Chapter 15 – Natural Resource and Energy Economics
58. Refer to the above graph. If the current market price rises from $60 to $70 and user costs
are not considered, the extraction quantity:
59. Refer to the above graph. What will be the quantity extracted if user costs are considered
compared to the case where they are not considered?
60. Refer to the above graph. If user costs increase, then the total cost line will:
Chapter 15 – Natural Resource and Energy Economics
61. Refer to the above graph. If total costs increase and the price of oil stays at $60, then the
firm will extract:
62. The goal of profit-maximizing extraction firms such as an oil company or a mining
company is to extract resources:
63. Consider a coal mining company that can mine coal this year or next year. As expected
future profits increase, the extraction quantity this year:
Chapter 15 – Natural Resource and Energy Economics
64. Consider an oil company that can pump oil from a reserve either this year or next year. As
expected future profits decrease, the extraction quantity this year:
65. In the case of extraction of a nonrenewable resource, when user costs increase, it implies
that expected future profits:
66. In the case of extraction of a nonrenewable resource, when user costs decrease, then it
implies that expected future profits:
Chapter 15 – Natural Resource and Energy Economics
67. Over-extraction of a resource in the present can occur because:
68. If users can benefit from conservation, resources will be:
69. Which of the following is the best example of a market failure to conserve a resource
resulting from poorly-defined property rights?
Chapter 15 – Natural Resource and Energy Economics
70. When diamonds are mined in conflict or war-torn areas, there is:
71. One major reason why the survival of elephants is threatened is that:
72. If the property rights for forests are clear and enforced, then:
Chapter 15 – Natural Resource and Energy Economics
73. In 2005, about what percentage of the world’s land area was forested?
74. Which nation had a growing area of forested land in the period 2000-2005?
75. Which nation has seen a decline in the amount of land covered by forests?
Chapter 15 – Natural Resource and Energy Economics
76. What is most likely to happen when no logger owns the property rights to a forest that is
open to logging?
77. Commercially-run forestry companies have the most profit incentive to harvest trees from
a forest:
78. Commercially-run forestry companies that have secure property rights over their trees:
Chapter 15 – Natural Resource and Energy Economics
79. Which fishery has the greatest market value in terms of its catch?
80. A fishery collapse occurs when the:
81. Approximately what percentage of the world’s fisheries in 2007 were depleted?
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82. Under the total allowable catch system:
83. What is a tradable fishing limit that gives the holder the right to harvest a given quantity
of fishery during a given time period?
84. Blythe fishes for tuna at a cost of $4 per ton. John fishes at a cost of $6 per ton. Each has a
1000 ITQ. The current market price is $8 per ton. What amount could Blythe pay John to
induce him to sell his ITQ?
Chapter 15 – Natural Resource and Energy Economics
85. Jimmy fishes for salmon at a profit of $6000 for his 1000 ITQ. David has one ITQ and
fishes for a cost of $5 per ton, but would like to buy more ITQ. The current market price is
$10 per ton. What amount could David pay Jimmy to induce him to sell his ITQ?
86. Glenna fishes for trout at a profit of $2000 for her 1000 ITQ. Erin has one ITQ and fishes
for a cost of $6 per ton, but would like to buy more. The current market price is $12 per ton.
What amount could Erin pay Glenna to induce her to sell her ITQ?
87. Donald fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton.
Both have one 1000 ITQ and the current market price is $10 per ton. If Donald sold his ITQ
to Ronny for $7000, he and Ronny would:
Chapter 15 – Natural Resource and Energy Economics
88. Linda fishes for mahi mahi at a cost of $10 per ton, while Tessa fishes at a cost of $8 per
ton. Both have one 1000 ITQ and the current market price is $13 per ton. If Linda sold her
ITQ to Tessa for $3000, she and Tessa would:
89. Sue fishes for cod at a cost of $2 per ton, while Dave fishes at a cost of $4 per ton. Both
have one 1000 ITQ and the current market price is $5 per ton. If Dave sold his ITQ to Sue for
$2000, he and Sue would:
