Exam 19: Natural Resource and Energy Economics

A mining company has the opportunity to extract from a coal reserve this year for a profit of $40 per pound. The current market rate of interest is 5 percent. The present value of this extraction is

An oil producer discovers an oil supply in Texas that can be pumped for a profit of $60 per barrel now, $65 per barrel in three years, $70 per barrel in five years, or $75 a barrel in seven years. The current market rate of interest is 5 percent. When should the oil producer extract the oil to obtain the most profit per barrel in present value terms?

Electricity generating plants with low fixed costs tend to have high operating costs.

Higher user costs imply that a resource should be extracted more quickly.

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.

Relative to 1800, the living standard of the average person today in the United States is about _____ times higher.

Present value allows us to weigh the benefits and costs of using resources today or in the future.

Discuss the problems with policies to limit catch size and the use of the total allowable catch (TAC)policy.

In electricity generation, it is most economically efficient to use a single energy source.

Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $7; Kyle's cost per ton is $11. Assume that the market price of sockeye salmon is $16 per ton. If Kara pays Kyle $6 per ton for his ITQs, and if she then catches her new limit of 4,000 tons, her profit would be

An electricity company has the opportunity to use natural gas to generate electricity at a cost of $30 per unit in 2 years. The current market rate of interest is 4 percent. The present value of this cost is about

Fish in the open ocean are protected by strong property rights.

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.

What are the likely trends for the demand for resources in the future?

According to demographers. The "demographic transition" resulting from an increase in living standards follows a pattern of

If energy use per capita in developed countries had leveled off, while GDP per capita had risen, then it must mean that

Which of the following is not one of the points made in "Tragedy of the Commons"?