Chapter 19
The Cost of Pollution

Find the correct answer for each question.

1. Which one of these economists developed the idea that the damage caused by utilising a natural resource should be the responsibility of the polluter?

   1.   ?    Milton Friedman
   2.   ?    Arthur Cecil Pigou
   3.   ?    John Maynard Keynes

2. An externality is:

   1.   ?    The cost of a product which also include utilization of common property.
   2.   ?    An unintended side-effect of an activity on the market.
   3.   ?    The cost of a product that is calculated as a tax covering the environmental value that is destroyed by an activity.

3. Commons are:

   1.   ?    Resources with no or ill-defined ownership
   2.   ?    Areal resources that are owned collectively by people occupying the area
   3.   ?    Another word for end consumers on the market

4. The invisible hand is:

   1.   ?    The idea that the market need the state as a stabilizing force on the market of consumers and producers
   2.   ?    The idea that consumer demand in the market economy also safeguard common properties
   3.   ?    The idea that the combined self-interest of all agents on the market will ensure mutual benefit for all

5. Who coined the expression ”tragedy of the commons”?

   1.   ?    John Marshall
   2.   ?    Ernst Haeckel
   3.   ?    G. Hardin

6. The abbreviation PPP means:

   1.   ?    Preventive Pollution Policy
   2.   ?    Polluter Pay Principle
   3.   ?    Prerogative Principle of Pollution

7. Deposit-refund system is a system where:

   1.   ?    A refundable product charge included in the sales price which is returned to the consumer when the refuse product is given back to the shop, for example refund on PET bottles and aluminium cans.
   2.   ?    An environmental tax is added on products with a negative impact on the environment, for example tax on petrol.
   3.   ?    A producer pays a charge to utilize a natural resource

8. Which environmental tax base is largest in Europe?

   1.   ?    Littering
   2.   ?    Energy
   3.   ?    Cars

9. Green tax shift means:

   1.   ?    An increase on environmental taxation and a decrease on tax on capital.
   2.   ?    An increase on environmental taxation and decrease on sales tax.
   3.   ?    An increase on environmental taxation and a decrease on income tax.

10. Tragedy of the commons means:

    1.   ?    The deteriotation of a common resource which use is unregulated and open for all to exploit.
    2.   ?    The problem of democracy and the lack of sufficient knowledge among the general public which illustrate the phenomena of bad majority decisions.
    3.   ?    The problem of indirect parliamentary decisions representing a common interest and the lack of scientific knowledge of the consequences of decisions.