Question 1

For resources with upward-sloping supply curves:

Accepted Answer

A) earnings consist solely of economic rent. 
B) earnings consist of both transfer earnings and economic rent. 
C) earnings are called transfer earnings. 
D) earnings are called dividends. 
E) earnings consist entirely of in-kind transfers. 
A) earnings consist solely of economic rent. 
B) earnings consist of both transfer earnings and economic rent. 
C) earnings are called transfer earnings. 
D) earnings are called dividends. 
E) earnings consist entirely of in-kind transfers.

Question 2

The role of the market for renewable resources is to determine a price at which the quantity of a resource is just sufficient to enable the resource to renew itself at a rate that best satisfies society's wants.

Accepted Answer

A) True 
 B)False

Question 3

In the market for both renewable and nonrenewable resources,the timing of the use of resources depends on:

Accepted Answer

A) the alternatives uses to which the resource is put. 
B) the market rate of interest. 
C) the availability of substitutes. 
D) the elasticity of demand for resources. 
E) government regulations. 
A) the alternatives uses to which the resource is put. 
B) the market rate of interest. 
C) the availability of substitutes. 
D) the elasticity of demand for resources. 
E) government regulations.

Question 4

Privatization of common property leads to overexploitation of natural resources.

Accepted Answer

A) True 
 B)False

Question 5

Because there is a finite supply of a nonrenewable resource:

Accepted Answer

A) it has inadequate substitutes. 
B) any use of that resource today will leave less available for tomorrow. 
C) such resources are replenished faster than they are consumed. 
D) the government subsidizes the extraction of such resources. 
E) any use of that resource today means the value of the resource in the future will be less. 
A) it has inadequate substitutes. 
B) any use of that resource today will leave less available for tomorrow. 
C) such resources are replenished faster than they are consumed. 
D) the government subsidizes the extraction of such resources. 
E) any use of that resource today means the value of the resource in the future will be less.

Question 6

The earnings of which of the following resources will comprise entirely of economic rent?

Accepted Answer

A) Unskilled labor 
B) Coal 
C) Timber 
D) Water 
E) Biomass 
A) Unskilled labor 
B) Coal 
C) Timber 
D) Water 
E) Biomass

Question 7

In the market for crude oil,everything held constant,if rate of interest of simple bank accounts or interest-bearing investments decline:

Accepted Answer

A) the consumption of crude oil declines in the present period. 
B) the extraction of crude oil will increase today. 
C) the price of the crude oil in the international market falls in the present period. 
D) greater research and developments are conducted to locate new sites of crude oil in the present period. 
E) the extraction of crude oil will fall in the present period. 
A) the consumption of crude oil declines in the present period. 
B) the extraction of crude oil will increase today. 
C) the price of the crude oil in the international market falls in the present period. 
D) greater research and developments are conducted to locate new sites of crude oil in the present period. 
E) the extraction of crude oil will fall in the present period.

Question 8

The market's role is to ensure that nonrenewable resources are allocated across time to where they are most highly valued.This implies,if more is used today:

Accepted Answer

A) the future supply curve shifts downward. 
B) financial investments offer a lower rate of return. 
C) the return on saving the resource for future use rises. 
D) the expected demand for the resource in the future is low. 
E) technological advancement will guarantee a steady future supply. 
A) the future supply curve shifts downward. 
B) financial investments offer a lower rate of return. 
C) the return on saving the resource for future use rises. 
D) the expected demand for the resource in the future is low. 
E) technological advancement will guarantee a steady future supply.

Question 9

Which of the following actions can be categorized as rent seeking?

Accepted Answer

A) Increase in the income tax rates by the government 
B) Lobbying efforts of individuals or groups to gain favors from the government 
C) Profit maximizing firms charging a price greater than their marginal costs 
D) Export of goods from developing to developed countries 
E) Government intervention in the real estate market 
A) Increase in the income tax rates by the government 
B) Lobbying efforts of individuals or groups to gain favors from the government 
C) Profit maximizing firms charging a price greater than their marginal costs 
D) Export of goods from developing to developed countries 
E) Government intervention in the real estate market

Question 10

As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future,and how much to extract,an equilibrium arises when:

Accepted Answer

A) the cost of extracting such resources is equal to its price. 
B) the rate of return for such resources equals the rate of interest on alternative uses of the funds. 
C) the cost of extracting such resources is equal to the price of the commodity using these resources. 
D) the price of such resources is equal to the rate of interest of bank accounts and other interest-bearing investments. 
E) the rate of return on alternative investments is equal to the cost of extracting such resources. 
A) the cost of extracting such resources is equal to its price. 
B) the rate of return for such resources equals the rate of interest on alternative uses of the funds. 
C) the cost of extracting such resources is equal to the price of the commodity using these resources. 
D) the price of such resources is equal to the rate of interest of bank accounts and other interest-bearing investments. 
E) the rate of return on alternative investments is equal to the cost of extracting such resources.

Question 11

What is the most likely consequence when people's preference for current consumption rises in relation to future consumption?

Accepted Answer

A) Interest rates will fall,and the rate of extraction of exhaustible natural resources will decrease. 
B) Interest rates will fall,and the rate of extraction of exhaustible natural resources will increase. 
C) Interest rates will rise,and the rate of extraction of exhaustible natural resources will decrease. 
D) Interest rates will rise,and the rate of extraction of exhaustible natural resources will increase. 
E) Interest rates will fall,and there will be no effect on the rate of extraction of exhaustible natural resources. 
A) Interest rates will fall,and the rate of extraction of exhaustible natural resources will decrease. 
B) Interest rates will fall,and the rate of extraction of exhaustible natural resources will increase. 
C) Interest rates will rise,and the rate of extraction of exhaustible natural resources will decrease. 
D) Interest rates will rise,and the rate of extraction of exhaustible natural resources will increase. 
E) Interest rates will fall,and there will be no effect on the rate of extraction of exhaustible natural resources.

