Question 1

A farmer discovers a natural gas reserve on his property. He can extract the natural gas for a profit of $70 per unit now, $72 per unit in one year, $74 per unit in two years, and $76 in three years. The current market rate of interest is 4 percent. When should the farmer extract the natural gas to obtain the most profit per unit in present value terms?

Accepted Answer

A)  two years
B)  three years
C)  one year
D)  today D

Question 2

ACME Corporation used to produce $50 worth of goods (in 2000 dollars) per million BTUs used. Now it produces $60 worth of goods (in 2000 dollars) per million BTUs. Based on this, we can conclude

Accepted Answer

A)  nothing about ACME's energy efficiency.
B)  that ACME's energy efficiency has declined.
C)  that ACME's energy efficiency has improved.
D)  that ACME is using a single energy source and achieving economies of scale in production.

Question 3

The period since the Industrial Revolution has been extraordinary because, despite unprecedented

Accepted Answer

A)  population growth, there has been a substantial increase in the standard of living in industrialized nations.
B)  population growth, there has been a substantial decrease in the productivity in industrialized nations.
C)  declines in economic efficiency, there has been a rise in the standard of living in industrialized nations.
D)  declines in economic efficiency, there has been a rise in population growth in industrialized nations.

Question 4

Which of the following is considered a nonrenewable natural resource?

Accepted Answer

A)  solar power
B)  coal
C)  oceans
D)  aquifers

Question 5

Commodity prices are relatively stable from year to year.

Accepted Answer

A) True 
 B)False  False

Question 6

Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $8; Kyle's cost per ton is $12. 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?

Accepted Answer

A)  $3.
B)  $8.
C)  $7.
D)  $15.

Question 7

Which one of the following is a correct description of the relationship between the price of oil and the production of alternative energy sources?

Accepted Answer

A)  As the price of oil falls, the production of alternative energy sources rises.
B)  As the price of oil rises, the production of alternative energy sources falls.
C)  As the price of oil rises, the production of alternative energy sources rises.
D)  As the price of oil falls, the production of alternative energy sources stays the same.

Question 8

In the United States and parts of Western Europe, strong property rights over forests have been established.

Accepted Answer

A) True 
 B)False

Question 9

A company's extraction cost curve slopes upward to reflect

Accepted Answer

A)  that marginal extraction costs increase as the company extracts more of the resource.
B)  that user costs rise as the company extracts more of the resource.
C)  that the price of the nonrenewable resource increases as the amount extracted increases.
D)  all of these.

Question 10

The table shows the quantity of gold bars in thousands, the extraction cost for each thousand bars (in millions of dollars) , and the user cost of each thousand bars (in millions of dollars) facing the OZ Mining Company this year (all costs are marginal) . If the current price of a bar of gold is $25,000, how many bars (in thousands) should OZ extract and sell this year in order to maximize profits?

Accepted Answer

A)  2
B)  1
C)  3
D)  4

Question 11

Most developed countries have fertility rates less than 2.1.

Accepted Answer

A) True 
 B)False

Question 12

Power plants with the lowest operating costs tend to

Accepted Answer

A)  have the lowest fixed costs in terms of construction.
B)  have the highest fixed costs in terms of construction.
C)  operate on the smallest scale of energy production.
D)  generate the cleanest energy. B

Question 13

A fishery is typically identified by

Accepted Answer

A)  location and size.
B)  location and species.
C)  species and size.
D)  species and market value.

Question 14

Elephant populations have

Accepted Answer

A)  expanded everywhere because of state control of elephant populations.
B)  declined in countries where they are owned by local villages and expanded where they are owned by the state.
C)  expanded in countries where they are owned by local villages and declined where they are owned by the state.
D)  declined everywhere, regardless of whether property rights over elephants are recognized.

Question 15

A total fertility rate of approximately 1.0 will cause each generation to be half as large as the preceding generation.

Accepted Answer

A) True 
 B)False

Question 16

World commodity prices over the past 170 years have

Accepted Answer

A)  steadily decreased in both the short run and long run.
B)  decreased in the long run despite occasional short-run increases.
C)  remained constant in the long run despite occasional short-run fluctuations.
D)  steadily increased in both the short run and long run.

Question 17

An electricity company is considering damming a small river to generate electricity at a cost of $160,000 and a profit of $200,000 in 5 years. The current market rate of interest is 5 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.

