pts The main advantage of tradable pollution permits over Pigovian taxes is that (O they impose less of a burden on consumers. O they raise more revenue. O they are easier to administer. (O they ensure the desired level of pollution reduction. O they lead to less price volatility. ~ ~ Which one of the following is not a potential reason for people's willingness-to-pay for environmental goods? O Nonuse benefits (O Ecosystem services O Profit-making enterprises (O Taxes or subsidies O Recreation Question 9 1 pts In cost-benefit analysis, discounting refers to O calculating a lower-bound estimate of the costs of a project. (O using replacement cost methods instead of stated preference methods. O subsidizing goods with positive environmental externalities. O adjusting contingent valuations to better reflect consumers' willingness-to-pay. O reducing the weight of future costs or benefits. Question 10 1 pts What are some of the difficulties of employing environmental cost-benefit analysis? (O Calculating the probability of occurrence of some events (O Estimating all possible impacts in monetary terms O All of these answers are difficulties associated with cost-benefit analysis. (O Choosing an appropriate discount rate O Valuing human lives