Question 1

User cost is defined as the present value of the profit the company would earn if it delayed extraction until next year.

Accepted Answer

A) True 
 B)False

Question 2

The user cost of nonrenewable resources is

Accepted Answer

A)   the current cost of extracting and selling the resource.
B)   the future cost of extracting and selling the resource.
C)   the opportunity cost of extracting and selling the resource today instead of in the future.
D)   the cost of future extraction and sale of a resource instead of current extraction and sale.E) A) and D)
F) A) and C)

Question 3

Which of the following is considered a nonrenewable natural resource?

Accepted Answer

A)   wind
B)   timber
C)   oceans
D)   tinE) A) and B)
F) A) and C)

Question 4

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

Question 5

Granting property rights to forestland tends to increase the rate at which the land is deforested.

Accepted Answer

A) True 
 B)False

Question 6

A farmer discovers a natural gas reserve on his property. He can extract the natural gas for a profit of $40 per unit now, $55 per unit in one year, $57 per unit in two years, and $60 in three years. The current market rate of interest is 6 percent. When should the farmer extract the natural gas to obtain the most profit per unit in present value terms?

Accepted Answer

A)   today
B)   one year
C)   two years
D)   three yearsE) A) and B)
F) A) and C)

Question 7

Total allowable catch policies promote economic efficiency better than individual transferable quotas.

Accepted Answer

A) True 
 B)False

Question 8

Per capita water use in the United States has steadily increased since 1973.

Accepted Answer

A) True 
 B)False

Question 9

Alex and Ben are both loggers wanting to harvest timber from the same forest. Alex prefers to harvest and replant at a sustainable rate; Ben 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)   Ben 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 B)
F) B) and C)

Question 10

Which of the following, in order, describes the three steps of the demographic transition?

Accepted Answer

A)   low birthrates and death rates; high birthrates and low death rates; high birthrates and death rates
B)   high birthrates and death rates; low birthrates and high death rates; low birthrates and death rates
C)   high birthrates and low death rates; high birthrates and death rates; low birthrates and death rates
D)   high birthrates and death rates; high birthrates and low death rates; low birthrates and death ratesE) A) and B)
F) A) and C)

Question 11

Joe fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Joe offered to sell his ITQ to Ronny for $7,000, he and Ronny would

Accepted Answer

A)   make the sale because they're both better off.
B)   not make the sale, because Joe is better off and Ronny is not.
C)   not make the sale, because Ronny is better of and Joe is not.
D)   not make the sale, because neither is better off.E) A) and B)
F) A) and C)

Question 12

The Malthusian prediction of Paul Ehrlich in The Population Bomb in 1968 proved to be wrong because population growth

Accepted Answer

A)   slowed dramatically as standards of living decreased.
B)   slowed dramatically as standards of living increased.
C)   rose dramatically as standards of living decreased.
D)   rose dramatically as standards of living increased.E) None of the above
F) B) and C)

Question 13

Which of the following statements is true about falling birthrates?

Accepted Answer

A)   They tend to lag behind falling death rates, allowing population growth to continue for at least one or two more generations.
B)   They tend to precede declines in death rates, causing a temporary dip in population before it stabilizes in a generation or two.
C)   They tend to lag behind declining standards of living.
D)   They always cause population to decline.E) None of the above
F) B) and C)

Question 14

Which of the following is considered a renewable natural resource?

Accepted Answer

A)   aquifers
B)   coal
C)   petroleum
D)   ironE) A) and B)
F) None of the above

Question 15

The total fertility rate of a nation is the

Accepted Answer

A)   total number of children a woman in the nation is capable of having during her lifetime.
B)   average number of children a woman in the nation is capable of having during her lifetime.
C)   average number of children a woman in the nation is expected to have during her lifetime.
D)   total number of women in the nation who are expected to have children during their lifetime.E) B) and C)
F) All of the above

Question 16

The long-run fall of commodity prices implies that commodity supplies have grown

Accepted Answer

A)   faster than the rate of productivity in the economy.
B)   more slowly than total resource consumption.
C)   faster than total resource consumption.
D)   more slowly than the inflation rate.E) A) and D)
F) B) and D)

Question 17

According to U.S. Energy Information Administration data, about what percentage of U.S. electricity was generated by coal-fired plants in 2014?

