Deck 9: Resource Depletion and Sustainability

Question 1

The report that concluded that the world will run out of oil in about 40 years used which formula to calculate the number of years to depletion?

A) (proven reserves + unknown reserves) ÷ annual consumption = number of years to depletion
B) total reserves ÷ total consumption = number of years to depletion
C) proven reserves ÷ annual consumption = number of years to depletion
D) proven reserves ÷ unknown reserves = number of years to depletion

Answer 1

proven reserves ÷ annual consumption = number of years to depletion

Question 2

If there are approximately 5,000 barrels of known reserves of oil, an estimated 7,500 barrels of unknown reserves of oil, and annual consumption is 500 barrels of oil, approximately how many years will it be until the supply of oil is depleted, all else equal?

A) 5
B) 10
C) 15
D) 25

Answer 2

25

Question 3

If there are approximately 6,000 barrels of known reserves of oil, an estimated 10,000 barrels of unknown reserves of oil, and it is estimated that the supply of oil will be depleted in 40 years, what is the annual consumption of barrels of oil, all else equal?

A) 150
B) 250
C) 400
D) 1,600

Answer 3

400

Question 4

If there are approximately 8,000 barrels of known reserves of oil, annual consumption of oil is 500 barrels, and it is estimated that the supply of oil will be depleted in 30 years, how many barrels of unknown reserves of oil are there estimated to be, all else equal?

A) 1,333
B) 7,000
C) 12,000
D) 48,000

Question 5

If there are an estimated 20,000 barrels of unknown reserves of oil, annual consumption of oil is 800 barrels, and it is estimated that the supply of oil will be depleted in 50 years, how many barrels of known reserves of oil are there estimated to be, all else equal?

A) 1,250
B) 16,000
C) 20,000
D) 320,000

Question 6

The proven-reserves figure used in most years-to-depletion calculations encompasses oil reserves that are ________ and ________ to extract.

A) known; economical
B) both known and unknown; economical
C) known; both economical and uneconomical
D) both known and unknown; both economical and uneconomical

Question 7

All else equal, if oil prices increase, annual oil consumption will ________ and the years it will take to deplete the stock of oil will most likely ________.

A) decrease; increase.
B) decrease; decrease
C) increase; increase
D) increase; decrease

Question 8

All else equal, if oil prices decrease, annual oil consumption will ________ and the years it will take to deplete the stock of oil will most likely ________.

A) decrease; increase.
B) decrease; decrease
C) increase; increase
D) increase; decrease

Question 9

All else equal, when oil prices increase, some uneconomical sources of oil tend to become more economical, and this will ________ proven reserves of oil and ________ the number of years it will take to deplete the stock of oil.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question 10

All else equal, when oil prices decrease, some economical sources of oil tend to become less economical, and this will ________ proven reserves of oil and ________ the number of years it will take to deplete the stock of oil.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question 11

All else equal, as the price of oil rises, potential profits from producing oil ________ which ________ oil companies to look for additional sources of oil.

A) increase; encourages
B) increase; discourages
C) decrease; encourages
D) decrease; discourages

Question 12

All else equal, as the price of oil falls, potential profits from producing oil ________ which ________ oil companies to look for additional sources of oil.

A) increase; encourages
B) increase; discourages
C) decrease; encourages
D) decrease; discourages

Question 13

All else equal, when oil prices increase, oil exploration processes like horizontal drilling become more advantageous for oil companies, and this will ________ proven reserves of oil and ________ the number of years it will take to deplete the stock of oil.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question 14

All else equal, when oil prices decrease, oil exploration processes like hydraulic fracturing become less advantageous for oil companies, and this will ________ proven reserves of oil and ________ the number of years it will take to deplete the stock of oil.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question 15

All else equal, when oil prices increase, people are ________ to look for oil substitutes. This will ________ the number of years it will take to deplete the stock of oil.

A) discouraged; increase
B) discouraged; decrease
C) encouraged; increase
D) encouraged; decrease

Question 16

All else equal, when oil prices decrease, people are ________ to look for oil substitutes. This will ________ the number of years it will take to deplete the stock of oil.

A) discouraged; increase
B) discouraged; decrease
C) encouraged; increase
D) encouraged; decrease

Question 17

All of the following will tend to increase the number of years until the oil stock is depleted except

A) falling oil prices.
B) additional oil exploration.
C) conservation measures.
D) development of oil substitutes.

Question 18

Which of the following will tend to make oil extraction more economical?

A) rising oil prices
B) additional oil exploration
C) conservation measures
D) development of oil substitutes

Question 19

Which of the following will tend to result in more proven oil reserves?

