Deck 19: Natural Resource and Energy Economics

Question 1

A total fertility rate of 1.0 is necessary to keep the population constant over time.

Answer 1

False

Question 2

The demand for productive resources has grown faster than the supply of productive resources for the past 150 years.

Answer 2

False

Question 3

Most developed countries have fertility rates less than 2.1.

Answer 3

True

Question 4

About one-half of U.S. electricity is generated using petroleum.

Question 5

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

Question 6

Renewable energy sources account for about 50 percent of U.S. electricity generation.

Question 7

Energy demand is relatively stable over the course of a day.

Question 8

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

Question 9

Per capita energy use in the United States has remained fairly constant since 1980.

Question 10

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

Question 11

About three-fourths of U.S. electricity is generated using coal, natural gas, and petroleum.

Question 12

The United States produces more than twice as much output per million BTUs of energy consumed as it did in 1950.

Question 13

Thomas Malthus argued that increases in living standards tend to reduce birthrates.

Question 14

Increases in U.S. living standards have matched increases in per capita energy use.

Question 15

Modernizing economies that have declining birthrates may still experience population growth because of rapidly declining death rates.

Question 16

Electricity generating plants with low fixed costs tend to have high operating costs.

Question 17

In electricity generation, it is most economically efficient to use a single energy source.

Question 18

Commodity prices are relatively stable from year to year.

Question 19

The United States is in imminent danger of running out of energy.

Question 20

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

Question 21

Present value allows us to weigh the benefits and costs of using resources today or in the future.

Question 22

The user cost of a resource is the market price paid by the buyer of the resource.

Question 23

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

Question 24

Weak property rights encourage faster extraction than would otherwise maximize the long-term stream of profits.

Question 25

Nonrenewable natural resources are fixed in supply (actually or virtually).

Question 26

Fish in the open ocean are protected by strong property rights.

Question 27

Higher user costs imply that a resource should be extracted more quickly.

Question 28

Renewable natural resources can never be exhausted.

Question 29

Property rights over fish in the open ocean exist once the fish are caught.

Question 30

TAC policies help reduce overfishing and reduce costs for fishers.

Question 31

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

Question 32

The total cost of extracting and selling a resource in a given year is the sum of the extraction cost and user cost.

Question 33

In the absence of enforceable property rights, there is little incentive to preserve resources for future use.

Question 34

Elephants are moving closer to extinction in places where they are treated as private property.

Question 35

The higher a resource's current price, the more extraction should be delayed to a later period.

Question 36

A fishery is a stock of fish or other marine animal thought of as a logically distinct group and usually identified by its location and species.

Question 37

Assuming that interest rates are positive, the present value of an $80 barrel of oil in two years is less than an $80 barrel today.

Question 38

Fisheries have been overexploited relative to forests primarily because people care more about trees than fish.

Question 39

The economic benefits of forests include provision of wildlife habitats, erosion prevention, and oxygen production.

Question 40

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

Question 41

Low birthrates in industrialized countries are a major concern for governments, reducing the number of potential soldiers and taxpayers to support social programs.

Question 42

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

Question 43

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.

Question 44

The era after the Industrial Revolution proved that it was impossible to have improved standards of living with large population growth.

Question 45

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.

Question 46

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.

Question 47

Malthus's theory states that living standards could only temporarily rise above subsistence levels.

Question 48

Efficient energy usage in electricity generation often involves using a mix of energy inputs, some of which are much more expensive than others.

Question 49

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.

Question 50

Optimal resource allocation involves considering current and future uses, benefits, and costs.

Question 51

ITQs both limit catches and encourage fishing in the least costly way.

Question 52

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

Question 53

If the world runs out of oil, it will also run out of energy.

Question 54

Economists widely fear that the world will run out of energy in the next century.

Question 55

If the price of oil falls, the economic viability of alternative energy sources also tends to fall.

Question 56

As technologies improve, the costs of producing alternatives will likely fall, reducing the cost of replacing oil.

Question 57

With modernization, the world's population will continue to decline even as many countries experience declining death rates.

Question 58

ITQs generate the most efficient use of resources when everyone keeps and fills their own quotas.

Question 59

Petroleum is the largest source of electric energy generated in the U.S.

Question 60

If per-capita energy usage has leveled off while per capita GDP has risen, then it must mean that each dollar of output produced required a larger amount of energy.

Question 61

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

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

Question 62

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 $7; Kyle's cost per ton is $11. Assume that the market price of sockeye salmon is $16 per ton. If Kara pays Kyle $6 per ton for his ITQs, and if she then catches her new limit of 4,000 tons, her profit would be

A)$18,000.
B)$14,000.
C)$24,000.
D)$38,000.

Question 63

Encouraging conservation is especially difficult in the open ocean, where it is impossible to either define or enforce property rights over fish.

Question 64

In the extraction of a nonrenewable resource, increased current extraction will reduce the extraction firm's user costs.

Question 65

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 $35,000, how many bars (in thousands)should OZ extract and sell this year in order to maximize profits?

A)2
B)3
C)4
D)5

Question 66

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, and Kara and Kyle both catch their quota, their combined profit will be

A)$6,000.
B)$14,000.
C)$20,000.
D)$30,000.

Question 67

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.

Question 68

A fishery collapse happens when a fishery's population grows faster than fish can be harvested.

Question 69

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

Question 70

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 $6; Kyle's cost per ton is $10. If the market price of sockeye salmon is $14 per ton, what is the maximum amount Kara would be willing to pay per ton for Kyle's ITQs?

A)$4.
B)$6.
C)$8.
D)$14.

Question 71

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 $7; Kyle's cost per ton is $11. If the market price of sockeye salmon is $16 per ton, what is the minimum amount per ton that Kara would have to offer Kyle to convince him to sell Kara his ITQs?

A)$6.
B)$4.
C)$5.
D)$9.

Question 72

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.

Question 73

The price of harvesting a renewable resource does not affect when or how much of a renewable resource will be harvested.

Question 74

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.

Question 75

One of the worst systems for encouraging conservation of fisheries is the combination of total allowable catch (TAC)with individual transferable quota (ITQ).

Question 76

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 $26; Oli's cost per ton is $31. If the market price of Pacific halibut is $37 per ton, what is the maximum amount Melanie would be willing to pay per ton for Oli's ITQs?

A)$6.
B)$31.
C)$11.
D)$37.

Question 77

In the case of conflict diamonds, the strict enforcement of property rights has led to too fast of a rate of extraction.

Question 78

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). Suppose that a new government regulation is going to shut down OZ's mining operation one year from now. If the current price per bar of gold is $20,000, how many bars (in thousands)should OZ extract and sell this year?

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

Question 79

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?

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

Question 80

If a country has a total fertility rate of 4.0, then, all else equal, we would expect

A)population in that country to fall over time.
B)population in that country to rise over time.
C)the replacement rate to also equal 4.0.
D)population in that country to remain stable over time.