Question 1

Commercially run forestry companies that have secure property rights over their trees

Accepted Answer

Commercially run forestry companies with secure property rights over their trees are likely to take a long-term approach to their business. They will not harvest their trees as soon as possible, as this would result in a finite resource that would quickly be exhausted. Instead, they will aim to manage the forests sustainably by only harvesting mature trees and replanting those that have been harvested, ensuring a continuous supply of timber in the long term. This approach benefits the company financially as well as the environment and local communities, as it allows them to maintain a stable source of income and create jobs while preserving the forest ecosystem.

Question 2

Linda fishes for mahi mahi at a cost of $10 per ton. Tessa fishes at a cost of $8 per ton. Both have one 1,000-ton ITQ and the current market price is $13. If Linda sold her ITQ to Tessa for $4,000, society would benefit from

Accepted Answer

Tessa fishes at a lower cost ($8 per ton) compared to Linda ($10 per ton). If Tessa uses both ITQs, she saves $2 per ton on 1,000 tons, totaling $2,000 in savings, which represents an efficiency gain for society.

Question 3

A fishery collapse occurs when the

Accepted Answer

A fishery collapse occurs when the fishery's population is harvested at a higher rate than it reproduces. This can lead to a depletion of the fish stock, making it difficult for the fishery to continue operations. The collapse can also have negative impacts on the ecosystem and the economy, as fish are an important source of food and income for many communities.

Question 4

What is most likely to happen when no logger owns the property rights to a forest that is open to logging?

Accepted Answer

When no logger owns the property rights to a forest that is open to logging, there is no incentive for any one logger to limit their use of the resource. This often leads to overlogging, as multiple loggers try to extract as much value as they can before the resource is depleted.

Question 5

Matt fishes for tuna at a cost of $4 per ton. John fishes at a cost of $6 per ton. Each has a 1,000-ton ITQ. The current market price is $8 per ton. What amount could Matt pay John to induce him to sell his ITQ?

Accepted Answer

To find the amount that Matt could pay John to induce him to sell his ITQ, we need to calculate the profit difference between the two fishermen.

Matt's profit per ton: $8 (market price) - $4 (fishing cost) = $4 per ton 
Matt's total profit with 1,000-ton ITQ: $4 x 1,000 = $4,000

John's profit per ton: $8 (market price) - $6 (fishing cost) = $2 per ton 
John's total profit with 1,000-ton ITQ: $2 x 1,000 = $2,000

The difference in profit between Matt and John is $4,000 - $2,000 = $2,000. Therefore, Matt could pay John up to $2,000 to induce him to sell his ITQ and still make a profit. Thus, the best choice is C.

Question 6

In 2015, about what percentage of the world's land area was forested?

Accepted Answer

According to the Food and Agriculture Organization (FAO), in 2015, approximately 30 percent of the world's land area was forested.

Question 7

Joe fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Joe offered to sell his ITQ to Ronny for $7,000, he and Ronny would

Accepted Answer

The answer of Joe fishes for swordfish at a cost...

Question 8

Under the total allowable catch (TAC) system of fishing,

Accepted Answer

Under the total allowable catch system, biologists determine the sustainable level of catch for each species, and the fishing quota is set accordingly. This is done to ensure that fishing activities do not threaten the long-term survival of fish populations. There may be additional regulations regarding the number of fishing boats or the number of days a species can be caught, but these are not intrinsic to the TAC system. Prioritizing species based on market value is not a component of sustainable fishing practices.

Question 9

According to data from the UN Food and Agriculture Organization, from 2010 to 2015 the amount of land worldwide that's covered by forests

Accepted Answer

From 2010 to 2015, the global forest area decreased by approximately 3 percent due to deforestation and land-use changes.

Question 10

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 1,000-ton ITQ, and the current market price is $13 per ton. If Linda offered to sell her ITQ to Tessa for $3,000, she and Tessa would

Accepted Answer

Currently, Linda and Tessa can both catch 1,000 tons of mahi mahi. If they both caught and sold their full quota, Linda would make a profit of $3,000 ($13 selling price - $10 cost per ton) and Tessa would make a profit of $5,000 ($13 - $8).

