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Problemset
Title
Introductory
Text
Self-Study Quiz
By Elizabeth Wheaton
Question 1
Which of the following is NOT one of the steps to identifying an
optimal outcome?
Type:
Hint:
Chapter 3, Normative Criteria for Decision Making:
Multiple Choice
Finding the Optimal Outcome
Feedback for What are the three steps to finding the optimal outcome?
all
incorrect
answers:
Answer
Graded
As
Ask all of the stakeholders what they Correct
think is the optimal outcome.
Feedback
Correct!
Discern the extent to which our
institutions produce optimal
outcomes and the divergences
between actual and optimal
outcomes.
Incorrect This is the second
step in identifying
an optimal outcome.
Identify an optimal outcome.
Incorrect This is the first step
in identifying an
optimal outcome.
Use knowledge of problems and
behavioral causes as a basis for
designing appropriate policy
solutions.
Incorrect This is the third step
in identifying an
optimal outcome.
Question 2
Which of the following statements relating efficiency and optimality is
correct?
Type:
Hint:
Chapter 3, Normative Criteria for Decision Making:
Multiple Choice
Relating Optimality to Efficiency
Feedback for What does it mean to maximize net benefit?
all
incorrect
answers:
Answer
Graded
As
Feedback
Efficient outcomes are always
better than optimal outcomes.
Incorrect What are the
definitions of efficient
outcome and optimal
outcome?
When the net benefit area is
Correct
Correct!
maximized in an optimal outcome
for public policy it is identical to
maximizing economic surplus.
Optimal outcomes are always better Incorrect What are the
than efficient outcomes.
definitions of efficient
outcome and optimal
outcome?
It is not possible to have both an
optimal outcome and an efficient
outcome at the same time.
Question 3
Type:
Multiple Choice
Incorrect What are the
definitions of efficient
outcome and optimal
outcome?
The First Equimarginal Principle ensures that ______________.
Hint:
Chapter 3, Normative Criteria for Decision Making:
Relating Optimality to Efficiency
Feedback for What is the First Equimarginal Principle?
all
incorrect
answers:
Answer
Graded
As
Feedback
resources are not
wasted
Incorrect This principle helps to minimize
wasted resources.
social cost is equal Incorrect What is the difference between cost
to social benefit
and marginal cost?
social net benefit
is maximized
Correct
Correct!
the allocation is
fair
Incorrect Inefficient allocations are inferior, but
cannot ensure that allocation is
considered fair by all parties.
Question 4
When making decisions about a potential action using a benefit-cost
approach, which of following is the most correct?
Type:
Hint:
Chapter 3, Normative Criteria for Decision Making:
Multiple Choice
Evaluating Predefined Options: Benefit-Cost Analysis
Feedback for Rationally people make choices so that they gain more
all
than they lose.
incorrect
answers:
Answer
Graded
As
Feedback
If the cost is greater than the Incorrect What do you gain from
benefit (B/C<1), support the
supporting an action that
action.
costs more than you gain
from it?
If B=C and B/C=0, support
the action.
Incorrect In this case, you neither gain
nor lose from the decision.
If the benefit is greater than Incorrect What do you gain from
the cost (B/C>1), support the
opposing an action that costs
action.
you less than you gain from
it?
If the cost is greater than the Correct
benefit, find an alternative
way to evaluate the action.
Question 5
Type:
Multiple Choice
Correct!
Opportunity cost _________________.
Hint:
Chapter 3, Normative Criteria for Decision Making:
Evaluating Predefined Options: Benefit-Cost Analysis
Feedback for Look up the definition for opportunity cost.
all
incorrect
answers:
Answer
Graded
As
Feedback
is the same as total
willingness to pay
Incorrect Total willingness to pay is
found on the demand curve.
is the foregone benefit you
must give up to get benefits
from some other choice
Correct
is irrelevant when making
environmental decisions
Incorrect Consider the different uses of
an environmental resource.
Correct!
is the dollar cost of making a Incorrect What other costs are involved
specific choice
when you must make a
choice between alternatives?
Question 6
As a method for evaluating benefits and costs for multi-year projects,
present value calculations _____________________.
Type:
Hint:
Chapter 3, Normative Criteria for Decision Making:
Multiple Choice
Comparing Benefits and Costs across Time
Feedback for Look at the definition of present value.
all
incorrect
answers:
Answer
Graded
As
Feedback
alleviate the need to look at
benefits across different time
periods
Incorrect What is the role of present
value in making choices?
determine the discount rate of
future benefits
Incorrect The discount rate is a
given and is used in
calculating present value.
determine net benefits of a
project over a short period of
time
Incorrect What is the role of present
value in making choices?
generate comparable estimates Correct
of net benefits that are received
in different time periods
Question 7
Correct!
The treatment of risk in the policy process involves ______________.
Hint:
Chapter 3, The Treatment of Risk
Type:
Feedback for Look at the major dimensions of policy-making when
Multiple Choice
all
risk is involved.
incorrect
answers:
Answer
Graded
As
Feedback
the number of different risks
involved
Incorrect What other aspects
affect risk?
the level of risk that is acceptable
Incorrect What other aspects
affect risk?
the total amount of risk involved
Incorrect What other aspects
affect risk?
both scientific/descriptive and
evaluative dimensions
Correct
Correct!
Question 8
Maximizing the net benefits that can be generated by resource
allocations across time leads to ________________.
Type:
Hint:
Chapter 3, Normative Criteria for Decision Making:
Multiple Choice
Dynamic Efficiency
Feedback for Look at the definitions of static efficiency and dynamic
all
efficiency.
incorrect
answers:
Answer
Graded
As
Feedback
static
efficiency
Incorrect Does static efficiency deal with time?
efficiency
Incorrect Efficiency is another name for static
efficiency.
dynamic
efficiency
Correct
Correct!
effectiveness
Question 9
Type:
Multiple Choice
Incorrect Effectiveness is the ability to bring about a
desired effect, not maximizing net benefit.
Each of the following supports the EPA's conclusion that pollution
control generates positive net benefits EXCEPT _________________.
Hint:
Chapter 3, Applying the Concepts: Pollution Control
Feedback for Look at the benefits and costs analyzed by the EPA over
all
the period of 1970-1990.
incorrect
answers:
Answer
Graded
As
Feedback
benefits include reductions in death rates
Incorrect This supports
the conclusion.
the costs of installing, operating, and
maintaining pollution control equipment
were passed on to consumers in the form
of higher prices
Incorrect This supports
the conclusion.
benefits include reductions in many lifethreatening diseases
Incorrect This supports
the conclusion.
using the optimal policy mix created the
net benefits found by the EPA's study
Correct
Correct!
Question 10
Which of the following is an issue when calculating a benefit-cost
estimation?
Type:
Hint:
Chapter 2, Applying the Concepts: Issues in Benefit
Multiple Choice
Estimation
Feedback for What are the issues of benefit estimation?
all
incorrect
answers:
Answer
Graded
As
Feedback
Primary versus secondary effects
Incorrect
This is an
issue.
The geographic scale at which the benefits
are measured
Incorrect
This is an
issue
The non-monetary value of an action
Incorrect
This is an
issue.
All of the above are issues.
Correct
Correct!