Question 1

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

Accepted Answer

While there are concerns about the depletion of non-renewable sources of energy such as oil and coal, there is also a significant push towards the development and use of renewable sources of energy such as wind, solar, and hydropower. Therefore, it is not accurate to say that economists widely fear that the world will run out of energy in the next century.

Question 2

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.

Accepted Answer

If per-capita energy usage has leveled off while per-capita GDP has risen, it indicates that each dollar of output produced required less energy, showing an increase in energy efficiency or a shift towards less energy-intensive industries.

Question 3

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

Accepted Answer

While petroleum is a significant source of energy in the US, it is not the largest source of electric energy generated. The largest sources are natural gas and coal.

Question 4

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

Accepted Answer

When the price of oil falls, it becomes cheaper to use it as an energy source, making it less attractive to invest in alternative energy sources which may still be more expensive to develop and use. Therefore, the economic viability of alternative energy sources tends to fall with the fall in oil prices.

Question 5

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.

Accepted Answer

Better technology can help to increase efficiency and productivity, leading to more output with the same amount of energy input. This means that future living standards can rise without relying solely on increased energy consumption.

Question 6

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.

Accepted Answer

This statement is true. As poorer countries develop and their citizens' incomes increase, they will demand more resources such as energy, food, and raw materials. This could potentially strain global supply chains and natural resources.

Question 7

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

Accepted Answer

This is likely to be true as advancements in technology can lead to cost reductions in the production of alternative sources of energy.

Question 8

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

Accepted Answer

A fishery collapse happens when the fish population declines due to various factors such as overfishing, habitat destruction, pollution, and climate change.

Question 9

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

Accepted Answer

This is true. In order to optimize energy generation and minimize costs, a combination of energy sources such as natural gas, coal, wind, solar, hydro, and nuclear are often utilized together. Some of these sources may be more expensive to produce or acquire than others, but by using a mix, energy companies can balance costs while also striving to reduce their carbon footprint.

Question 10

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

Accepted Answer

The price of harvesting a renewable resource does indeed affect when and how much will be harvested. If the price is too low, it may not be economically feasible to harvest the resource, whereas if the price is too high, it may lead to overexploitation and damage to the sustainability of the resource. Therefore, the price plays a crucial role in determining the harvesting decisions for renewable resources.

Question 11

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

Accepted Answer

In the open ocean, there is no defined ownership over fish, making it difficult to enforce conservation efforts.

Question 12

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.

Accepted Answer

Recent studies have shown that when the price of a barrel of oil rises to $80 or higher, the cost of producing biodiesel becomes comparable to or lower than that of traditional diesel fuel, making it economically viable as an alternative fuel.

Question 13

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.

Accepted Answer

Studies have shown that as people's incomes grow, they tend to become more concerned about the environment and are willing to pay more for goods and services that are environmentally friendly. This can lead to innovations in clean technology and energy efficiency, which can ultimately help to reduce greenhouse gas emissions and protect natural resources.

Question 14

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

Accepted Answer

Increased current extraction of a nonrenewable resource depletes the available reserves faster, thereby increasing the user costs for the extraction firm due to the reduced future availability of the resource.

Question 15

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

Accepted Answer

Conflict diamonds, also known as "blood diamonds," are mined in war zones and sold to finance armed conflict against governments. The issue with conflict diamonds is not related to the enforcement of property rights leading to rapid extraction, but rather the lack of regulation and oversight that allows these diamonds to fund violence and exploitation.

Question 16

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

Accepted Answer

The combination of TAC and ITQ has been shown to be effective in some cases for promoting sustainable management of fisheries by incentivizing individuals to conserve and manage their quota effectively. However, there are also criticisms of this approach, such as concerns about concentration of quota ownership and potential for overfishing if the TAC is set too high. Therefore, the statement is not entirely true and requires more nuanced analysis.

Question 17

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

Accepted Answer

Property rights refer to the legal rights an individual has over their property or resources. Clear definition and enforcement of property rights encourage responsible conservation and management of resources, as the individual has a vested interest in their preservation.

Question 18

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.

Accepted Answer

Resource extraction companies have an incentive to balance current profits with future extraction opportunities. Therefore, they may opt to limit current extraction to only those units which are more profitable to extract in the present rather than in the future. This strategy allows them to maximize their overall profit over time.

Question 19

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

Accepted Answer

While oil is a major source of energy, renewable energy sources such as solar, wind, hydro, geothermal, and biomass can provide significant amounts of energy as well. Therefore, the world will not run out of energy if it runs out of oil, but rather it will need to shift towards alternative energy sources.

Question 20

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

Accepted Answer

Optimal resource allocation requires assessing the potential uses of a resource, the benefits it can provide, and the costs associated with its allocation in both the present and the future. This helps ensure that resources are allocated efficiently and effectively towards achieving desired outcomes.

Quiz 19: Natural Resource and Energy Economics