Question 1

According to water resource economists

Accepted Answer

A) water is seldom in short supply anywhere in the world. 
B) we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C) the world is running out of water, just as it is running out of accessible oil. 
D) there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles. 
A) water is seldom in short supply anywhere in the world. 
B) we are not running out of water, but specific places do run short of water, given the status of their water supply arrangements and ease (or lack of) transferability of water among users. 
C) the world is running out of water, just as it is running out of accessible oil. 
D) there is no workable way to make water markets function properly, because in the end, we can't make more water the way we can make more bread or automobiles. B

Question 2

Proved reserves of natural gas and oil

Accepted Answer

A) will last only another five years at the current worldwide consumption rate. 
B) reveal little about whether the world is about to run out of these resources since they are calculated at present levels of price and technology. 
C) are just another way of measuring how many years civilization will continue. 
D) indicate that the supply of petroleum will be depleted by the year 2020 unless governments adopt price controls and energy rationing. 
A) will last only another five years at the current worldwide consumption rate. 
B) reveal little about whether the world is about to run out of these resources since they are calculated at present levels of price and technology. 
C) are just another way of measuring how many years civilization will continue. 
D) indicate that the supply of petroleum will be depleted by the year 2020 unless governments adopt price controls and energy rationing. B

Question 3

What happens to a resource as it becomes scarcer?

Accepted Answer

A) The price rises and this increases the future supply relative to demand. 
B) The price rises and this increases the future demand relative to supply. 
C) The price falls and this increases the future supply relative to demand. 
D) The price falls and this increases the future demand relative to supply. 
A) The price rises and this increases the future supply relative to demand. 
B) The price rises and this increases the future demand relative to supply. 
C) The price falls and this increases the future supply relative to demand. 
D) The price falls and this increases the future demand relative to supply. A

Question 4

When water cannot be traded among current and potential users, then

Accepted Answer

A) each user will take more care to conserve, because added water cannot be obtained. 
B) users have a strong incentive to conserve because they are now protected from price increases imposed by greedy entrepreneurs. 
C) efficiency improves, as dry years can be better anticipated and planned for, and every user knows the quantity that will be available. 
D) water will not flow to its highest valued uses, and some users will use water for relatively low-valued uses, because they cannot gain by selling it to others. 
A) each user will take more care to conserve, because added water cannot be obtained. 
B) users have a strong incentive to conserve because they are now protected from price increases imposed by greedy entrepreneurs. 
C) efficiency improves, as dry years can be better anticipated and planned for, and every user knows the quantity that will be available. 
D) water will not flow to its highest valued uses, and some users will use water for relatively low-valued uses, because they cannot gain by selling it to others.

Question 5

The concept of "proved reserves" refers to the amount of a resource that can be produced

Accepted Answer

A) in one year's time. 
B) in the next ten years. 
C) before it runs out. 
D) at current prices and technology. 
A) in one year's time. 
B) in the next ten years. 
C) before it runs out. 
D) at current prices and technology.

Question 6

Forests in the United States have, in recent decades,

Accepted Answer

A) expanded substantially in the amount of wood grown. 
B) been steadily declining in acreage and in wood produced. 
C) been cut and cleared at a faster and faster rate. 
D) shown no trend in growth or shrinkage. 
A) expanded substantially in the amount of wood grown. 
B) been steadily declining in acreage and in wood produced. 
C) been cut and cleared at a faster and faster rate. 
D) shown no trend in growth or shrinkage.

Question 7

Water supply problems are widespread, indicating that

Accepted Answer

A) water markets can seldom work, because water Is a necessity. 
B) property rights are frequently incomplete and not fully tradable. 
C) water is too important to ration by price. 
D) water markets are seldom controlled by government. 
A) water markets can seldom work, because water Is a necessity. 
B) property rights are frequently incomplete and not fully tradable. 
C) water is too important to ration by price. 
D) water markets are seldom controlled by government.

