Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

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. D

Question 3

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. E

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

For any particular period of time, say a year, the supply of exhaustible resources:

Accepted Answer

A) decreases infinitely with increase in price. 
B) remains unaffected by any change in price. 
C) increases infinitely with increase in price. 
D) increases to a certain extent with increase in price. 
E) decreases to a certain extent with increase in price. 
A) decreases infinitely with increase in price. 
B) remains unaffected by any change in price. 
C) increases infinitely with increase in price. 
D) increases to a certain extent with increase in price. 
E) decreases to a certain extent with increase in price.

Question 10

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.

Question 11

Which of the following is a nonrenewable source of energy?

Accepted Answer

A) Corn 
B) Ethanol 
C) Petroleum 
D) Bagasse 
E) Biomass 
A) Corn 
B) Ethanol 
C) Petroleum 
D) Bagasse 
E) Biomass

Question 12

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 13

A fisherman will catch and sell all the fishes in his pond in response to a substantial increase in the price of the fish even if he wishes to remain in the fishing business.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Privatization of common property leads to overexploitation of natural resources.

Accepted Answer

A) True 
 B)False

Question 16

For resources with vertical supply curves, earnings comprise of both economic rent and transfer earnings.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

The figure given below represents an imperfectly competitive resource market.Here common land (and not land used for specific purpose)is under consideration. Figure 31.1   In Figure 31.1, the curve B indicates:

Accepted Answer

A) supply curve of land. 
B) marginal revenue product curve for land. 
C) value of marginal product curve of land. 
D) marginal factor cost curve of land. 
E) marginal product curve of land. 
A) supply curve of land. 
B) marginal revenue product curve for land. 
C) value of marginal product curve of land. 
D) marginal factor cost curve of land. 
E) marginal product curve of land.

Question 20

When does the entire earning of a resource comprise of economic rent?

Accepted Answer

A) When the supply curve of the resource is relatively elastic 
B) When the supply curve of the resource is horizontal 
C) When the supply curve of the resource is vertical 
D) When the supply curve of the resource is relatively inelastic 
E) When the supply curve of the resource is a ray through the origin 
A) When the supply curve of the resource is relatively elastic 
B) When the supply curve of the resource is horizontal 
C) When the supply curve of the resource is vertical 
D) When the supply curve of the resource is relatively inelastic 
E) When the supply curve of the resource is a ray through the origin

Exam 52: The Land Market and Natural Resources

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

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

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?

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

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

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

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

For any particular period of time, say a year, the supply of exhaustible resources:

Which of the following is a nonrenewable source of energy?

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

A fisherman will catch and sell all the fishes in his pond in response to a substantial increase in the price of the fish even if he wishes to remain in the fishing business.

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.

Privatization of common property leads to overexploitation of natural resources.

For resources with vertical supply curves, earnings comprise of both economic rent and transfer earnings.

Because there is a finite supply of a nonrenewable resource:

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

The figure given below represents an imperfectly competitive resource market.Here common land (and not land used for specific purpose)is under consideration. Figure 31.1 In Figure 31.1, the curve B indicates:

When does the entire earning of a resource comprise of economic rent?

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

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

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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