Accepted Answer

A)   10 percent
B)   22 percent
C)   35 percent
D)   60 percentE) A) and D)
F) A) and B)

Question 18

A user cost of zero implies that

Accepted Answer

A)   a firm will extract all of a resource in the present.
B)   a firm will extract resources at a faster rate than if the user cost was positive.
C)   a firm will extract resources at a faster rate than if the user cost was negative.
D)   the price of the resource will not change.E) A) and C)
F) All of the above

Question 19

The use of present value calculations in valuing natural resources is important because it

Accepted Answer

A)   ensures that net benefits are minimized over time.
B)   permits greater extraction of resources in the future.
C)   permits greater extraction of resources in the present.
D)   ensures resources are allocated to their best use over time.E) C) and D)
F) B) and D)

Question 20

Definition of property rights is a key component to proper conservation of resources.

Accepted Answer

A) True 
 B)False

Exam 19: Natural Resource and Energy Economics

Joe fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Joe offered to sell his ITQ to Ronny for $7,000, he and Ronny would

Correct Answer
verified

The user cost of nonrenewable resources is

Correct Answer
verified

User cost is defined as the present value of the profit the company would earn if it delayed extraction until next year.

Correct Answer
verified

Per capita water use in the United States has steadily increased since 1973.

Correct Answer
verified

Definition of property rights is a key component to proper conservation of resources.

Correct Answer
verified

Correct Answer
verified

The long-run fall of commodity prices implies that commodity supplies have grown

Correct Answer
verified

Total allowable catch policies promote economic efficiency better than individual transferable quotas.

Correct Answer
verified

Which of the following is considered a nonrenewable natural resource?

Correct Answer
verified

The Malthusian prediction of Paul Ehrlich in The Population Bomb in 1968 proved to be wrong because population growth

Correct Answer
verified

Correct Answer
verified

The use of present value calculations in valuing natural resources is important because it

Correct Answer
verified

Which of the following statements is true about falling birthrates?

Correct Answer
verified

The total fertility rate of a nation is the

Correct Answer
verified

Granting property rights to forestland tends to increase the rate at which the land is deforested.

Correct Answer
verified

According to U.S. Energy Information Administration data, about what percentage of U.S. electricity was generated by coal-fired plants in 2014?

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

Which of the following, in order, describes the three steps of the demographic transition?

Correct Answer
verified

A user cost of zero implies that

Correct Answer
verified

Which of the following is considered a renewable natural resource?

Correct Answer
verified

Exam 19: Natural Resource and Energy Economics

Joe fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Joe offered to sell his ITQ to Ronny for $7,000, he and Ronny would

Correct AnswerverifiedShow Answer

The user cost of nonrenewable resources is

Correct AnswerverifiedShow Answer

User cost is defined as the present value of the profit the company would earn if it delayed extraction until next year.

Correct AnswerverifiedShow Answer

Per capita water use in the United States has steadily increased since 1973.

Correct AnswerverifiedShow Answer

Definition of property rights is a key component to proper conservation of resources.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The long-run fall of commodity prices implies that commodity supplies have grown

Correct AnswerverifiedShow Answer

Total allowable catch policies promote economic efficiency better than individual transferable quotas.

Correct AnswerverifiedShow Answer

Which of the following is considered a nonrenewable natural resource?

Correct AnswerverifiedShow Answer

The Malthusian prediction of Paul Ehrlich in The Population Bomb in 1968 proved to be wrong because population growth

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The use of present value calculations in valuing natural resources is important because it

Correct AnswerverifiedShow Answer

Which of the following statements is true about falling birthrates?

Correct AnswerverifiedShow Answer

The total fertility rate of a nation is the

Correct AnswerverifiedShow Answer

Granting property rights to forestland tends to increase the rate at which the land is deforested.

Correct AnswerverifiedShow Answer

According to U.S. Energy Information Administration data, about what percentage of U.S. electricity was generated by coal-fired plants in 2014?

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

Which of the following, in order, describes the three steps of the demographic transition?

Correct AnswerverifiedShow Answer

A user cost of zero implies that

Correct AnswerverifiedShow Answer

Which of the following is considered a renewable natural resource?

Correct AnswerverifiedShow Answer

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