Resources

& Environmental Economics EC307

Lekima Nalaukai Semester II, 2020

Tutorial 10 Questions
Week 12 – Callan, S. J. and Thomas, J. M. (2013) – Chapter 18

Section A: Multiple Choices

1. In terms of nonhazardous waste, the federal government is responsible for
A. every aspect of nonhazardous waste management
B. setting recycling rates for each state
C. establishing markets for recovered MSW
D. setting minimum criteria for sanitary landfills and other land disposal sites

2. Electronics wastes are a potential problem because
A. recovery rates have been declining
B. consumption of electronics products and hence waste generation are rising over time
C. some contain toxic materials
D. (b) and (c) only

3. Municipal solid waste (MSW)
A. refers to the collection of hazardous and toxic wastes disposed of in local communities
B. can cause problems if improperly managed
C. poses no health or ecological risks to society
D. is a problem only in developing countries

4. Available data on the generation of MSW in the United States indicates that
A. durable goods represent the largest proportion by weight of all product groups
B. plastics are the largest proportion by weight across all materials groups
C. containers and packaging are the largest proportion by weight of all product groups
D. none of the above

Consider the following model of the municipal solid waste (MSW) services market in the city of
Houston.

MSC = 1.5 + 1.25Q MSB = 30 – 2.5Q
MEC = 0.75Q MEB = 0

where Q is the number of trash containers serviced per household per month.

5. A flat fee pricing system for MSW services
A. ignores the positively sloped MPC of MSW services
B. causes an underallocation of resources to MSW services
C. means that demanders pay nothing for MSW services
D. provides an incentive for waste reduction



1

Resources & Environmental Economics EC307
Lekima Nalaukai Semester II, 2020

Tutorial 10 Questions
Week 12 – Callan, S. J. and Thomas, J. M. (2013) – Chapter 18

Section B: Review of the Basics and Calculations

1. Suppose you are a public official responsible for setting a retail disposal charge on
antifreeze. Estimated marginal benefit and cost functions for antifreeze are as follows:
MPB = 10.0 – 0.5Q MPC = MSC = 1.0 + 0.4Q
MSB = 10.0 – 1.1Q,
where MPB, MSB, and MPC are measured in dollars per gallon, and Q is in millions of
gallons.
A. Identify the Marginal External Benefit (MEB) function, and briefly explain what this
function is measuring.
B. In the absence of government intervention, find the equilibrium price (PC) and Quantity
(QC) being exchanged in the antifreeze market?
C. Determine the retail disposal charge that will produce an efficient allocation of
antifreeze.

2. State officials are establishing a deposit/refund system for batteries. Marginal costs and
benefits have been estimated to be:
MPC = 5 + 0.5Q MPB = MSB = 20 – 0.5Q
MSC = 5 + 0.7Q,
where Q is in millions, and the marginal cost and benefit values are in dollars per battery.
A. Determine the deposit/refund amount that achieves an efficient solution.
B. Explain the economics of why the refund might be set higher than the deposit.