Question 18

Data from the U.S. Energy Information Administration on per capita energy consumption in the United States for the period 1950-2017 show that it has

Accepted Answer

A)  continually increased.
B)  continually decreased.
C)  increased, leveled off, and started declining.
D)  decreased, leveled off, and started rising.

Question 19

Most economists view economic growth as

Accepted Answer

A)  good for the environment because richer economies spend more on environmental protection.
B)  bad for the environment because richer economies extract resources at a faster rate.
C)  good for the environment because richer economies produce fewer chemicals.
D)  bad for the environment because people in richer economies tend to care less about the environment.

Question 20

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.

Exam 19: Natural Resource and Energy Economics

Correct Answer
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D

ACME Corporation used to produce $50 worth of goods (in 2000 dollars) per million BTUs used. Now it produces $60 worth of goods (in 2000 dollars) per million BTUs. Based on this, we can conclude

Correct Answer
verified

The period since the Industrial Revolution has been extraordinary because, despite unprecedented

Correct Answer
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Which of the following is considered a nonrenewable natural resource?

Correct Answer
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Commodity prices are relatively stable from year to year.

Correct Answer
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False

Correct Answer
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Which one of the following is a correct description of the relationship between the price of oil and the production of alternative energy sources?

Correct Answer
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In the United States and parts of Western Europe, strong property rights over forests have been established.

Correct Answer
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A company's extraction cost curve slopes upward to reflect

Correct Answer
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Correct Answer
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Most developed countries have fertility rates less than 2.1.

Correct Answer
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Power plants with the lowest operating costs tend to

Correct Answer
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B

A fishery is typically identified by

Correct Answer
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Elephant populations have

Correct Answer
verified

A total fertility rate of approximately 1.0 will cause each generation to be half as large as the preceding generation.

Correct Answer
verified

World commodity prices over the past 170 years have

Correct Answer
verified

An electricity company is considering damming a small river to generate electricity at a cost of $160,000 and a profit of $200,000 in 5 years. The current market rate of interest is 5 percent. Should the company make the investment?

Correct Answer
verified

Data from the U.S. Energy Information Administration on per capita energy consumption in the United States for the period 1950-2017 show that it has

Correct Answer
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Most economists view economic growth as

Correct Answer
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The user cost of nonrenewable resources is

Correct Answer
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Exam 19: Natural Resource and Energy Economics

Correct AnswerverifiedD

ACME Corporation used to produce $50 worth of goods (in 2000 dollars) per million BTUs used. Now it produces $60 worth of goods (in 2000 dollars) per million BTUs. Based on this, we can conclude

Correct AnswerverifiedShow Answer

The period since the Industrial Revolution has been extraordinary because, despite unprecedented

Correct AnswerverifiedShow Answer

Which of the following is considered a nonrenewable natural resource?

Correct AnswerverifiedShow Answer

Commodity prices are relatively stable from year to year.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

Which one of the following is a correct description of the relationship between the price of oil and the production of alternative energy sources?

Correct AnswerverifiedShow Answer

In the United States and parts of Western Europe, strong property rights over forests have been established.

Correct AnswerverifiedShow Answer

A company's extraction cost curve slopes upward to reflect

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most developed countries have fertility rates less than 2.1.

Correct AnswerverifiedShow Answer

Power plants with the lowest operating costs tend to

Correct AnswerverifiedB

A fishery is typically identified by

Correct AnswerverifiedShow Answer

Elephant populations have

Correct AnswerverifiedShow Answer

A total fertility rate of approximately 1.0 will cause each generation to be half as large as the preceding generation.

Correct AnswerverifiedShow Answer

World commodity prices over the past 170 years have

Correct AnswerverifiedShow Answer

An electricity company is considering damming a small river to generate electricity at a cost of $160,000 and a profit of $200,000 in 5 years. The current market rate of interest is 5 percent. Should the company make the investment?

Correct AnswerverifiedShow Answer

Data from the U.S. Energy Information Administration on per capita energy consumption in the United States for the period 1950-2017 show that it has

Correct AnswerverifiedShow Answer

Most economists view economic growth as

Correct AnswerverifiedShow Answer

The user cost of nonrenewable resources is

Correct AnswerverifiedShow Answer

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D

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False

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B

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