Question 8

Data on world reserves of minerals, gathered by Blackman and Baumol, show that between 1950 and 2000, production of most minerals

Accepted Answer

A) greatly exceeded the reserves available in 1950. 
B) declined as depletion occurred. 
C) greatly reduced the reserves available in 2000. 
D) was limited to a fraction of the reserves available in 1950. 
A) greatly exceeded the reserves available in 1950. 
B) declined as depletion occurred. 
C) greatly reduced the reserves available in 2000. 
D) was limited to a fraction of the reserves available in 1950.

Question 9

In the petroleum industry, proved reserves are

Accepted Answer

A) evidence that uncertainty is not a problem in the industry. 
B) inevitably growing smaller over time. 
C) the same thing as the current supply of petroleum. 
D) resources recoverable at current prices and technology. 
A) evidence that uncertainty is not a problem in the industry. 
B) inevitably growing smaller over time. 
C) the same thing as the current supply of petroleum. 
D) resources recoverable at current prices and technology.

Question 10

When a highly valued resource cannot be easily traded, as is often true with water flowing in a river, then

Accepted Answer

A) it will not be hoarded by the rich, but will be available to all on an equal basis. 
B) we can expect shortages from time to time, and conflicts over access to its use. 
C) its price will be low as a result. 
D) markets in the resource will clear more easily, without greed and profit to get in the way. 
A) it will not be hoarded by the rich, but will be available to all on an equal basis. 
B) we can expect shortages from time to time, and conflicts over access to its use. 
C) its price will be low as a result. 
D) markets in the resource will clear more easily, without greed and profit to get in the way.

Question 11

Doomsday projections have generally

Accepted Answer

A) been correct. 
B) been incorrect, but with better technology and the ability to predict the future, these forecasts have become much more accurate in the last few decades. 
C) been inconsistent. Some projections came true, others failed. 
D) been wrong. 
A) been correct. 
B) been incorrect, but with better technology and the ability to predict the future, these forecasts have become much more accurate in the last few decades. 
C) been inconsistent. Some projections came true, others failed. 
D) been wrong.

Question 12

The classic resource study of Barnett and Morse found that

Accepted Answer

A) resource costs have been rising at such a rate that, within fifty years, the prices of most natural resources will be exorbitant. 
B) the current proved reserves of most minerals are becoming perilously low. 
C) resource prices declined between 1870 and 1920, but since 1920 the relative price of natural resources has been increasing at an annual rate of approximately 3.5 percent. 
D) technology and developing substitutes outran our use of scarce natural resources during the last century, so that relative resource prices have declined. 
A) resource costs have been rising at such a rate that, within fifty years, the prices of most natural resources will be exorbitant. 
B) the current proved reserves of most minerals are becoming perilously low. 
C) resource prices declined between 1870 and 1920, but since 1920 the relative price of natural resources has been increasing at an annual rate of approximately 3.5 percent. 
D) technology and developing substitutes outran our use of scarce natural resources during the last century, so that relative resource prices have declined.

Question 13

Economic theory indicates that the economy is better off not to produce proved reserves of a mineral "too quickly." By this, we mean that we

Accepted Answer

A) prefer some bad luck in exploration efforts, rather than too much good luck in finding the resources. 
B) do not want the resource to be too abundantly available since this would reduce its price and GDP. 
C) want to use other nations' resources first, even if doing so is more costly. 
D) do not want to use additional resources for exploration if the present discounted value of the benefits is smaller than the cost. 
A) prefer some bad luck in exploration efforts, rather than too much good luck in finding the resources. 
B) do not want the resource to be too abundantly available since this would reduce its price and GDP. 
C) want to use other nations' resources first, even if doing so is more costly. 
D) do not want to use additional resources for exploration if the present discounted value of the benefits is smaller than the cost.

Question 14

An example of a renewable resource is

Accepted Answer

A) coal. 
B) oil. 
C) timber. 
D) diamonds. 
A) coal. 
B) oil. 
C) timber. 
D) diamonds.

Question 15

When natural resources are not traded, or where markets are not allowed to function as well as they can under a system of well-defined property rights, the problems of ____ and ____ are common.

