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When a good lacks either the rivalry property or the excludability property (i.e. it is nonrival and nonexcludable), we can safely conclude that it is a private good. True False

False

When a natural resource is optimally allocated over time, the share of the resource that each group of people get in each period will be exactly the same. True False

False

Only those users within a 4 mile distance from a lake or river may withdraw water, based on western U.S. water law. True False

False

Ramsey thought that the social discount rate was made up of only one component, the rate of society's impatience, or pure time preference. True False

False

Solar and wind power are industries subsidized by the U.S. federal government, but the oil and natural gas industries are not given any subsidy. True False

False

The EPA commissioned a study of the Clean Air Act that showed that the total net benefit to society from it is negative, and thus, people in congress who want to gut the CAA on the basis of economics have support from economic analysis. True False

False

The EU emissions trading program was implemented using features that differed in several "phases" over time, and this proved to be very efficient economically, in that it allowed firms to adjust as time went on. True False

False

The Magnuson-Stevens fisheries act seeks to manage the stock to achieve a level consistent with dynamic efficiency recommended by economists. True False

False

The Obama administration's Clean Power Plant has worked to reduce global warming problems because all electric utilities have been required, under the new law to reduce CO2 emissions. True False

False

The Obama administration's Clean Power Plant was passed into law and has successfully worked to reduce global warming problems because all electric utilities have been required, under the new law to reduce CO2 emissions. However, the Trump administration is trying to repeal the law in 2020. True False

False

The U.S. congress can easily influence both the price of oil and gasoline by taking appropriate economic policy measures. True False

False

The Venezuela area oil spill situation was made worse because the Trump administration encouraged sales of PDVSA crude oil to the Citgo Petro group, in the U.S. True False

False

The biologist's simple recommendation for a level of effort of fishing means that there will definitely be over-fishing, as compared to the economist's dynamic efficiency level of effort. True False

False

The definition of "current" reserves does not involve any economics at all, it is just the measurement of the amount of resources in physical terms that the best estimate by geologists can determine. True False

False

The doctrine of prior appropriation promotes the efficient use of water, while riparian water law does not. True False

False

The goal for an economist, in allocating resources, is to just make sure that the present value of net benefits is not negative. True False

False

The highest use of a U.S. household's annual consumption of water is for showers and baths. True False

False

The optimal rule of allocation of a scarce natural resource requires that the total net benefit to society from the resource is equal in each period. True False

False

The price of solar power used to generate electricity has fallen by about a factor of 2 since 1976. True False

False

The travel cost method of non-market valuation is authorized to be used in assessing damages in a CERCLA-related situation, but the contingent valuation method, because it is "hypothetical," is not. True False

False

To obtain the "aggregate" or market demand curve when goods are public ones, you should horizontally sum the individual demand curves. True False

False

To solve problems related to an open access resource there is basically only one solution, which is to privatize the property so that one or more clear owners emerge, preferably, with there being at most, five owners. True False

False

Under economists' rules for efficiency in addressing air pollution, each polluter would abate or clean up the same amount, which is fair to polluters. True False

False

United States pollution policy is essentially a combination of regulations (laws that mandate controls and standards), and emissions charges on only a few select air pollutants such as lead. True False

False

United States pollution policy is essentially a combination of regulations (laws that mandate controls and standards), and emissions charges on various air pollutants. True False

False

We can safely speculate that because coal has a higher cost per kwh of producing electricity than natural gas currently does, it will never be used again to produce electric power in generating plants in the U.S. True False

False

Of all possible energy sources, wind power is the only one with zero environmental impacts. True False

False

Suppose there is a linear demand function with the equation Q = 100 - 2P. Initially, there is no observable price, so we could say that the entire area under the demand curve is consumer's surplus. What is the original consumer's surplus? $2500

$2500

In terms of million barrels per day, U.S. oil demand is about: 10 mbpd 80 mbpd About one barrel per household per day 20 mbpd

20 mbpd

Which of the following are reasons one could argue that the social discount rate should be very low, or even close to zero: A. Very long term consequences might involve future generations and they cannot be here in the present to weigh in on decisions that affect them. B. Human beings show very little tendency to prefer to have things in the present C. market rates of interest, such as 30 year fixed mortgage rates, are close to zero in today's housing market D. Economic growth rates are always positive

A. Very long term consequences might involve future generations and they cannot be here in the present to weigh in on decisions that affect them.

