Classify each of the following statements as either true or false. Give a short (one-paragraph) explanation for each of your choices. (a) Contingent valuation studies are able to estimate both use and non-use values of an environmental amenity. (b) Because production function approaches are related to cost curves, they are best suited to measuring the costs of environmental problems and cannot be used to measure the benefits from an environmental amenity.

Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the total costs of cleaning up the sewage to different levels, together with the total benefits of doing so. (Benefits include environmental, recreational, health, and industrial benefits.) Using the information in Table 12.8, calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. See Production, Costs and Industry Structure if you need a refresher on how to calculate marginal costs. What is the optimal level of sewage for this city? Why not just pass a law that films can emit zero sewage? After all, the total benefits of zero emissions exceed the total costs.

Name two public goods and explain why they are public goods.

The state of Colorado requires oil and gas companies who use fracking techniques to retune the land to its original condition after the oil and gas extractions. Table 12.9 shows the total cost and total benefits (in dollars) of this policy. Calculate the marginal cost and the marginal benefit at each quantity (acre) of land restored. See Production. Costs and Industry Structure if you need a refresher on how to calculate marginal costs and benefits. If we apply marginal analysis, what is the optimal amount of land to be restored?

What are better-defined property rights and what incentive do they provide to account for external costs?

Why might private markets tend to provide too few incentives for the development of new technology?

Why has coal dominated as a fuel source for 24/7/365 electricity generation for so many decades?

In what ways (it) company investments in research and development create positive externalities?

The chapter defines private enterprise as a characteristic of market-oriented economies. What would public enterprise be? Hint: It is a characteristic of command economies.

Can extreme levels of pollution hurt the economic development of a high-income country? Why or why not?