Question 12

Unlike nonrenewable resources,the timing of extraction of renewable resources are independent of the market rate of interest.

Accepted Answer

A) True 
 B)False

Question 13

Gold mining and the supply of gold not only depend on its price but also on the market rate of interest.

Accepted Answer

A) True 
 B)False

Question 14

The people of Andres,a small fishing village in a country,are facing extremely difficult times as their source of livelihood is threatened.Unregulated by the government,the coastline was subject to overfishing for a long time,adversely affecting the stock of fish.The variety of fish has declined and it takes much longer to haul in a decent catch these days.People in Andres are worried that they may have to migrate to other areas or look for alternative sources to earn a living.Which of the following is most similar to this scenario?

Accepted Answer

A) Oil producers hoard the extracted oil to increase prices. 
B) Public highways get congested because they are nonexclusive. 
C) Poaching of the Javan rhino for its priced horns in unprotected forest belts of Indonesia has led to its near extinction. 
D) People in Jinbong village now have to pay to be able to fish in the local pond. 
E) A farmer shifts from potato to corn cultivation because the latter offers more profits. 
A) Oil producers hoard the extracted oil to increase prices. 
B) Public highways get congested because they are nonexclusive. 
C) Poaching of the Javan rhino for its priced horns in unprotected forest belts of Indonesia has led to its near extinction. 
D) People in Jinbong village now have to pay to be able to fish in the local pond. 
E) A farmer shifts from potato to corn cultivation because the latter offers more profits.

Question 15

If coal is extracted in an unsustainable manner in the current period,the price for steel is likely to increase in future.

Accepted Answer

A) True 
 B)False

Question 16

The markets for renewable and nonrenewable resources operate to ensure that:

Accepted Answer

A) the producers using these resources earn above-normal profits even in the long run. 
B) the current and future prices of such resources remain high. 
C) the cost of extraction of such resources increase with increase in price. 
D) the current price of such resources should remain low but the future prices should increase to increase profitability of the producers. 
E) the current and future wants for these resources are satisfied in the least costly manner. 
A) the producers using these resources earn above-normal profits even in the long run. 
B) the current and future prices of such resources remain high. 
C) the cost of extraction of such resources increase with increase in price. 
D) the current price of such resources should remain low but the future prices should increase to increase profitability of the producers. 
E) the current and future wants for these resources are satisfied in the least costly manner.

Question 17

What are the earnings of a resource with a perfectly elastic supply curve called?

Accepted Answer

A) Transfer earnings 
B) Dividends 
C) Economic rent 
D) Capital gain 
E) Interest 
A) Transfer earnings 
B) Dividends 
C) Economic rent 
D) Capital gain 
E) Interest

Question 18

If the owner of a nonrenewable resource expects his profits to be high in future,he will abstain from resource extraction in the present period.

Accepted Answer

A) True 
 B)False

Question 19

Common ownership of resources:

Accepted Answer

A) is a system by which the government allocates the rights to harvest renewable resources. 
B) may fail to ensure that harvesting of renewable resources does not exceed the maximum sustainable yield. 
C) is an environmentally effective method of correcting for an externality problem in renewable resource conservation. 
D) efficiently controls the harvesting of renewable resources. 
E) usually helps in preventing market failures. 
A) is a system by which the government allocates the rights to harvest renewable resources. 
B) may fail to ensure that harvesting of renewable resources does not exceed the maximum sustainable yield. 
C) is an environmentally effective method of correcting for an externality problem in renewable resource conservation. 
D) efficiently controls the harvesting of renewable resources. 
E) usually helps in preventing market failures.

Question 20

When natural resources are commonly owned,the exhaustion of these resources are evenly spread over current and future periods.

Accepted Answer

A) True 
 B)False

Exam 17: The Land Market and Natural Resources

For resources with upward-sloping supply curves:

The role of the market for renewable resources is to determine a price at which the quantity of a resource is just sufficient to enable the resource to renew itself at a rate that best satisfies society's wants.

In the market for both renewable and nonrenewable resources,the timing of the use of resources depends on:

Privatization of common property leads to overexploitation of natural resources.

Because there is a finite supply of a nonrenewable resource:

The earnings of which of the following resources will comprise entirely of economic rent?

In the market for crude oil,everything held constant,if rate of interest of simple bank accounts or interest-bearing investments decline:

The market's role is to ensure that nonrenewable resources are allocated across time to where they are most highly valued.This implies,if more is used today:

Which of the following actions can be categorized as rent seeking?

As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future,and how much to extract,an equilibrium arises when:

What is the most likely consequence when people's preference for current consumption rises in relation to future consumption?

Unlike nonrenewable resources,the timing of extraction of renewable resources are independent of the market rate of interest.

Gold mining and the supply of gold not only depend on its price but also on the market rate of interest.

If coal is extracted in an unsustainable manner in the current period,the price for steel is likely to increase in future.

The markets for renewable and nonrenewable resources operate to ensure that:

What are the earnings of a resource with a perfectly elastic supply curve called?

If the owner of a nonrenewable resource expects his profits to be high in future,he will abstain from resource extraction in the present period.

Common ownership of resources:

When natural resources are commonly owned,the exhaustion of these resources are evenly spread over current and future periods.

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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