In models of natural resource extraction with constant marginal costs of extraction of resource A and the presence of a backstop resource ("B"), we know for certain that the switch point from A to B occurs above the choke price of resource A. True False

False

In the economic analysis of damages from the Deepwater Horizon oil spill (BP), the sole focus was on use values, so it is not surprising that the contingent valuation study estimate of damages was about $600 million in total. True False

False

Assuming the first year of a project can be designated using t = 0, the discount factor in year 5, when the discount rate equals 7 percent : A. is 0.94 B. is 0.052 C. is 0.696 D. implies that $10 in the present would only be worth about $7.63 by year five (t = 4)

D. implies that $10 in the present would only be worth about $7.63 by year five (t = 4)

"Cap and Trade" applied to reductions in sulfur dioxide is flourishing in the United States today (in 2020), because of changes in the 1990 air pollution law amendments. True False

False

"Cap and Trade" is flourishing in the United States today (in 2020), because of changes in the 1990 air pollution law amendments. True False

False

A discount rate of zero means that the future has no value to the present generation. True False

False

An ITQ program is a theoretical dream of economists, and it would never work because it would require too much involvement from federal or local government. True False

False

An economist would likely recommend a restriction on the length of fishing vessels in order to reduce the severe impacts of overfishing by these "factory" like boats. True False

False

An economist would never recommend an optimal solution to the level of fishing effort such that the species would be driven to extinction. True False

False

An economist would recommend taxing fishing effort (labor) as the best way of reducing over-fishing. True False

False

An iterative approach to allocating scarce natural resources would only consider the calculation of producer's surplus at each period in time where profits can be made from selling the resource. True False

False

An open access fishery is exactly the same as a common property resource. True False

False

An open access resource situation is characterized by non-rivalry of the good. True False

False

As an example of a fish species, Orange Roughy is very simple to manage because of its rapid rate of reproduction, after birth. True False

False

At the open access "solution" for fishing, each angler behaves as if the marginal benefit (MB) of fishing equals the marginal cost (MC) of fishing. True False

False

Economist Michael Greenstone and his colleague used a modern "natural experiments" approach to assess the impact of the Clean Air Act on infant mortality, and concluded that there was no impact at all, because the true cause of reduced infant mortality was entirely due to a recession. True False

False

Economists would likely favor strict fishing regulations, such as limits on the length of the fishing season, to a system of tradable or transferable quotas or permits, because regulations have been shown to work, but the tradable systems have so far failed. True False

False

Economists, on purely economic efficiency grounds, would never suggest that harvesting a stock until extinction is socially optimal. True False

False

Estimates are that the 2011 Texas drought resulted in approximately $7.6 million in losses to the agricultural sector in Texas. True False

False

Free flowing water in a river is clearly a private good because water rights have long been established and actually are over allocated on most rivers and streams in the U.S. True False

False

Holt's card game, which we played in class, clearly shows that the "optimal" thing for players to do is to NEVER put a red card into the pot of cards that everyone has access to because the red cards are symbolic of a public good, and a public good is a silly thing to invest in because it pays no rewards. True False

False

Iceland was the first country globally, to nationalize an ITQ program to help reduce overfishing. True False

False

If management is pursued consistent with dynamic efficiency in a fishery, it is impossible for the fish species to go extinct. True False

False

In 1981 politicians like Ronald Reagan questioned the value to society of huge federal programs such as the Clean Air Act. They were obviously correct in questioning these programs because a subsequent analysis of the benefits and costs of the Clean Air act showed clearly that costs outweighed the benefits. True False

False

In an open access fishery, the most likely level of the stock size will be larger than the stock size that biologists would recommend for ideal management. True False

False

In an open access resource situation, equilibrium catch is at that same point implied by assuming society has a zero discount rate. True False

False

Individual transferable quota programs are quite popular in New Zealand, but unfortunately have not improved profits for anglers who are part of them. True False

False

"Return flows" make it possible to adjudicate more water rights than there is average annual flow in a river. True False

True

A key factor that leads to the underprovision of a public good is that the free rider's maximum willingness to pay is not observable and thus, the aggregate or market demand curve is determined by vertical summation of demand curves, but the supplier cannot identify this. True False

True

A species with a growth function that exhibits critical depensation is more vulnerable to extinction than one that does not have this. True False

True

Amendments to the Clean Air Act that were signed into law by George H. Bush in 1990 included provision of what became known as the Acid Rain or SO2 cap and trade program. True False

True

Among the top three generators of nuclear power countries are the U.S., France, and Russia. True False

True

An Ecological economist would likely stress the importance of the first and second laws of thermodynamics. True False

True

An economist might predict that shortening the length of the fishing season will just result in anglers subtituting more effort or more capital, with the end result that fish catch will not be signficantly reduced, unless other steps are taken to prevent that. True False

