Question 1

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 2

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 A indicates:

Accepted Answer

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

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 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

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

Privatization of common property leads to overexploitation of natural resources.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) demand for these professionals is highly elastic. 
B) the supply curve of skilled engineering professionals is upward-sloping. 
C) the supply curve of skilled engineering professionals is backward bending. 
D) demand for these professionals is perfectly inelastic. 
E) the supply curve of skilled engineering professionals is vertical. 
A) demand for these professionals is highly elastic. 
B) the supply curve of skilled engineering professionals is upward-sloping. 
C) the supply curve of skilled engineering professionals is backward bending. 
D) demand for these professionals is perfectly inelastic. 
E) the supply curve of skilled engineering professionals is vertical.

Question 16

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

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

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.

Exam 30: the Land Market and Natural Resources

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

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 A indicates:

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

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

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

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.

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

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:

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

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.

For resources with upward-sloping supply curves:

Privatization of common property leads to overexploitation of natural resources.

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

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

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

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.

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

The supply of hydro electric power:

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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