Question 1

Refer to the diagram, assuming that the firm represented is operating on curve TC ₀ . What is the user cost of extracting a unit of this resource?

Accepted Answer

A)  $20
B)  $40
C)  $60
D)  It cannot be determined with the information given.E) A) and B)
F) None of the above

Question 2

Malthus argued that any increase in living standards would cause a decrease in population growth.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

Accepted Answer

A)  The market price of the resource rises.
B)  Weak property rights create fears that firms will not be allowed to extract in the future.
C)  Market interest rates increase.
D)  New information suggests that the demand for the resource will be greater in the future.E) A) and C)
F) All of the above

Question 4

A mining company's extraction costs curve is

Accepted Answer

A)  upward-sloping because the more the company extracts, the more its marginal extraction costs increase.
B)  upward-sloping because the more the company extracts, the more its marginal extraction costs decrease.
C)  downward-sloping because the more the company extracts, the more its marginal extraction costs increase.
D)  downward-sloping because the more the company extracts, the more its marginal extraction costs decrease.E) A) and B)
F) All of the above

Question 5

Under the total allowable catch (TAC) system of fishing,

Accepted Answer

A)  there are limits to the number of days a species can be caught.
B)  biologists determine the size of the catch based on sustainable levels.
C)  the number of fishing boats allowed to fish in a specific area is restricted.
D)  priority is given to catching fish with the greatest market value.E) None of the above
F) All of the above

Question 6

An increase in the present value of the profit that can be obtained by delaying resource extraction will lead profit-maximizing firms to

Accepted Answer

A)  reduce extraction in the present.
B)  increase the current rate of extraction.
C)  invest in less extraction equipment.
D)  hire more workers to support current production.E) None of the above
F) B) and D)

Question 7

Over the past decade, U.S. per capita consumption of water

Accepted Answer

A)  and energy have both increased.
B)  has increased, while per capita consumption of energy has fallen.
C)  and energy have leveled off or fallen.
D)  has fallen, while per capita consumption of energy has increased.E) A) and B)
F) A) and C)

Question 8

Alex and Belle are both loggers wanting to harvest timber from the same forest. Alex prefers to harvest and replant at a sustainable rate; Belle wants to harvest as many trees as possible to maximize short-run profit and then move on. They face the same production costs. If property rights are poorly enforced or nonexistent,

Accepted Answer

A)  Belle will choose to harvest as quickly as possible, but Alex will choose to harvest more slowly and replant.
B)  both will harvest trees as quickly as possible, before the other one does.
C)  both now have an incentive to harvest and replant in a sustainable manner.
D)  we would expect them to form an agreement on harvesting and replanting.E) A) and C)
F) A) and B)

Question 9

Commercially run forestry companies that have secure property rights over their trees

Accepted Answer

A)  harvest them as soon as possible and replant them when they are harvested.
B)  harvest them as soon as possible and do not replant them when they are harvested.
C)  do not harvest them as soon as possible and do replant them when they are harvested.
D)  do not harvest them as soon as possible and do not replant them when they are harvested.E) None of the above
F) A) and B)

Question 10

Define fishery, and describe the resource problem with fisheries.

Accepted Answer

A fishery is a stock of fish or other ma...

Question 11

An oil company is considering drilling in the Gulf at a current cost of $300,000 with an expected profit of $500,000 in three years. The current market rateof interest is 10 percent. Should the company make the investment?

Accepted Answer

A)  Yes, the future value of the profit is greater than the present value of the cost.
B)  No, the future value of the profit is less than the present value of the cost.
C)  Yes, the present value of the profit is greater than the present value of the cost.
D)  No, the present value of the profit is less than the present value of the cost.E) C) and D)
F) None of the above

Question 12

Which of the following policies has succeeded in reducing fishery catch sizes without creating an "arms race" among fishers?

Accepted Answer

A)  limiting the length of the catch season
B)  limiting the number of boats allowed in a given area
C)  limiting catch size (TA
C)  
D)  issuing individual transferable quotas (ITQs) E) B) and C)
F) A) and B)

Question 13

A profit-maximizing company should extract a nonrenewable resource in the present up to the quantity where the

Accepted Answer

A)  selling price of the resource equals the extraction cost plus the user cost of the resource.
B)  selling price of the resource equals the total cost plus the user cost of the resource.
C)  selling price of the resource equals the extraction cost of the resource.
D)  extraction cost of the resource equals the user cost of the resource.E) B) and C)
F) A) and D)

Question 14

Why is the overall world population still increasing? What are the expectations for population growth in the future?

Accepted Answer

At present, the world's population is in...

Question 15

Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $20; Oli's cost per ton is $25. If the market price of Pacific halibut is $35 per ton, and Melanie and Oli both catch their quota, their combined profit will be

Accepted Answer

A)  $10,000.
B)  $15,000.
C)  $25,000.
D)  $35,000.E) B) and C)
F) A) and B)

Question 16

Demographers expect world population to peak and then decline in the twenty-first century.

Accepted Answer

A) True 
 B)False

Question 17

An oil producer discovers an oil supply in Texas that can be pumped for a profit of $50 per barrel now, $60 per barrel in three years, $80 per barrel in five years, or $90 a barrel in seven years. The current market rate of interest is 3 percent. When should the oil producer extract the oil to obtain the most profit per barrel in present value terms?

