Download Chapter 6

Problemset
Title
Introductory
Text
Self-Study Quiz
Question 1
Which one of the following provides the correct definition?
Hint:
Chapter 6, A Resource Taxonomy
By Elizabeth Wheaton
Type:
Feedback for Look at the definitions of current reserves, potential
Multiple Choice
all
reserves, and resource endowment.
incorrect
answers:
Answer
Graded
As
Feedback
Current reserves are known
resources that can profitably be
extracted at current prices.
Correct
Correct!
Potential reserves are the natural
Incorrect This is resource
occurrence of resources in the earth's
endowment.
crust.
Resource endowment is the amount Incorrect This is potential
of reserves available depending upon
reserves.
the price people are willing to pay
for those resources.
Current reserves are known
resources that can be extracted.
Question 2
Type:
Multiple Choice
Incorrect Current reserves
depend upon the
price of extraction.
Resources in which there is natural replenishment at a non-negligible
rate are called ______________.
Hint:
Chapter 6, A Resource Taxonomy
Feedback for Look at the definitions of environmental resources,
all
depletable resources, recyclable resources, and
incorrect
renewable resources.
answers:
Answer
Graded
As
Feedback
environmental
resources
Incorrect Environmental resources are not
necessarily naturally replenished.
depletable
resources
Incorrect Depletable resources are not
necessarily naturally replenished.
recyclable
resources
Incorrect Recyclable resources are not
necessarily naturally replenished.
renewable
resources
Correct
Correct!
Question 3
Some examples of renewable resources are ________.
Hint:
Chapter 6, A Resource Taxonomy
Type:
Feedback for Look at the definition of renewable resources.
Multiple Choice
all
incorrect
answers:
Answer
Graded
As
Feedback
copper wiring, aluminum,
paper, and glass
Incorrect These are recyclable
resources.
solar energy, water, fish,
forests, and animals
Correct
coal and wood
Incorrect These are depletable
resources.
copper wiring, solar energy,
and coal
Incorrect This is a combination of
resources.
Correct!
Question 4
When you assume that the marginal cost of extraction is constant, the
value of marginal user cost rises over time. Why?
Type:
Hint:
Chapter 6, Efficient Intertemporal Allocations: The
Multiple Choice
Two-Period Model Revisited
Feedback for Think about a depletable resource used over time.
all
incorrect
answers:
Answer
Graded
As
The marginal cost of
extraction pushes up the
value of marginal user
cost.
Incorrect Look at the definitions of
marginal cost of extraction and
marginal user cost.
There are more users of
the resources over time.
Incorrect The value of marginal user cost
goes up even if the number of
users of the resource stays the
same.
As a resource is depleted, Correct
its value increases due to
scarcity.
Producers refuse to pay
more than the current
marginal extraction cost.
Question 5
Feedback
Correct!
Incorrect This would not affect marginal
user cost.
Total marginal cost equals ___________________.
Hint:
Chapter 6, The N-Period Constant-Cost Case
Type:
Feedback for Look at the definition of total marginal cost.
Multiple Choice
all
incorrect
answers:
Question 6
Answer
Graded
As
Feedback
the sum of total extraction cost
and total user cost
Incorrect The sum of these two
gives you total cost.
the sum of marginal extraction
cost and total user cost
Incorrect Both costs must be
marginal costs.
the sum of marginal extraction
cost and marginal user cost
Correct
the sum of total extraction cost
and marginal user cost
Incorrect Both costs must be
marginal costs.
Correct!
Which of the following is true?
Hint:
Chapter 6, Transition to a Renewable Substitute
Type:
Feedback for Think about reasons why an industry would consider
Multiple Choice
all
transitioning to a renewable resource.
incorrect
answers:
Answer
Graded
As
Feedback
An industry would transition to a
Incorrect Costs are always a
renewable resource regardless of cost
consideration in
when public opinion decided "green
production.
was good".
An industry would transition to a
renewable resource when the
marginal user cost of the renewable
resource was less than the choke
price.
Incorrect Marginal extraction
cost must also be
considered.
An industry would transition to a
renewable resource when the
marginal cost of the renewable
resource was more than the choke
price.
Incorrect Look at the
definition of choke
price.
An industry would transition to a
renewable resource when the total
marginal cost of the renewable
resource was less than the choke
price.
Correct
Correct!
Question 7
Type:
Multiple Choice
If the marginal cost of extracting the depletable resource rises with the
cumulative amount extracted __________.
Hint:
Chapter 6, Increasing Marginal Extraction Cost
Feedback for Think about the costs associated with using up a
all
depletable resource.
incorrect
answers:
Answer
Graded
As
Feedback
marginal user cost can Incorrect Total marginal cost includes
be ignored
marginal user cost.
marginal user cost
declines over time
Correct
Correct!
marginal user cost
increases over time
Incorrect Look at the information on
increasing marginal extraction
cost.
opportunity cost
increases over time
Incorrect Marginal user cost is an
opportunity cost.
Question 8
Our analysis of efficient allocation of depletable resources could
change if we added any of the following concepts EXCEPT
_________.
Type:
Multiple Choice Hint:
Chapter 6, Exploration and Technological Progress
Feedback for Think about outside influences that could increase the
all
potential reserves of a depletable resource.
incorrect
answers:
Answer
Graded
As
Feedback
technological progress in extraction
Incorrect What other concepts
are involved?
exploration
Incorrect What other concepts
are involved?
technological progress in production Incorrect What other concepts
using the depletable resource
are involved?
increasing consumption of
depleteable resources
Correct
Correct!
Question 9
Which of the following will NOT increase efficiency in markets for
resources?
Type:
Hint:
Chapter 6, Market Allocations of Depletable Resources:
Multiple Choice
Appropriate Property Rights Structures
Feedback for Think about structures that are needed for market
all
incorrect
answers:
efficiency.
Answer
Graded
As
Feedback
Appropriate property right
structures
Incorrect This will increase
efficiency in the
resource market.
Profit-maximizing producers who Incorrect This will increase
consider both the present and the
efficiency in the
future
resource market.
Producers who are solely
concerned with present profit
maximizing
Correct
Correct!
The property rights of exclusivity, Incorrect This will increase
transferability, and enforceability
efficiency in the
resource market.
Question 10
Which of the following forms the bridge between environmental
economics and natural resource economics?
Type:
Hint:
Chapter 6, Market Allocations of Depletable Resources:
Multiple Choice
Environmental Costs
Feedback for Look at the definition of environmental costs.
all
incorrect
answers:
Answer
Graded
As
Feedback
Marginal costs
Incorrect This is not the bridge. What do the two
types of economics have in common?
Environmental
costs
Correct
Net benefit
Incorrect This is not the bridge. What do the two
types of economics have in common?
Market
allocation
Incorrect This is not the bridge. What do the two
types of economics have in common?
Correct!