True

An oil or agricultural producer can "hedge" against the risk of a low future price by going "short" on a futures contract, and thereby at least slightly reduce the loss they could experience in the market at a future date. True False

True

At roughly 125,000 global deaths so far, the corona virus has killed far fewer than 10 percent of the number of people who die every year in the world from inadequate sanitation and access to clean drinking water True False

True

Biologists' focus on the maximum sustainable yield point (msy) is only possibly of interest to an economist when they are sure that marginal cost of extraction or harvest is equal to zero. True False

True

By coincidence, the biologist's MSY recommended effort level might be the same as the economist's dynamic efficiency level of effort. True False

True

China emits the world's 2nd largest amount of CO2, just behind the United States. True False

True

Economist Paul Samuleson, who won the Nobel Prize in economics, showed the classic case of the under-provision of a public good, and the role that free riders play in that. True False

True

Firms in the U.S. probably lobby against an emissions charge or pollution tax because they understand that it means that different firms (i.e. with different levels of "dirtyness" and abatement technology) will likely have to pay very different total costs, and abate at very different levels. True False

True

Fish stocks around the world are overfished and this can simply be explained by recognizing that individual anglers behave as if their discount rate is infinitely large. True False

True

Following Hotelling's rule, when marginal cost of extraction is near or at zero, implies that we extract so that the resource price rises at the discount rate. True False

True

If a resources is abundant, such that there is really no scarcity issue, then the marginal user cost can be ignored when setting the price of the resource. True False

True

If the external costs of energy production associated with environmental problems were included in the cost, then the current price of a natural resource used in production (e.g. oil) would be higher, slowing demand in the current period and thus, less extraction of the resource in the present periiod. True False

True

If the population growth rate for the fish species is larger than the social discount rate, the species is safe from being driven from extinction. True False

True

In 2008 a federal court "vacated" the CAIR legislation, essentially agreeing with the state of North Carolina that there were unintended negative consequences of S02 permit trading. True False

True

In a simple single harvest forestry model with constant marginal costs of the harvest, the optimal rule is to let the percentage increase in the volume over time equal the social discount rate, r. True False

True

In recent years China has been responsible for the majority of the increase in global aquaculture. True False

True

In some models of natural resource extraction society will hit the choke price for a resource before the resource is exhausted, or all used up. True False

True

In the U.S., Secondary air pollution standards are set to include protection of animals, among other things. True False

True

It might be just coincidence, but the total amount of damages estimated by economists implementing the contingent valuation approach, and the settlement amount in the legal case that is the Deep Water Horizon )(BP oil spill) were approximately the same. True False

True

Medical costs associated with poor air quality could be used to approximate the benefits of cleaner air, but they are only a lower bound approximation because the desired measure of benefits would be the maximum willingness to pay to obtain a particular level of clean air. True False

True

New Zealand's ITQ fishery programs are part of official government policy there. True False

True

One of the main problems in overfishing of a species such as the Blue Fin tuna is that open access results in each individual angler harvesting up to the point that they just break even, economically (i.e. up to the point where TB = TC). True False

True

Other than a short-lived effort to buy back fish (shrimp) boats, the Gulf of Mexico fisheries management efforts have largely been confined to regulations, such as shortening the season for Red Snapper, and putting limits on fish catch. True False

True

Over-fishing can have both the consequence of reduced numbers of fish, and may lead to smaller fish, on average, and both can be characterized as smaller or reduced "stock biomass." True False

True

Real world forest managers probably factor in many more complicated phenomena than simply maximizing the mean annual increment, such as the influence that the tree canopy has on available sunlight for smaller trees, and what is happening to forest nutrients. True False

True

Saudi Arabian owned companies can essentially export water back to their home country from Arizona, by using unregulated groundwater to grow large quantities of alfalfa, shipped back to feed Saudi cattle. True False

True

The NYSERDA project was an early effort to compare the economic cost of energy sources including all environmental costs. True False

True

The Quileute Tribe behaved as if they had an infinitely high WTA (minimum willingness to accept compensation) for Rialto Beach, which was the beach the National Park Service accidentally took away from them. True False

True

The Texas "rule of capture" essentially means that a land-owner owns the water underneath his or her property and with a recent ruling by the Texas Supreme Court, it cannot be removed by other parties without compensation to the land owner. True False

True

The average household in the U.S. uses between about 160,000 and 325,000 gallons of waterper year. True False

True

The circular flow diagram, in its original form, omitted any mention of waste or environmental impacts from consumption or production. True False

