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Exam 19: Natural Resource and Energy Economics

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Question 171

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Which of the following is not one of the points made in "Tragedy of the Commons"?

A) Individual property rights play a crucial role in resource preservation.
B) Common property will tend to be overexploited.
C) Common property makes its users try to use as much as possible and as soon as possible.
D) Individual property rights tend to be tragically abused by the owners.

E) None of the above
F) C) and D)

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Question 172

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Relative to 1800, the living standard of the average person today in the United States is about _____ times higher.

A) 5
B) 12
C) 20
D) 42

E) None of the above
F) B) and C)

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Question 173

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Present value allows us to weigh the benefits and costs of using resources today or in the future.

A mining company has the opportunity to extract from a coal reserve this year for a profit of $40 per pound. The current market rate of interest is 5 percent. The present value of this extraction is

In electricity generation, it is most economically efficient to use a single energy source.

What are the likely trends for the demand for resources in the future?

Fish in the open ocean are protected by strong property rights.

Electricity generating plants with low fixed costs tend to have high operating costs.

An oil producer discovers an oil supply in Texas that can be pumped for a profit of $60 per barrel now, $65 per barrel in three years, $70 per barrel in five years, or $75 a barrel in seven years. The current market rate of interest is 5 percent. When should the oil producer extract the oil to obtain the most profit per barrel in present value terms?

Because better technology means that more output can be produced with the same amount of energy input, rising living standards in the future will not necessarily depend on using more energy.

Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $7; Kyle's cost per ton is $11. Assume that the market price of sockeye salmon is $16 per ton. If Kara pays Kyle $6 per ton for his ITQs, and if she then catches her new limit of 4,000 tons, her profit would be

An electricity company has the opportunity to use natural gas to generate electricity at a cost of $30 per unit in 2 years. The current market rate of interest is 4 percent. The present value of this cost is about

Studies by economists indicate that economic growth and rising living standards are good for the environment because, as societies get richer, they tend to spend more on things that improve environmental quality.

If energy use per capita in developed countries had leveled off, while GDP per capita had risen, then it must mean that

Higher user costs imply that a resource should be extracted more quickly.

According to demographers. The "demographic transition" resulting from an increase in living standards follows a pattern of

Discuss the problems with policies to limit catch size and the use of the total allowable catch (TAC)policy.