Question

1. Trade in toxic waste between rich and poor countries…

a. Enhances global equity and global efficiency.

b. Enhances global equity but not necessarily efficiency.

c. Enhances global efficiency but not necessarily equity.

d. Enhances neither global equity nor global efficiency.

e. Should be banned under all circumstances because the net benefits are often negative.

2. The safety standard…

a. Is determined by cost-benefit analysis.

b. Encourages regulators to focus resources first on the largest risks.

c. Aligns well with the objectives of the efficiency standard.

d. Allocates disproportionately large amounts of resources on relatively small risks.

e. Is an all-time classic song (and music video) by Montreal-based Men Without Hats.

3. Which of the following can achieve dynamic efficiency when welfare per capita is growing?

a. Using a discount rate of zero.

b. Using the market interest rate.

c. Expressing all costs and benefits in present value terms.

d. Using a discount rate equal to the inflation rate.

e. All of the above can achieve dynamic efficiency.

4. The precautionary principle says…

a. When in doubt, conserve.

b. When in doubt, consume until the marginal benefit equals the marginal cost.

c. Calculate the expected value of a decision and then pursue it if the expected value is positive.

d. Substitutability depends on uniqueness, irreversibility and uncertainty.

e. People in a hierarchy rises to their level of incompetence.

Answer 1

Answer 1. C

International trade in toxic waste and hazardous substances by firms in rich industrialized countries has emerged as a regular practice but poor countries are ill equipped with management of these hazardous imports.

Answer 2. B

Safety standards depicts that proper organisation or product is maintained when we must consider the larger risk first.

Answer 3. E

Dynamic efficiency explains that if the real interest rate is below the growth rate of economy, the growth rate of population and per capita, it will fail to have dynamic efficiency.

Answer 4. A

The precautionary principle says that if some cause of action carries even a remote chance of irreparable the ecology, then you shouldn't do it no matter how great the possible advantages of the action may be.