Deck 1: The Natural Environment and the Human Economy: the Neoclassical Perspective

Question 1

Neoclassical economics is the dominant approach to economic analyses.

Answer 1

True

Question 2

Neoclassical economists are fully aware of the critical significance of ecosystem services
to humans.

Answer 2

True

Question 3

Only environmental resources, unlike economic resources, such as capital and labor, are
considered to be scarce resources.

Answer 3

False

Question 4

The provision of ecosystem services is essential for supporting and sustaining life, and by
extension, is also necessary for the human economy to function.

Question 5

In many respects, there is little trade-off between economic goods and services and the
preservation of the quality of the natural environment.

Question 6

A renewable resource is one that is, by definition, priced at zero dollars.

Question 7

Market price is an indicator of absolute scarcity.

Question 8

Market prices are market-clearing prices because they fully account for all the costs of
either extracting or using resources.

Question 9

Factor substitution suggests that basic resources do not need to be used in combinations.

Question 10

It is possible to substitute natural capital with human-made capital and vice-versa to
produce a desired level of output.

Question 11

Environmental resources can always be substituted by other factors of production at a
decreasing opportunity cost.

Question 12

Technological advance implies a possibility of producing a given level of
output with less of any resources, with the exception of the environment.

Question 13

Technological advancement is the ability to produce a given amount of output by using
less of all inputs.

Question 14

The anthropocentric economic view implies that environmental services have no intrinsic
value.

Question 15

The primary goal of a market-oriented economy is maximizing consumers' wellbeing.

Question 16

Economics approach is called anthropocentric because

A) Environmental resources are deemed to have no intrinsic value.
B) Environmental resources are evaluated based on their uses to all living beings, human or
non-human.
C) Environmental degradation is considered unacceptable, even if benefits to humans are
accrued.
D) All of the above.
E) None of the above.

Question 17

The provision of ecosystem services

A) Are essential for supporting and sustaining life.
B) Are not fully accounted for by the market-clearing price.
C) Have been overlooked by neoclassical economists.
D) None of the above.
E) All of the above.

Question 18

The natural environment is assumed to depend on which of the following?

A) Extraction of non-renewable resources.
B) Extraction of renewable resources.
C) Sunlight.
D) Humans.
E) All of the above.

Question 19

The opportunity cost of a particular activity

A) Is always unknown with certainty.
B) Is a concept applicable to ecological economics, but not to the neoclassical approach.
C) Usually decreases as more of that activity is pursued.
D) Increases when more environmental resources need to used to substitute for the same
amount of other factors of production.
E) None of the above.

Question 20

An ecosystem service, such as bee pollination, is dramatically increase because of reduction in pesticide use. How would this influence the opportunity cost for an apple orchard that relies on bees for pollination of their apple trees?

A) It would not affect the opportunity cost
B) It would increase the opportunity
C) It would decrease the opportunity cost
D) From an economic standpoint, opportunity cost should not be an issue
E) None of the above

Question 21

Consider the following substitution possibility graph. Assume that the output level (i.e. Economic production) is the same for each line (Q0 = Q1 = Q2). Which of the following statements is correct?

A) With Q1, technological improvements are such that resource conservation
is lower relative to Q0.
B) With Q2, technological improvements are such that resource conservation
is lowest relative to Q0 and Q1.
C) With Q0, technological improvements are such that resource conservation
Is highest relative to Q1 and Q2.
D) Only b) and c) are correct
E) A), b), and c) are correct

Question 22

Consider the following substitution possibility graph. Assume that the output level (i.e. Economic production) is the same for each line (Q0 = Q1 = Q2). Which of the following statements is correct?

A) Any point along Q2 represents a combination of resource outputs that
requires more natural capital relative to any point along Q1 or Q2.
B) Any point along Q2 represents a combination of resource outputs that
requires more human-made capital relative to any point along Q0 or Q1.
C) Any point along Q0 represents a combination of resource outputs that
requires more human-made capital relative to any point along Q1 or Q2.
D) Both a and b
E) None of the above

Question 23

A free market system

A) Allows for the determination of absolute scarcity by constructing a ratio of
two market-clearing prices
B) Provides information about the scarcity values of non-renewable resources
only
C) Exhibits a shortage when the supply of a resources exceeds the demand of
a resource
D) None of the above
E) All of the above

Question 24

Correcting for possible market price distortions

A) Is required because prices deliver perfect information on absolute scarcity
B) Is challenging because most ecosystem services are easily traded through
normal market mechanisms
C) Is easily done because it is known that that ecosystem services are
valuable
D) Allows one to estimate the value ecosystem services
E) All of the above

Question 25

In the factor market,

A) Supply provides information about households as resource owners
B) Firms are the suppliers of capital and natural resources
C) Households provide services for the product market
D) None of the above
E) All of the above