Chapter 15 – Natural Resource and Energy Economics
58. Refer to the data above. Suppose that a new government regulation is going to shut down
OZ’s mining operation 1 year from now. Assuming that all gold extracted is sold in the same
year (cannot be stockpiled for later sale), how will the regulation affect the user cost?
59. Higher interest rates will, all else equal:
60. A user cost of zero implies that:
Chapter 15 – Natural Resource and Energy Economics
61. A profit-maximizing company should extract a non-renewable resource in the present up
to the quantity where the:
62. Extraction costs of a non-renewable resource include the:
63. The optimal extraction level in the present for a non-renewable resource is:
Chapter 15 – Natural Resource and Energy Economics
64. A company’s extraction cost curve slopes upward to reflect:
65. Refer to the diagram above, representing Slippery Slope Oil Company. What is the user
cost of extracting a barrel of oil this year?
Chapter 15 – Natural Resource and Energy Economics
66. Refer to the diagram above, representing Slippery Slope Oil Company. How many million
barrels should Slippery Slope extract and sell this year?
67. Refer to the diagram above, representing Slippery Slope Oil Company. A $10 increase in
the user cost would shift:
68. Refer to the diagram above, representing Slippery Slope Oil Company. A $5 decrease in
the user cost would:
Chapter 15 – Natural Resource and Energy Economics
69. Refer to the diagram above, representing Slippery Slope Oil Company. What price of oil
would make 15 million barrels the optimal quantity to extract and sell this year?
70. Which of the following would cause the present optimal extraction level of a non-
renewable resource to fall?
71. Which of the following would cause the present optimal extraction level of a non-
renewable resource to rise?
Chapter 15 – Natural Resource and Energy Economics
72. Which of the following would cause the present optimal extraction level of a non-
renewable resource to fall?
73. Refer to the diagram above, assuming that the firm represented is operating on curve TC0.
What is the user cost of extracting a unit of this resource?
Chapter 15 – Natural Resource and Energy Economics
74. Refer to the diagram above, assuming that the firm represented is operating on curve TC0.
How much will the firm extract this year?
75. Refer to the diagram above, assuming that the firm represented is operating on curve TC0.
If the user cost increases by $20 at the beginning of the year, the quantity extracted in the first
year will:
76. Refer to the diagram above, assuming that the firm represented is operating on curve TC1.
If the current price of the resource rises by $20, the optimal quantity extracted in the first year
will:
Chapter 15 – Natural Resource and Energy Economics
77. Refer to the diagram above, assuming that the firm represented is operating on curve TC0.
A change from TC0 to TC1 could be caused by:
78. Refer to the diagram above. An increase in extraction costs could be shown by:
79. An increase in the present value of the profit that can be obtained by delaying resource
extraction will lead profit-maximizing firms to:
Chapter 15 – Natural Resource and Energy Economics
80. Profit-maximizing extraction companies will attempt to:
81. 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?
82. If property rights are weak or uncertain, resource extraction will tend to:
Chapter 15 – Natural Resource and Energy Economics
83. Mining of “conflict diamonds” tends to:
84. Elephant populations have:
85. In countries like Botswana and Zimbabwe, local villages have been given property rights
over local elephants with the result that elephant populations:
Chapter 15 – Natural Resource and Energy Economics
86. Renewable resources:
87. The amount of land covered by forests is:
88. Some nations are increasing the amount of land covered by forests, while others are
experiencing rapid deforestation. According to economists, this is largely because:
Chapter 15 – Natural Resource and Energy Economics
89. Refer to the information above. If property rights are poorly enforced or non-existent:
Chapter 15 – Natural Resource and Energy Economics
91. Refer to the information above. The forest is more likely to be harvested and replanted at a
sustainable rate if:
92. Refer to the information above. If no explicit property right is given over the forest land,
then:
93. Which of the following best describes the typical growth pattern of trees for logging?
Chapter 15 – Natural Resource and Energy Economics
94. Forestry companies typically harvest and replant an area when trees are:
95. In fisheries management, a fishery is defined as:
96. Which of the following is the best example of a fishery?
Chapter 15 – Natural Resource and Energy Economics
97. What was the largest U.S. fishery, in dollar terms, in 2007?
98. A fishery is typically identified by:
99. It is generally easier to prevent deforestation than fishery collapse because:
Chapter 15 – Natural Resource and Energy Economics
100. Property rights for fish from the open ocean:
101. A fishery collapse:
102. Which of the following policies has succeeded in reducing fishery catch sizes?
Chapter 15 – Natural Resource and Energy Economics
103. Which of the following policies has succeeded in reducing fishery catch sizes without
creating an “arms race” among fishers?
104. Total Allowable Catch (TAC):
105. In fisheries management, ITQ stands for:
Chapter 15 – Natural Resource and Energy Economics
106. Under a TAC system, fishing of a particular fishery is halted after:
107. Refer to the information above. If the market price of Sockeye Salmon is $15 per ton,
and Kara and Kyle both catch their quota, their combined profit will be:
Chapter 15 – Natural Resource and Energy Economics
108. Refer to the information above. If the market price of Sockeye Salmon is $15 per ton,
what is the maximum amount Kara would be willing to pay per ton for Kyle’s ITQs?
109. Refer to the information above and assume that the market price of Sockeye Salmon is
$15 per ton. If Kara pays Kyle $5 per ton for his ITQs, and if she then catches her new limit
of 4,000, their combined profit would be:
110. Refer to the information above. If the market price of Sockeye Salmon is $15 per ton,
what is the minimum amount per ton that Kara would have to offer Kyle to convince him to
sell Kara his ITQs?