True

The economist named Hotelling proposed a way to estimate the benefits of trips to Yellowstone National Park, by using distances from a person's home, as indicated by their license plate number on their car, to the park. True False

True

The general trend of U.S. air pollution concentrations, across pollutants, is for a decline in them since 1970. True False

True

The level of effort corresponding to a dynamically efficient fish harvest is partially determined by the magnitude of the social discount rate. True False

True

The marginal cost of exploration of natural resources is expected, or likely to rise over time. True False

True

The office of management and budget (U.S. federal) determines the discount rate to be used to evaluate projects involving federal spending on large scale projects. True False

True

The state of Texas has over 50 superfund sites. True False

True

There is evidence that ITQ programs have led to better management of fish stocks than fisheries that have no such programs. True False

True

Under simple assumptions, an emissions charge (or pollution tax) achieves efficiency in terms of the optimal amount of abatement because each firm will pay the tax when marginal costs of abatement (MCA) exceed it, and abate when MCA is less than the tax, so all firms will have the same MCA. True False

True

When a market functions properly, the equilibrium of supply and demand will result in maximization of both producer's and consumer's surplus. True False

True

When anglers are in an open access fishery they behave as if the marginal user cost (MUC) of fishing is zero. True False

True

When congestion occurs (overcrowding), it is probably the case that a public good like a national park changes it's status to an open access resource or something more like a common property resource. True False

True

When much, or the majority, of forest land is in private hands, the optimal rotation might be faster than society may desire because the social benefit of preserving forest land for species habitat gets ignored by private foresters True False

True

While the Orange Roughy fish can live very long lives, their inability to reproduce in early years makes them especially vulnerable to over fishing. True False

True

While water quality problems still exist in developed countries such as the U.S., basic water supply issues in developing countries lead to the fact that about 1 in 10 of the approximately 7.8 billion people in the world do not have access to clean drinking water. True False

True

A study of a shrimp buyback program (where boats are purchased from anglers) basically shows that over numerous auction rounds: a. As an economist might suspect, the average boat length gets larger over later auction rounds, as anglers cleverly substitute bigger boats for fewer boats. b. The average price paid goes down over later rounds in the auction c. Shrimp take definitely decreases as shrimp boats are bought back from several anglers. d. Boat length decreases over auction rounds because the biggest boats are sold off first.

a. As an economist might suspect, the average boat length gets larger over later auction rounds, as anglers cleverly substitute bigger boats for fewer boats.

Which are true under the CERCLA/SARA laws: a. Even if you polluted hazardous wastes in the past, or even just purchased a company who did, you can be found liable and responsible for those wastes b. While the federal government might not pursue prosecuting a city for its responsibility in waste contributions, private companies can drag them into the criminal law suits to seek punitive damages because of joint and several liability clauses in the CERCLA law. c. Consumers never have to pay anything to achieve clean-up d. a and b are both true

a. Even if you polluted hazardous wastes in the past, or even just purchased a company who did, you can be found liable and responsible for those wastes

The Quiluete Native American Indian Tribe: a. Indicated an infinitely large WTA to give up their beach. b. Exhibited a reasonable WTP to get their beach back from the National Park service. c. None of these answers are correct d. were unfortunately on the wrong side of the law in their effort to try to get a beach away from the U.S. Federal government.

a. Indicated an infinitely large WTA to give up their beach.

The High Plains (Ogallala) Aquifer water level has fallen by over 100 feet, and the deepest wells are in which state? a. Probably Texas b. New Mexico c. Oklahoma d. Kansas

a. Probably Texas

A study of voluntary versus mandatory water conservation programs in Los Angeles and San Diego California showed that: a. That both programs were basically effective in reducing water consumption b. The voluntary program was not effective, while the mandatory program was c. None of these answers are correct. d. The mandatory program, surprisingly, was not nearly as effective as the voluntary program

a. That both programs were basically effective in reducing water consumption

The Last Drop article reminds us, using Delhi, India as an example: a. That the distribution of precipitation is more important, perhaps, than the annual average, so one probably needs to pay attention to reliable storage. b. That Delhi people survive because rainfall occurs evenly, throughout the year. c. that a key thing to focus on is annual average precipitation. d. That drilling a good well to get groundwater solves water scarcity problems

a. That the distribution of precipitation is more important, perhaps, than the annual average, so one probably needs to pay attention to reliable storage.