If Linda sells her ITQ to Tessa for $3,000, she gives up the opportunity to catch and sell 1,000 tons of mahi mahi, which would have given her a profit of $3,000. Tessa now has a total quota of 2,000 tons and could make a profit of $10,000 ($13 - $8) if she caught and sold all of it.

Therefore, if Linda sells her ITQ to Tessa for $3,000, Tessa would be better off because she could catch and sell more fish, while Linda would be worse off because she would lose the opportunity to catch and sell fish. Thus, they would not make the sale.

Question 11

Which fishery product in the U.S. had the greatest market value in terms of its catch in 2014?

Accepted Answer

According to NOAA Fisheries, lobster had the highest market value in terms of its catch in 2014, amounting to $541 million.

Question 12

According to data from the UN Food and Agriculture Organization, which of the following nations saw a significant decline in the amount of land covered by forests in the period 2010-2015?

Accepted Answer

According to data from the UN Food and Agriculture Organization, Nigeria saw a significant decline in the amount of land covered by forests in the period 2010-2015.

Question 13

Sue fishes for cod at a cost of $2 per ton, while Dave fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ and the current market price is $5 per ton. If Dave offered to sell his ITQ to Sue for $2,000, he and Sue would

Accepted Answer

Currently, both Sue and Dave have one ITQ allowing them to catch 1,000 tons of cod. Sue's cost of fishing for cod is $2 per ton, and Dave's cost is $4 per ton. At the current market price of $5 per ton, Sue's profit would be $3 per ton, while Dave's profit would only be $1 per ton.

If Dave offers to sell his ITQ to Sue for $2,000, Sue would be able to increase her catch to 2,000 tons at a cost of $2 per ton, resulting in a profit of $3 per ton or a total profit of $6,000. Dave would be able to sell his ITQ for $2,000, which is more than he would make by fishing with it himself. Therefore, both Sue and Dave would be better off by making the sale, making choice A the correct answer.

Question 14

According to Seafish.org, approximately what percentage of the world's fisheries in 2014 were overexploited?

Accepted Answer

According to Seafish.org, approximately 30 percent of the world's fisheries were overexploited in 2014.

Question 15

What is a tradable fishing limit that gives the holder the right to harvest a given quantity of fish during a given time period?

Accepted Answer

An individual transferable quota (ITQ) is a tradable fishing limit that gives the holder the right to harvest a given quantity of fish during a given time period. It is intended to promote sustainable fishing practices by providing incentives to conserve fish populations while allowing fishermen to earn a profit by efficiently utilizing their share of the quota. The ITQ system has been implemented in various countries, including New Zealand and Iceland, with some success in promoting sustainable fisheries management.

Question 16

Donald fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Donald sold his ITQ to Ronny for $5,000, society would benefit from

Accepted Answer

Ronny can fish at a lower cost ($4 per ton) compared to Donald ($6 per ton). By transferring the ITQ to Ronny, society saves $2 per ton for 1,000 tons, resulting in an efficiency savings of $2,000.

Question 17

Commercially run forestry companies have the most profit incentive to harvest trees from a forest

Accepted Answer

Commercially run forestry companies have the most profit incentive to harvest trees before they are fully mature because the trees are more valuable when they are younger and have not yet reached full maturity. Once the trees are fully mature, they may start to decline in value and quality, making them less profitable. Harvesting trees early in the forest growth cycle or after they can no longer grow may not be as profitable as harvesting them before they are fully mature.

Question 18

The key difficulty with fishery management is that

Accepted Answer

Establishing property rights over fish is difficult because they are a common-pool resource that cannot be exclusively owned by any one individual or group without catching and killing them. This makes fishery management a challenging task as it involves balancing the interests of different groups, such as fishermen, consumers, and conservationists while ensuring the sustainable use of the resource.

Question 19

According to data from the UN Food and Agriculture Organization, which of the following nations had the fastest growing area of forested land in the period 2010-2015?

Accepted Answer

The correct answer is D) Iceland, as surprising as it may seem. During the period of 2010-2015, Iceland’s forested areas increased by 1.2% per year, the fastest rate in the world.

Question 20

The total allowable catch (TAC) system differs from the individual transferable quota (ITQ) system in that

Accepted Answer

The ITQ system allocates specific quotas to individuals or companies, limiting their harvest, while TAC sets a limit on the total harvest for the entire fishery.

Quiz 19: Natural Resource and Energy Economics