A) rising oil prices
B) development of oil substitutes
C) conservation measures
D) all of the above

Question 20

In 1973, mainstream sources predicted that the world would run out of oil in

A) 20 years.
B) 40 years.
C) 100 years.
D) Mainstream sources in 1973 predicted the world would never run out of oil.

Question 21

Oil price increases encourage oil conservation.

Question 22

All else equal, oil price increases decrease annual oil consumption and therefore decrease the number of years until the oil stock is depleted.

Question 23

As oil prices increase, it becomes more economical to extract oil from sources like tar sands.

Question 24

All else equal, increases in oil prices tend to increase the quantity of proven oil reserves.

Question 25

Because oil price increases reduce the consumption of oil, this discourages exploration for new sources of oil.

Question 26

Because oil price increases reduce the consumption of oil, this discourages the development of oil substitutes.

Question 27

The oil depletion formula discussed in the chapter uses "proven resources"in its calculation. Explain what these "proven resources"are with respect to known and unknown oil reserves, and economical and uneconomical oil extraction methods.

Question 28

The tax on gasoline in England is close to $3.20 per gallon, whereas the federal excise tax on gasoline in the United States is 18.4 cents per gallon. Suppose the U. S. government raised the federal excise tax to the English gas tax rate of $3.20. Explain the likely impact of that higher tax rate on conservation, oil exploration, and the development of substitutes for gasoline.

Question 29

Explain what increases in the price of oil have done to the exploration and extraction of oil from more costly sources of oil. What are some of these more costly sources of oil, and what happens to the quantity of proven oil reserves?

Question 30

Of the following resources, which one is the world most likely to run out of?

A) kiwi fruit
B) spotted owls
C) titanium
D) shrimp

Question 31

Resources that are ________ tend to be carefully managed to provide profits, which ensures that they will last a long time.

A) publicly held
B) privately owned
C) scarce
D) abundant

Question 32

OPEC's incentives to produce a stream of long-term profits for its member nations means that oil stocks will

A) probably last quite a while.
B) most likely run out quickly.
C) not be used or needed in the near future.
D) increase indefinitely.

Question 33

In Zimbabwe and Namibia, a limited number of permits to hunt elephants are sold to hunters, and the revenue from the permits is shared with local residents. This gives the residents a financial incentive to ________, and as a result, the elephant populations have ________ in those countries.

A) stop protecting elephants from poachers; dwindled
B) preserve elephant habitat; disappeared
C) stop protecting elephants from poachers; grown
D) protect elephants from poachers; rebounded

Question 34

Resources that ________ protected by well-defined property rights are in ________ of being depleted.

A) are; great danger
B) are; absolutely no danger
C) are not; the greatest danger
D) are not; little danger

Question 35

For resources whose property rights are not well-defined or well-enforced,

A) people have an incentive to acquire as much of the resource as possible for themselves before someone else does.
B) people have no incentive to acquire the resource since they do not have the property rights to that resource.
C) people have little incentive to acquire the resource because if the the property rights are not well-defined or well-enforced, they are most likely of little value.
D) people have an incentive to acquire a limited amount of that resource for personal use, but no more than they can use personally.

Question 36

Resources that are privately owned are less likely to be depleted than resources that are not privately owned.

Question 37

The world is more likely to run out of gold than it is to run out of bald eagles.

Question 38

The "tragedy of the commons"refers to a phenomenon where

A) people do not internalize an externality.
B) people have distinct property rights to a resource.
C) people overuse a common resource.
D) individuals are not allowed to use a common resource.

Question 39

Which of the following is an example of a common pool resource?

A) cats at an animal shelter
B) lobsters in the coastal waters of the North Atlantic
C) public health care services in the United States
D) salmon in a private fishery in the Pacific Northwest

Question 40

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-If Sheb places ________ sheep on the commons, Monty is better off placing ________ on the commons.

A) 4; 4
B) 5; 5
C) 5; 4
D) Both A and C are correct.

Question 41

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-If Monty places ________ sheep on the commons, Sheb is better off placing ________ on the commons.

A) 4; 4
B) 5; 4
C) 5; 5
D) Both A and B are correct.

Question 42

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-The dominant strategy for Sheb is to place ________ sheep on the commons.

A) 4
B) 5
C) Sheb's dominant strategy depends on how man sheep Monty places on the commons.
D) Sheb has no dominant strategy.

Question 43

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-The dominant strategy for Monty is to place ________ sheep on the commons.

A) 4
B) 5
C) Monty's dominant strategy depends on how man sheep Sheb places on the commons.
D) Monty has no dominant strategy.