Accepted Answer

A) higher taxes; increased regulation 
B) waste; scarcity 
C) inflation; unemployment 
D) slow growth; fluctuating currency values 
A) higher taxes; increased regulation 
B) waste; scarcity 
C) inflation; unemployment 
D) slow growth; fluctuating currency values

Question 16

Renewable resources are those that

Accepted Answer

A) can be renewed, but only with the use of energy resources. 
B) are constantly being renewed by nature. 
C) will inevitably run out over time, like all other resources. 
D) are not really scarce, because they are constantly renewed naturally. 
A) can be renewed, but only with the use of energy resources. 
B) are constantly being renewed by nature. 
C) will inevitably run out over time, like all other resources. 
D) are not really scarce, because they are constantly renewed naturally.

Question 17

Which of the following statements is true about the demand for and/or the supply of natural resources?

Accepted Answer

A) The supply curve for natural resources is more elastic in the long run than in the short run. 
B) The elasticity of demand for electricity, natural gas, and gasoline equals approximately 0.1 in both the short run and the long run. 
C) Natural resources are demanded by consumers and producers in steadily growing amounts, so future shortages are inevitable. 
D) The supply of many natural resources is finite; thus the long-run elasticity of supply must be zero. 
A) The supply curve for natural resources is more elastic in the long run than in the short run. 
B) The elasticity of demand for electricity, natural gas, and gasoline equals approximately 0.1 in both the short run and the long run. 
C) Natural resources are demanded by consumers and producers in steadily growing amounts, so future shortages are inevitable. 
D) The supply of many natural resources is finite; thus the long-run elasticity of supply must be zero.

Question 18

When market trades in water occur, we can assume that

Accepted Answer

A) the party releasing water is the loser. 
B) the party buying water is paying too much. 
C) the trade in something as important as water is immoral. 
D) the signals and incentives flowing from the trades help many in that water market, not just the buyer and seller directly. 
A) the party releasing water is the loser. 
B) the party buying water is paying too much. 
C) the trade in something as important as water is immoral. 
D) the signals and incentives flowing from the trades help many in that water market, not just the buyer and seller directly.

Question 19

Predictions that natural resources such as oil will be essentially used up in the next few decades have

Accepted Answer

A) been frequently made for the past century, but have always proven to be false. 
B) usually been based on the quantity of proved reserves. 
C) ignored the role of price in governing the quantities demanded and supplied. 
D) All of the above. 
A) been frequently made for the past century, but have always proven to be false. 
B) usually been based on the quantity of proved reserves. 
C) ignored the role of price in governing the quantities demanded and supplied. 
D) All of the above.

Question 20

Generally, the elasticity of demand for an energy source in the long run will be

Accepted Answer

A) approximately equal to its elasticity of demand in the short run. 
B) considerably more elastic than in the short run. 
C) slightly less elastic than in the short run. 
D) considerably less elastic than in the short run. 
A) approximately equal to its elasticity of demand in the short run. 
B) considerably more elastic than in the short run. 
C) slightly less elastic than in the short run. 
D) considerably less elastic than in the short run.

Exam 26: Appendix: the Question of Resource Exhaustion

According to water resource economists

Proved reserves of natural gas and oil

What happens to a resource as it becomes scarcer?

When water cannot be traded among current and potential users, then

The concept of "proved reserves" refers to the amount of a resource that can be produced

Forests in the United States have, in recent decades,

Water supply problems are widespread, indicating that

Data on world reserves of minerals, gathered by Blackman and Baumol, show that between 1950 and 2000, production of most minerals

In the petroleum industry, proved reserves are

When a highly valued resource cannot be easily traded, as is often true with water flowing in a river, then

Doomsday projections have generally

The classic resource study of Barnett and Morse found that

Economic theory indicates that the economy is better off not to produce proved reserves of a mineral "too quickly." By this, we mean that we

An example of a renewable resource is

When natural resources are not traded, or where markets are not allowed to function as well as they can under a system of well-defined property rights, the problems of ____ and ____ are common.

Renewable resources are those that

Which of the following statements is true about the demand for and/or the supply of natural resources?

When market trades in water occur, we can assume that

Predictions that natural resources such as oil will be essentially used up in the next few decades have

Generally, the elasticity of demand for an energy source in the long run will be

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters

When natural resources are not traded, or where markets are not allowed to function as well as they can under a system of well-defined property rights, the problems of and are common.