Question 1

Which of the following is true of earnings from land?

Accepted Answer

A) An increase in economic rent leads to an increase in the supply of land. 
B) A decrease in transfer earnings from land leads to an increase in its demand. 
C) An increase in economic rent does not lead to an increase in the supply of land. 
D) A decrease in transfer earnings from land leads to a decrease in its supply. 
E) An increase in economic rent raises the elasticity of supply of land. 
A) An increase in economic rent leads to an increase in the supply of land. 
B) A decrease in transfer earnings from land leads to an increase in its demand. 
C) An increase in economic rent does not lead to an increase in the supply of land. 
D) A decrease in transfer earnings from land leads to a decrease in its supply. 
E) An increase in economic rent raises the elasticity of supply of land. C

Question 2

Like profit-seeking,rent seeking is also a productive activity and contributes to the growth of the economy.

Accepted Answer

A) True 
 B)False  False

Question 3

On account of a massive construction boom in a country,the demand for iron ore increases substantially.This causes iron ore prices to escalate.Producers increase iron ore mining considerably in the short run,in spite of knowing that this will adversely affect future availability of ore.Which of the following is most similar to the scenario described above?

Accepted Answer

A) Corn producers hoard their supplies in order to induce a price hike. 
B) Petroleum manufacturers increase extraction in response to sky-rocketing fuel prices. 
C) The government of a country makes aforestation mandatory for lumber firms. 
D) Impressive revenue generation induces the government of a country to impose additional fuel surcharge. 
E) To discourage smoking,the government of a country increases sales tax on cigarettes. 
A) Corn producers hoard their supplies in order to induce a price hike. 
B) Petroleum manufacturers increase extraction in response to sky-rocketing fuel prices. 
C) The government of a country makes aforestation mandatory for lumber firms. 
D) Impressive revenue generation induces the government of a country to impose additional fuel surcharge. 
E) To discourage smoking,the government of a country increases sales tax on cigarettes. B

Question 4

Lobbying efforts by individuals and firms:

Accepted Answer

A) increase productive activities in the economy. 
B) merely transfer income and wealth from one individual or group to another. 
C) enable the firms to experience economies of scale. 
D) improves the overall standard of living in the economy. 
E) helps the economy to produce the efficient level of output. 
A) increase productive activities in the economy. 
B) merely transfer income and wealth from one individual or group to another. 
C) enable the firms to experience economies of scale. 
D) improves the overall standard of living in the economy. 
E) helps the economy to produce the efficient level of output.

Question 5

An increase in economic rent is simply a transfer from the buyer to the seller without any change in quantity.Identify the underlying assumption.

Accepted Answer

A) Quantity supplied remains unchanged even when economic rent increases. 
B) Quantity supplied is positively related to economic rent. 
C) The relation between quantity supplied and economic rent is indeterminate for nonrenewable resources. 
D) Bargaining power of buyers is greater than sellers. 
E) Consumer surplus is a positive function of economic rent. 
A) Quantity supplied remains unchanged even when economic rent increases. 
B) Quantity supplied is positively related to economic rent. 
C) The relation between quantity supplied and economic rent is indeterminate for nonrenewable resources. 
D) Bargaining power of buyers is greater than sellers. 
E) Consumer surplus is a positive function of economic rent.

Question 6

In the market for hardwood,everything else held constant,if the rate of interest increases:

Accepted Answer

A) the price of the hardwood will fall today. 
B) the lumberjacks will harvest fewer trees today. 
C) prices of boats and furniture will increase in the present period. 
D) the lumberjacks will harvest all the trees leaving nothing for the future. 
E) the price of the hardwood will fall in the future. 
A) the price of the hardwood will fall today. 
B) the lumberjacks will harvest fewer trees today. 
C) prices of boats and furniture will increase in the present period. 
D) the lumberjacks will harvest all the trees leaving nothing for the future. 
E) the price of the hardwood will fall in the future.

Question 7

In the market for land as a resource,the demand curve is elastic while the supply curve is perfectly inelastic.Identify the underlying assumption.

Accepted Answer

A) There are limited ways in which land can be used as a resource. 
B) Land as an input has large number of substitutes. 
C) There is a fixed supply of land. 
D) Land includes all immovable assets. 
E) Land looses productivity over time. 
A) There are limited ways in which land can be used as a resource. 
B) Land as an input has large number of substitutes. 
C) There is a fixed supply of land. 
D) Land includes all immovable assets. 
E) Land looses productivity over time.

