Questions for (3.3.3) Externalities in agriculture
[True or False?] The percent of income Americans spend on food has declined from over
20% in the 1930s to less than 15% today.
[True or False?] Food author Michael Pollan argues that food really is much less expensive
today, even when you include all costs, and this is largely due to technological advancements.
Which of the following are definitions of an externality?
a) When someone buys food not to eat, but for “external” reasons
b) When someone has no choice over what foods they purchase
c) A cost or benefit that affects a party that did not consent to the cost or benefit
d) A cost or benefit not reflected in the good’s price
e) a or b
f) c or d
[True or False?] Because the producer pays for energy use, everyone consents to the use of
energy in food production.
Which of the following are negative externalities?
a) When beef production results in large carbon emissions
b) When farmers hire unskilled labor to raise pigs
c) When crop producers purchase specialty seeds to raise corn
d) When a buyer and seller have trouble negotiating a price
e) When a farming practice conserve resources like topsoil
f) All of the above
[True or False?] Food activist and vegan David Simon argues in his book Meatonomics that
the real cost of a Big Mac at McDonalds is much larger than its price in the store.
[True or False?] Animal welfare can be thought of as an externality because I may be
negatively affected if animals suffer in the production of food you eat.
[True or False?] In experimental studies people value better animal care much lower than
they do in the grocery store.
[True or False?] The extent to which there are externalities in meat production depends on
the degree to which people are aware of the health consequences of meat production.
[Multiple choice, multiple selection] Which of the following are ways in which obesity
impacts a person’s life?
a) Health consequences
b) Higher health insurance premiums
c) Discrimination in the workplace
d) All of the above
What did the city of Burien, Washington make illegal?
a) Morbid obesity
b)
c)
d)
e)
Smoking
Bad body odor
Sneezing without covering ones mouth
Littering
[True or False?] If a region taxes broiler producers for the manure runoff from their farms,
that would be an example of Pigouvian taxes.
What pollution abatement tool did Sweden use to reduce fertilizer runoff?
a) Command and control policies detailing explicitly how fertilizer can and cannot be
used
b) Fertilizer tax
c) Cap-and-trade system where total fertilizer use was capped and farmers then had to
buy a permit allowing them to apply fertilizer
What pollution abatement tool did regions surrounding the Chesapeake Bay use to reduce
manure and fertilizer runoff?
a) Command and control policies detailing explicitly how fertilizer / manure can and
cannot be used
b) Fertilizer / manure tax
c) Cap-and-trade system where the total amount of nutrient runoff was capped,
and then farmers and other polluters had to buy the rights to create nutrient
runoff
[True or False?] Cap-and-trade systems are desirable in that they can minimize the costs of
achieving a specific amount of pollution abatement.
[True or False?] Just as market can fail due to externalities, government legislation crafted to
fix the market could make the situation worse.
[True or False?] Environmentalists still support the conversion of corn into biofuels, and
this is why corn ethanol subsidies still exist.
[True or False?] Al Gore supported corn ethanol because he believed it benefitted the
environment, even though doing so harmed him politically.