Exam 52: The Land Market and Natural Resources

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

Common ownership may fail to ensure that harvesting of renewable resources does not exceed the maximum sustainable yield.

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

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.

Common ownership of resources:

Extraction of petroleum in the current period will shift the supply curve of petroleum outward in the future resulting in a fall in price of petroleum.

If a nonrenewable resource is used more in the current period, the return on saving the resource for future falls.

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

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

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

The returns that skilled engineering professionals earn consist of both transfer earnings and economic rent.This implies:

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

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:

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

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

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:

The supply of hydro electric power:

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

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.