Question 1

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  True

Question 2

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. C

Question 3

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  False

Question 4

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 5

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 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 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 8

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.

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

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 11

The figure given below represents an imperfectly competitive resource market.Here common land (and not land used for specific purpose)is under consideration. Figure 17.1   In Figure 17.1, 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 12

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.

Question 13

The supply curve of land in the market for uses of land is:

Accepted Answer

A) perfectly inelastic. 
B) nonexistent. 
C) perfectly elastic. 
D) positively sloped. 
E) negatively sloped. 
A) perfectly inelastic. 
B) nonexistent. 
C) perfectly elastic. 
D) positively sloped. 
E) negatively sloped.

Question 14

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 15

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 16

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 17

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 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

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

Exam 30: the Land Market and Natural Resources

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

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

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.

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.

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

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

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

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

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

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

The figure given below represents an imperfectly competitive resource market.Here common land (and not land used for specific purpose)is under consideration. Figure 17.1 In Figure 17.1, the curve B indicates:

Which of the following is true of earnings from land?

The supply curve of land in the market for uses of land is:

Lobbying efforts by individuals and firms:

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

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.

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

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

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

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

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

The Land Market and Natural Resources

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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