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| 1 | |
Growing world population and incomes have resulted in a growing demand for basic commodities. The evidence suggests that the supply of commodities has grown: |
| | A) | even faster, resulting in rising commodity prices |
| | B) | slower, resulting in rising commodity prices |
| | C) | slower, resulting in falling commodity prices |
| | D) | even faster, resulting in falling commodity prices |
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| 2 | |
Compared to limiting the number of boats allowed to fish in a particular area, a system of individual transferable quotas will likely: |
| | A) | lead to more intensive fishing by bigger and faster boats |
| | B) | reduce the overall cost of the total catch |
| | C) | reduce the number of days the typical boat is out fishing |
| | D) | increase the size of the total catch |
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| 3 | |
Which of the following best exemplifies a renewable resource? |
| | A) | Pacific cod |
| | B) | Arizona copper |
| | C) | Alaska crude oil |
| | D) | Pennsylvania coal |
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| 4 | |
Suppose you own property containing a small vein of copper ore. By mining and selling the copper today, you could get net benefits of $4.00 per pound. Alternatively, you could wait for one year and get net benefits at that time of $4.10 per pound. If the interest rate is 5%, you should: |
| | A) | mine the copper next year, since the market price may go up even further |
| | B) | mine the copper next year, since $4.10 exceeds $4.00 |
| | C) | mine the copper today, since the present value of $4.10 received next year exceeds $4.00 |
| | D) | mine the copper today, since $4.00 today could be invested and return $4.20 next year |
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| 5 | |
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Suppose the current market price of this non-renewable resource is $10. Extraction costs are given by EC and the user cost is $3. In the first year, the firm depicted in the diagram should extract: |
| | A) | none of this resource, as the total cost of the resource exceeds $10 |
| | B) | all of this resource, as the user cost is only $3, which is less than the market price |
| | C) | Q0 units of the resource, as the total cost of extracting units in excess of this amount exceeds the market price |
| | D) | Q1 units of the resource, as the user cost concept only applies to renewable resources |
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| 6 | |
The fundamental trade-off facing small non-renewable extraction companies is: |
| | A) | the more they extract today, the lower the demand for the resource |
| | B) | the more they extract today, the less will be available to extract tomorrow |
| | C) | the more they extract today, the higher the cost of extraction tomorrow |
| | D) | the less they extract today, the lower the user cost of extraction tomorrow |
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| 7 | |
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If the graph shows the typical growth pattern of a forest, forest companies will most likely harvest the trees at a time somewhere: |
| | A) | between 0 and T0 |
| | B) | between T0 and T1 |
| | C) | between T1 and T2 |
| | D) | after T2 |
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| 8 | |
Demographers expect the world's population to: |
| | A) | rise for the next several years, peak at around 9 billion people, then begin to fall |
| | B) | continue to rise for the foreseeable future |
| | C) | continue to fall for the foreseeable future |
| | D) | rise rapidly for the next 200 years, then begin to level off |
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| 9 | |
If a firm expects it might lose the property rights to a natural resource it currently controls: |
| | A) | its user cost will rise and it will decrease its current rate of extraction |
| | B) | its user cost will fall and it will decrease its current rate of extraction |
| | C) | its user cost will rise and it will increase its current rate of extraction |
| | D) | its user cost will fall and it will increase its current rate of extraction |
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| 10 | |
Evidence for the U.S. since 1988 indicates that per capita energy usage: |
| | A) | and per capita GDP have both increased at the same rate, indicating little change in energy efficiency |
| | B) | has fallen while per capita GDP has increased dramatically, indicating improved energy efficiency |
| | C) | has increased while per capita GDP has leveled off, indicating a reduction in energy efficiency |
| | D) | has leveled off while per capita GDP has increased, indicating improved energy efficiency |
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