Question 1

How are the economic forces that govern renewable resources different than those that govern non-renewable resources?

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Question 2

Empirical evidence suggests that the relative scarcity of most resources is

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Question 3

Resources that are not created or renewed at a significant rate, and therefore could potentially be used up over time, are called

Accepted Answer

Nonrenewable resources are those that are not created or renewed at a significant rate and can be used up over time. Examples of nonrenewable resources include fossil fuels like coal, oil, and natural gas, as well as minerals like gold and copper. Once these resources are depleted, they cannot be replaced in our lifetimes. In contrast, renewable resources are those that are replenished naturally and can be sustained over time, like solar and wind energy, as well as crops and forests that can be replanted.

Question 4

What happens to a resource as it becomes scarcer?

Accepted Answer

As a resource becomes scarcer, the supply decreases relative to demand. This creates a situation where suppliers will raise prices to maximize profits. Higher prices will either encourage producers to increase production (leading to a future increase in supply) or lower demand (leading to a future decrease in demand). Thus, the price rise will help balance supply and demand and create incentives for increasing future supply.

Question 5

The overall trend in resource prices has been

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Question 6

When natural resources are not traded, or where markets are not allowed to function as well as they can under a system of well-defined property rights, the problems of ____ and ____ are common.

Accepted Answer

When resources are not traded or markets do not function well due to poorly defined property rights, two common problems are waste and scarcity. Without market mechanisms to allocate resources efficiently, there may be excess production of some goods and shortages of others, leading to waste and scarcity, respectively.

Question 7

An example of a renewable resource is

Accepted Answer

Timber is a renewable resource because more trees can be planted and grown to replace the harvested ones. Coal and oil are non-renewable resources because they take millions of years to form and cannot be replenished within a human lifetime. Diamonds are also non-renewable resources because they are formed over millions of years deep within the earth and cannot be created by humans.

Question 8

"If China and India continue their economic expansion, the world cannot provide enough raw materials without terrible shortages worldwide." Evaluate this statement.

Accepted Answer

While increased demand from China and India may lead to some scarcity and higher prices, market forces such as increased efficiency of production and deployment of new technologies will help to balance the supply and demand of raw materials worldwide. This means that the statement is false and that the world can provide enough raw materials with market adjustments.

Question 9

The concept of "proved reserves" refers to the amount of a resource that can be produced

Accepted Answer

Proved reserves refer to the amount of a resource that can be produced at current levels of expected prices and technology. This means that it takes into account the economic feasibility of extracting the resource and producing it in the near future. The reserve estimate is based on the assumption of uniform technological and economic conditions, and it may change as new technology and economic circumstances arise.

Question 10

"Doomsday" predictions about the imminent depletion of one or more of our vital natural resources usually are

Accepted Answer

The doomsday predictions about the depletion of natural resources are often overstated because they do not take into account human responses to changes in relative prices. As resources become scarcer, their prices rise, which encourages people to conserve or find substitutes. This is not reflected in the predictions of imminent depletion, which assume a fixed rate of consumption regardless of price changes. Therefore, while there may be concerns about resource depletion, the market economy's relative price mechanism ensures that scarcity and depletion will be addressed over time by encouraging conservation and substitution.

Question 11

Predictions that natural resources such as oil will be essentially used up in the next few decades have

Accepted Answer

All of the statements are true. Predictions about natural resource depletion have been made for a long time, but technology and exploration have often resulted in the discovery of new reserves. Projections based strictly on proved reserves may not account for future discoveries or advancements in extraction technology. Additionally, price plays a key role in determining how much of a resource is consumed and produced.

Question 12

Technological advances in agriculture (such as chemical fertilizers and harvesting equipment) have helped to preserve and grow forest land because they

Accepted Answer

Technological advances in agriculture have allowed for increased efficiency in food production, leading to reduced land use for agriculture. This, in turn, can help preserve and grow forest land. Chemical fertilizers can also improve the health of soil, making it more suitable for agriculture without the need to clear more forest land. Harvesting equipment can also reduce the need for clear-cutting by allowing for more precise tree removal, and can facilitate reforestation efforts. Overall, these advances can help balance the need for agriculture with the preservation of forest land.

Question 13

Compared with 1920, the United States today has

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Question 14

Proved reserves are likely to underestimate the total quantity of the resource in the ground because

Accepted Answer

Proved reserves are based on current technology and prices, and do not take into account future advancements in technology or changes in prices. Therefore, the actual quantity of the resource in the ground could be greater than what is currently known as proved reserves.

Question 15

Why do water supply problems exist in many parts of the world?

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Question 16

Water supply problems are generally the result of

Accepted Answer

Missing or incomplete markets for water can lead to inefficient allocation of water resources and water scarcity. Too much trading of water can exacerbate this issue and lead to inequalities in water access. However, government subsidies to desalination may not necessarily address the root cause of water supply problems and may not be economically sustainable in the long term.

Question 17

Doomsday projections have generally

Accepted Answer

Doomsday projections have been wrong, as they are often based on speculation and uncertainty rather than concrete evidence. While some events may occur that lead to catastrophic consequences, the exact timing and severity of such events cannot always be predicted with accuracy.

Question 18

The amount of a resource consumed depends on

Accepted Answer

All three factors listed can influence the amount of a resource consumed. If the price of a resource increases, consumers may look for substitutes or reduce consumption altogether. If consumer income increases, they may have more money to spend on the resource. And if substitute resources become cheaper, consumers may switch to those instead. Therefore, all of the above options can impact the amount of a resource consumed.

Question 19

While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal.

Accepted Answer

The structure of incentives accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal. Government programs, foreign competition, and taxation do not necessarily prevent or encourage depletion.

Question 20

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will rise and

Accepted Answer

If the market price is unregulated and the proved reserves of titanium are unexpectedly low, then the price of titanium is likely to rise. This will increase the incentive for exploration and for developing more effective recovery methods, which could result in the discovery of new supplies of titanium. At the same time, the higher price will encourage consumers and manufacturers to conserve titanium and to seek out substitutes, which will further reduce demand for it. Therefore, all of the above choices are likely to occur in response to the price increase.

Special Topic 13 : The Question of Resource Exhaustion