Question 8

The category of resources economists call "land" refers to all of the following,except:

Accepted Answer

A) nonrenewable natural resources. 
B) renewable natural resources. 
C) oceans. 
D) minerals. 
E) buildings. 
A) nonrenewable natural resources. 
B) renewable natural resources. 
C) oceans. 
D) minerals. 
E) buildings.

Question 9

An increase in economic rent is accompanied by an increase in the quantity supplied of a resource.

Accepted Answer

A) True 
 B)False

Question 10

The supply of land being fixed,the earnings from land are called transfer earnings.

Accepted Answer

A) True 
 B)False

Question 11

If corporate firms start offering higher dividends on their stock,the price of the exhaustible resource tends to fall in the current period.

Accepted Answer

A) True 
 B)False

Question 12

The market for renewable resources often fail to allocate the resources to their highest-valued uses.

Accepted Answer

A) True 
 B)False

Question 13

An increase in demand for housing will lead to less land to be available for cultivation.

Accepted Answer

A) True 
 B)False

Question 14

Unproductive actions designed to increase income or wealth are known as:

Accepted Answer

A) transfer search. 
B) incorporation. 
C) profit seeking. 
D) income search. 
E) rent seeking. 
A) transfer search. 
B) incorporation. 
C) profit seeking. 
D) income search. 
E) rent seeking.

Question 15

If the rate of extraction of a renewable resource is greater than its rate of replenishment,the price of the resource is likely to fall in future.

Accepted Answer

A) True 
 B)False

Question 16

The marginal cost of extraction of a nonrenewable resource increases with passage of time because:

Accepted Answer

A) the technology used in extraction depreciates in value. 
B) the price of the product that uses this resource increases. 
C) the exchange rate in the international market appreciates. 
D) the tragedy of commons problem is encountered. 
E) the resource gradually becomes scarce. 
A) the technology used in extraction depreciates in value. 
B) the price of the product that uses this resource increases. 
C) the exchange rate in the international market appreciates. 
D) the tragedy of commons problem is encountered. 
E) the resource gradually becomes scarce.

Question 17

If a hydel power plant expects the interest rate to rise in near future,it might resort to installation of more turbines and dynamos in its firm in the present period.

Accepted Answer

A) True 
 B)False

Question 18

With the passage of time as the availability of an exhaustible resource declines,the cost of extraction of the resource increases.

Accepted Answer

A) True 
 B)False

Question 19

The supply of hydro electric power:

Accepted Answer

A) can be varied infinitely in the short run. 
B) remains fixed in the long run. 
C) decreases with increase in price in the short run. 
D) reduces in the future due to continuous consumption today. 
E) increases with increase in price in the long run. 
A) can be varied infinitely in the short run. 
B) remains fixed in the long run. 
C) decreases with increase in price in the short run. 
D) reduces in the future due to continuous consumption today. 
E) increases with increase in price in the long run.

Question 20

The supply curve in the market for land that has limited availability is:

Accepted Answer

A) perfectly elastic. 
B) relatively inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) relatively elastic. 
A) perfectly elastic. 
B) relatively inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) relatively elastic.

Exam 17: The Land Market and Natural Resources

Which of the following is true of earnings from land?

Like profit-seeking,rent seeking is also a productive activity and contributes to the growth of the economy.

Lobbying efforts by individuals and firms:

An increase in economic rent is simply a transfer from the buyer to the seller without any change in quantity.Identify the underlying assumption.

In the market for hardwood,everything else held constant,if the rate of interest increases:

In the market for land as a resource,the demand curve is elastic while the supply curve is perfectly inelastic.Identify the underlying assumption.

The category of resources economists call "land" refers to all of the following,except:

An increase in economic rent is accompanied by an increase in the quantity supplied of a resource.

The supply of land being fixed,the earnings from land are called transfer earnings.

If corporate firms start offering higher dividends on their stock,the price of the exhaustible resource tends to fall in the current period.

The market for renewable resources often fail to allocate the resources to their highest-valued uses.

An increase in demand for housing will lead to less land to be available for cultivation.

Unproductive actions designed to increase income or wealth are known as:

If the rate of extraction of a renewable resource is greater than its rate of replenishment,the price of the resource is likely to fall in future.

The marginal cost of extraction of a nonrenewable resource increases with passage of time because:

If a hydel power plant expects the interest rate to rise in near future,it might resort to installation of more turbines and dynamos in its firm in the present period.

With the passage of time as the availability of an exhaustible resource declines,the cost of extraction of the resource increases.

The supply of hydro electric power:

The supply curve in the market for land that has limited availability is:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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