Accepted Answer

A)  today
B)  three years
C)  five years
D)  seven yearsE) A) and B)
F) A) and C)

Question 18

In the extraction of a nonrenewable resource such as coal, the mining firm faces "user costs," which refers to the cost of digging out the coal, running the mine, and transporting the coal.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the diagram, assuming that the firm represented is operating on curve 1. If the current price of the resource rises by $20, the optimal quantity extracted in the first year will

Accepted Answer

A)  remain unchanged.
B)  increase by 250.
C)  increase by 500.
D)  decrease by 250.E) B) and D)
F) C) and D)

Question 20

The Economist's Commodity Price Index reveals that the supply of productive resources has increased faster than the demand for decades.

Accepted Answer

A) True 
 B)False

Exam 19: Natural Resource and Energy Economics

Refer to the diagram, assuming that the firm represented is operating on curve 1. If the current price of the resource rises by $20, the optimal quantity extracted in the first year will

Correct Answer
verified

Why is the overall world population still increasing? What are the expectations for population growth in the future?

Correct Answer
verified
At present, the world's population is in...
View Answer

Refer to the diagram, assuming that the firm represented is operating on curve TC ₀ . What is the user cost of extracting a unit of this resource?

Correct Answer
verified

Define fishery, and describe the resource problem with fisheries.

Correct Answer
verified
A fishery is a stock of fish or other ma...
View Answer

Demographers expect world population to peak and then decline in the twenty-first century.

Correct Answer
verified

Under the total allowable catch (TAC) system of fishing,

Correct Answer
verified

Which of the following policies has succeeded in reducing fishery catch sizes without creating an "arms race" among fishers?

Correct Answer
verified

The Economist's Commodity Price Index reveals that the supply of productive resources has increased faster than the demand for decades.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Over the past decade, U.S. per capita consumption of water

Correct Answer
verified

In the extraction of a nonrenewable resource such as coal, the mining firm faces "user costs," which refers to the cost of digging out the coal, running the mine, and transporting the coal.

Correct Answer
verified

An oil company is considering drilling in the Gulf at a current cost of $300,000 with an expected profit of $500,000 in three years. The current market rateof interest is 10 percent. Should the company make the investment?

Correct Answer
verified

Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

Correct Answer
verified

A profit-maximizing company should extract a nonrenewable resource in the present up to the quantity where the

Correct Answer
verified

Commercially run forestry companies that have secure property rights over their trees

Correct Answer
verified

Correct Answer
verified

An increase in the present value of the profit that can be obtained by delaying resource extraction will lead profit-maximizing firms to

Correct Answer
verified

A mining company's extraction costs curve is

Correct Answer
verified

Malthus argued that any increase in living standards would cause a decrease in population growth.

Correct Answer
verified

Exam 19: Natural Resource and Energy Economics

Refer to the diagram, assuming that the firm represented is operating on curve 1. If the current price of the resource rises by $20, the optimal quantity extracted in the first year will

Correct AnswerverifiedShow Answer

Why is the overall world population still increasing? What are the expectations for population growth in the future?

Correct AnswerverifiedAt present, the world's population is in...View AnswerShow Answer

Refer to the diagram, assuming that the firm represented is operating on curve TC ₀ . What is the user cost of extracting a unit of this resource?

Correct AnswerverifiedShow Answer

Define fishery, and describe the resource problem with fisheries.

Correct AnswerverifiedA fishery is a stock of fish or other ma...View AnswerShow Answer

Demographers expect world population to peak and then decline in the twenty-first century.

Correct AnswerverifiedShow Answer

Under the total allowable catch (TAC) system of fishing,

Correct AnswerverifiedShow Answer

Which of the following policies has succeeded in reducing fishery catch sizes without creating an "arms race" among fishers?

Correct AnswerverifiedShow Answer

The Economist's Commodity Price Index reveals that the supply of productive resources has increased faster than the demand for decades.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Over the past decade, U.S. per capita consumption of water

Correct AnswerverifiedShow Answer

In the extraction of a nonrenewable resource such as coal, the mining firm faces "user costs," which refers to the cost of digging out the coal, running the mine, and transporting the coal.

Correct AnswerverifiedShow Answer

An oil company is considering drilling in the Gulf at a current cost of $300,000 with an expected profit of $500,000 in three years. The current market rateof interest is 10 percent. Should the company make the investment?

Correct AnswerverifiedShow Answer

Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

Correct AnswerverifiedShow Answer

A profit-maximizing company should extract a nonrenewable resource in the present up to the quantity where the

Correct AnswerverifiedShow Answer

Commercially run forestry companies that have secure property rights over their trees

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in the present value of the profit that can be obtained by delaying resource extraction will lead profit-maximizing firms to

Correct AnswerverifiedShow Answer

A mining company's extraction costs curve is

Correct AnswerverifiedShow Answer

Malthus argued that any increase in living standards would cause a decrease in population growth.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
At present, the world's population is in...
View Answer

Correct Answer
verified

Correct Answer
verified
A fishery is a stock of fish or other ma...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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