Question 44

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-The Nash equilibrium occurs when Sheb places ________ sheep on the commons and Monty places ________ sheep on the commons.

A) 4; 4
B) 4; 5
C) 5; 4
D) 5; 5

Question 45

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-The socially optimal outcome occurs when Sheb places ________ sheep on the commons and Monty places ________ sheep on the commons.

A) 4; 4
B) 4; 5
C) 5; 4
D) 5; 5

Question 46

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.

-This scenario is an example of a ________ game.

A) pure coordination
B) chicken
C) prisoner's dilemma
D) battle of the sexes

Question 47

Sheb and Monty, both sheep ranchers, share a pasture that is open to both. Each rancher faces the choice of grazing 4 or 5 sheep on the commons. With 8 sheep on the commons, the grass will be plentiful and each sheep will produce 20 pounds of wool per year. With 9 sheep on the commons, the grass will will be sufficient enough for each sheep to produce 17 pounds of wool per year. With 10 sheep on the commons, the grass will be sparse, and each sheep will only produce 14 pounds of wool each year.
-Placing Sheb as the row player and Monty as the column player, create a payoff matrix for the above information and have the payoffs for the Nash equilibrium located in the lower-right cell.

Question 48

In which of the following situations would it be the most difficult to keep the water in a river flowing?

A) as it passes from one city to another city in the same county
B) as it passes from one county to another county in the same state
C) as it passes from one state to another state in the same country
D) as it passes from one country to another country

Question 49

The tragedy of the commons was avoided in the Middle Ages in much the same way economist Elinor Ostrom's research suggested. Which of the following ways reflects Ostrom's findings, and was actually conducted in the middle ages?

A) Common grounds were sold to individuals.
B) Local law enforcement monitored entry into the commons.
C) There was social pressure to uphold traditionally accepted limits on family.
D) The government imposed a tax for the use of the commons.

Question 50

An example of a common pool resource is a broadcast television signal.

Question 51

For the tragedy of the commons to occur, property rights must be clearly defined and enforced.

Question 52

Pollution and depletion both occur because of poorly defined property rights.

Question 53

How are depletion and pollution mirror images of the same problem?

Question 54

Restricting access to endangered common resources assigns

A) permanent property rights to those people given permission to use the resource.
B) temporary property rights to those people given permission to use the resource.
C) property rights to no one since access has been restricted to only a select few.
D) property rights to society in general since the resource is a common resource.

Question 55

Leaving open-access resources open to all people but restricting the intensity of the use of the resources assigns

A) permanent property rights to the government.
B) temporary property rights to those people given permission to use the resource.
C) property rights to no one since the intensity of the use of the resource has been restricted.
D) property rights to everyone since the resource is available to be used by everyone.

Question 56

If Florida issues an alligator hunting permit to Jackson, who values an alligator hunt at $2,500, instead of Oliver, who values an alligator hunt at $4,000, the $1,500 difference in values is

A) a deadweight loss.
B) a negative externality.
C) a transactions cost.
D) the social cost of the alligator hunt.

Question 57

Suppose Florida issues an alligator hunting permit to Jackson, who values an alligator hunt at $2,500, instead of Oliver, who values an alligator hunt at $4,000, and alligator hunting permits are allowed to be bought and sold in a secondary market. If Jackson and Oliver agree on a price for Jackson to transfer the permit to Oliver, society would capture ________ cooperative surplus.

A) an additional $1,500 of
B) no additional
C) an additional $6,500 of
D) The additional cooperative surplus captured by society would depend on the negotiated price of the permit.

Question 58

The individual transferrable quota system (ITQ) used to control overfishing is a variation of

A) the tragedy of the commons.
B) a prisoner's dilemma game.
C) the cap-and-trade system.
D) a negative externality.

Question 59

Privatizing a commons gives the person who owns it an incentive to

A) exploit the resource until it is depleted.
B) restrict it from being used at all.
C) manage it carefully.
D) make it available to everyone without restriction.

Question 60

Governments can reduce depletion of resources by restricting access to the resource.

Question 61

Absolute property rights exist when one individual or entity has complete control over a resource, including the right to transfer that resource to someone else.

Question 62

Privatizing a commons tends to lead to a faster depletion of the resource.

Question 63

List three ways government can reduce depletion of an endangered resource. Which of these ways requires the least amount of management, monitoring, and bureaucracy?

Question 64

A(n) ________ is a system of controlling overfishing whereby the government decides how big the total fish catch will be and then lets fishermen negotiate to determine the share of the total catch each fisherman will be allowed.

Question 65

If absolute property rights to an endangered resource are granted to someone who inefficiently manages the resource, explain what the Coase theorem predicts will happen to that resource.