Chapter 15 — Quiz

Multiple choice

Q1. Climate change is an externality because: a) The government causes it b) CO₂ emitters impose costs on others who don't consent and aren't compensated c) It only affects rich countries d) It only affects future generations

Q2. Three reasons climate change is the hardest externality problem: a) It's local, temporary, and reversible b) It's global, intertemporal, and irreversible c) It only affects agriculture d) It's caused by a single industry

Q3. The social cost of carbon estimates: a) The cost of producing one ton of carbon b) The total economic damage from one additional ton of CO₂ emitted c) The price of coal d) The cost of carbon capture

Q4. The U.S. government's 2023 estimate of the social cost of carbon is approximately: a) $7/ton b) $50/ton c) $190/ton d) $1,000/ton

Q5. The Stern-Nordhaus debate is primarily about: a) Whether climate change is real b) Whether carbon pricing is a good idea c) The discount rate — how much to weight future damages relative to present costs d) Whether cap-and-trade is better than carbon tax

Q6. A higher discount rate implies: a) More aggressive climate action now b) Less aggressive climate action now (future damages are valued less) c) No change in policy d) Higher carbon prices

Q7. About what percentage of economists support some form of carbon pricing? a) 30% b) 50% c) 70% d) 90%

Q8. The Inflation Reduction Act (2022) primarily uses which policy approach? a) Carbon tax b) Cap-and-trade c) Subsidies and tax credits for clean energy d) Ban on fossil fuels

Q9. A "carbon border adjustment" is: a) A subsidy for exports b) A tariff on imports from countries without carbon pricing c) A tax on all international trade d) A regulation on shipping

Q10. The "just transition" refers to: a) A gradual phaseout of all government programs b) Ensuring that workers and communities dependent on fossil fuels are not left behind by decarbonization c) A transition from democracy to technocracy d) Moving to nuclear power

Q11. Present bias (Chapter 10) affects climate policy because: a) People prefer future costs to present costs b) The costs of climate action are immediate and visible while the benefits are distant and diffuse c) People discount the present d) Climate change only affects the present

Q12. The Paris Agreement (2015) relies on: a) Mandatory emissions cuts with penalties for non-compliance b) Voluntary national pledges with no enforcement mechanism c) A global carbon tax d) A global cap-and-trade system

Short answer

SA1. What is the social cost of carbon and why does its estimate vary so much?

SA2. Explain the Stern-Nordhaus disagreement in your own words. What is each side really arguing about?

SA3. Why do most economists prefer carbon pricing to regulation for climate policy? Why does most real-world climate policy use regulation instead?

SA4. What is the IRA and how does it approach climate policy differently from a carbon tax?

SA5. Why is climate change a collective action problem?

True / False

TF1. The social cost of carbon is a purely scientific number with no value judgments. (True / False)

TF2. A carbon tax and a cap-and-trade system produce identical outcomes under all conditions. (True / False)

TF3. The Inflation Reduction Act includes a federal carbon tax. (True / False)

TF4. The EU Emissions Trading System is the world's largest carbon market. (True / False)

TF5. About 90% of surveyed economists support some form of carbon pricing. (True / False)

Selected answers in appendices/answers-to-selected.md.