90. Donald fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton.
Both have one 1000 ITQ and the current market price is $10 per ton. If Donald sold his ITQ
to Ronny for $5000, society would benefit from:
Chapter 15 – Natural Resource and Energy Economics
91. Linda fishes for mahi mahi at a cost of $10 per ton. Tessa fishes at a cost of $8 per ton.
Both have one 1000 ITQ and the current market price is $13. If Linda sold her ITQ to Tessa
for $4000, society would benefit from:
92. Sue fishes for cod at a cost of $2 per ton. Dave fishes at a cost of $4 per ton. Both have
one 1000 ITQ and the current market price is $5. If Dave sold his ITQ to Sue for $2000,
society would benefit from:
93. Governments in certain nations are considering adopting policies to raise their low
birthrates because of the concern with having:
Chapter 15 – Natural Resource and Energy Economics
94. Russia, France, and Italy have adopted a policy to encourage higher birthrates by:
95. Which of the following factors fosters the survival of alternative-energy companies?
96. As nations become richer they tend to pollute:
Chapter 15 – Natural Resource and Energy Economics
97. A plot of the Environment Performance Index (EPI) scores for nations on the vertical axis
and corresponding GDP per person on the horizontal axis shows that as:
98. The era after the Industrial Revolution proved that it was impossible to have improved
standards of living with large population growth.
99. Malthus’s theory states that living standards could only temporarily rise above subsistence
levels.
Chapter 15 – Natural Resource and Energy Economics
100. Malthus argued that any increase in living standards would cause a decrease in
population growth.
101. If a country’s replacement rate is two births per woman and its total fertility rate is four
births per woman, the country’s population will decline.
102. The world’s population will continue to decline as many countries continue to modernize
and adjust to the decline in death rates.
103. Low birthrates in industrialized countries are a major concern for governments, reducing
the number of potential soldiers and taxpayers to support social programs.
Chapter 15 – Natural Resource and Energy Economics
104. One of the world’s greatest economic challenges over the coming decades will be to
supply the resources that will be demanded, as living standards in poorer countries rise to
rich-country standards.
105. Because better technology means that more output can be produced with the same
amount of energy input, rising living standards in the future will not necessarily depend on
using more energy.
106. Efficient energy in electricity generation often involves using a mix of energy inputs,
some of which are much more expensive than others.
107. Economists widely fear that the world will run out of energy in the next century.
Chapter 15 – Natural Resource and Energy Economics
108. Recent studies indicate that as the price of a barrel of oil rises to $80, the use of biodiesel
as an alternative fuel becomes economically viable.
109. As technologies improve, the costs of producing alternatives will likely fall, reducing the
cost of replacing oil.
110. Optimal resource allocation involves considering current and future uses, benefits and
costs.
111. In the extraction of a nonrenewable resource, increased user costs decrease future
profits.
Chapter 15 – Natural Resource and Energy Economics
112. If resource extraction companies can benefit from both present and future extraction,
they will limit current extraction to only those units which are more profitable to extract in the
present rather than in the future.
113. Definition of property rights is a key component to proper conservation of resources.
114. In the case of conflict diamonds, the strict enforcement of property rights has lead to too
fast of a rate of extraction.
115. The price of harvesting a renewable resource does not affect when or how much of a
renewable resource will be harvested.
Chapter 15 – Natural Resource and Energy Economics
116. A fishery collapse happens when a fishery’s population grows faster than fish can be
harvested.
117. Encouraging conservation is especially difficult in the open ocean where it is impossible
to either define or enforce property rights over fish.
118. One of the worst systems for encouraging conservation of fisheries is the combination of
totally allowable catch (TAC) with individual transferable quota (ITQ).
119. Studies by economists indicate that economic growth and rising living standards are
good for the environment because as societies get richer, they tend to spend more on things
that improve environmental quality.