Exam 19: Natural Resource and Energy Economics

Define fishery, and describe the resource problem with fisheries.

The Economist's Commodity Price Index reveals that the supply of productive resources has increased faster than the demand for decades.

Why is the overall world population still increasing? What are the expectations for population growth in the future?

Malthus argued that any increase in living standards would cause a decrease in population growth.

Under the total allowable catch (TAC)system of fishing,

Which of the following policies has succeeded in reducing fishery catch sizes without creating an "arms race" among fishers?

An oil producer discovers an oil supply in Texas that can be pumped for a profit of $50 per barrel now, $60 per barrel in three years, $80 per barrel in five years, or $90 a barrel in seven years. The current market rate of interest is 3 percent. When should the oil producer extract the oil to obtain the most profit per barrel in present value terms?

An increase in the present value of the profit that can be obtained by delaying resource extraction will lead profit-maximizing firms to

Refer to the diagram, assuming that the firm represented is operating on curve TC ₀ . What is the user cost of extracting a unit of this resource?

In the extraction of a nonrenewable resource such as coal, the mining firm faces "user costs," which refers to the cost of digging out the coal, running the mine, and transporting the coal.

Over the past decade, U.S. per capita consumption of water

Alex and Belle are both loggers wanting to harvest timber from the same forest. Alex prefers to harvest and replant at a sustainable rate; Belle wants to harvest as many trees as possible to maximize short-run profit and then move on. They face the same production costs. If property rights are poorly enforced or nonexistent,

Which of the following is the best example of a market failure that would lead a firm to extract resources at a rate that is faster than the rate that would maximize its long-term stream of profits?

Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $20; Oli's cost per ton is $25. If the market price of Pacific halibut is $35 per ton, and Melanie and Oli both catch their quota, their combined profit will be

Demographers expect world population to peak and then decline in the twenty-first century.

Refer to the diagram, assuming that the firm represented is operating on curve 1. If the current price of the resource rises by $20, the optimal quantity extracted in the first year will

Commercially run forestry companies that have secure property rights over their trees

A mining company's extraction costs curve is

A profit-maximizing company should extract a nonrenewable resource in the present up to the quantity where the

An oil company is considering drilling in the Gulf at a current cost of $300,000 with an expected profit of $500,000 in three years. The current market rateof interest is 10 percent. Should the company make the investment?