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Practice mode Natural Resources and the Environment Toward Sustainable Development

Air pollution from car exhausts and water pollution from steel plants are examples of what?

Correct answer A. Negative externalities

Explanation

These are costs imposed on third parties who are not part of the transaction, which economists call negative externalities or external diseconomies.

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Question 03 Natural Resources and the Environment Toward Sustainable Development

Consider these possible effects of growth in the booming export sector: I. It reduces the price of foreign exchange. II. It slows other sectors’ growth by reducing incentives to export other goods. III. It reduces incentives to substitute domestic goods for imports. IV. It raises factor and input prices for non-booming sectors. Which of them does Michael Roemer’s three-sector model identify?

Correct answer D. I, II, III and IV

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Question 04 Natural Resources and the Environment Toward Sustainable Development

Coase’s theorem states that, if property rights are clearly defined and legally enforceable and transaction costs are not prohibitive, what will happen?

Correct answer D. Participants will organize their transactions

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