Which of the following would slow down or lengthen the optimal rotation of a forest? a. a tax on the harvest b. moving, in a single harvest simple model, to higher discount rates c. Ignoring the value of carbon sequestration in the harvest timing decision d. All of the above are correct

a. a tax on the harvest

In a situation with an open access resource, such as ocean catch of fish, it is safe to say that: a. Anglers will keep fishing until total cost equals total benefit, or profits are driven to zero. b. All of these answers are correct c. In the absence of management of any kind, anglers will almost certainly over fish, as compared to a dynamically efficient catch of the fish stock d. Anglers will keep fishing because if they don't catch a fish, someone else will.

b. All of these answers are correct

Which of the following likely prevents economic efficiency in water allocation? a. Third party effects (i.e. return flow issues) b. All of these answers are correct. c. Fear of losing water unless the user uses it, even if they don't really need it in a given year. d. Difficult timing issues involved in desired use versus reliable storage of water.

b. All of these answers are correct.

A study of a shrimp buyback program (where boats are purchased from anglers) basically shows that over numerous auction rounds: a. Shrimp take definitely decreases as shrimp boats are bought back from several anglers. b. As an economist might suspect, the average boat length gets larger over later auction rounds, as anglers cleverly substitute bigger boats for fewer boats. c. The average price paid goes down over later rounds in the auction d. Boat length decreases over auction rounds because the biggest boats are sold off first.

b. As an economist might suspect, the average boat length gets larger over later auction rounds, as anglers cleverly substitute bigger boats for fewer boats.

Which is true of instream flow protection? a. Because instream flow has no value, environmental groups that want it must argue for it on the basis of only qualitative statements b. Bob Berrens and his colleagues did a contingent valuation study of a very small fish (silvery minnow) that was endangered and found substantial WTP (willingness to pay) estimates to protect instream flow needed to protect the fish c. Texas now has instream flow protection for the Comal River, near San Antonio d. Virtually every state in the U.S. now has their own statewide instream flow protection legislation.

b. Bob Berrens and his colleagues did a contingent valuation study of a very small fish (silvery minnow) that was endangered and found substantial WTP (willingness to pay) estimates to protect instream flow needed to protect the fish

U.S. air pollution policy is likely what it is because of which of the following reasons: a. Lobbyists are against what they see as the "unfair" consequences of things like an emissions charge b. Each of these reasons is correct. c. It is in reality, quite difficult to determine a "once and for all time" level of emissions for all of the various pollutants, and then carefully construct the best pollution taxes that match those levels of emissions d. the political process of actually getting pollution legislation is very time intensive, and it is likely that taxes would have to be continually updated, requiring years of legislation each time the tax is changed.

b. Each of these reasons is correct.

Which is true regarding economic modeling and extinction of a species? a. Economists would never develop a model that optimized harvest such that extinction of the species would occur. b. Extinction would not occur if the cost of extracting the last unit greatly exceeded the benefit. c. Economics has nothing to contribute about managing a fishery, and this is best left to fisheries biologists. d. Nonuse values do not exist in economics, so accounting for protection of a species simply for its existence is a bogus notion.

b. Extinction would not occur if the cost of extracting the last unit greatly exceeded the benefit.

Which is true of fishing regulations that specify the minimum or maximum size of the mesh (the size of the openings in the net): a. Environmentalists might like this, but biologists won't. b. If dynamic efficiency depends in part on the growth function, then it might be best to make sure that juvenile fish, which are the smallest, are allowed to pass through the net, so we would not in fact want the mesh size limit to be too small. c. Economists are against all regulation of inputs, in all circumstances, so they would always veto a mesh size constraint. d. a and c are both correct

b. If dynamic efficiency depends in part on the growth function, then it might be best to make sure that juvenile fish, which are the smallest, are allowed to pass through the net, so we would not in fact want the mesh size limit to be too small.

Which of the following is an advantage of a "cap and trade" type of system over an emissions charge or pollution tax approach: a. Under any cap and trade system, the government cannot collect revenue, as they can with a tax b. In theory at least, cap and trade approaches likely require at least a little bit less information for the government to have to make the approach work, because the trading market will adjust more easily to changes that occur over time. c. None of these is correct: there are no advantages of cap and trade over a tax approach. d. Cap and trade does not require monitoring the polluters, which costs the government a great deal in a tax approach such as France uses.

b. In theory at least, cap and trade approaches likely require at least a little bit less information for the government to have to make the approach work, because the trading market will adjust more easily to changes that occur over time.

Which is true of the EU's emissions trading program? a. The penalty for cheating was set, and kept, at 40 Euro's per tonne of emissions for all phases of the program. b. Later phases involved further limitations on emissions, i.e. a tighter or stricter cap. c. All allowances were "grandfathered" for all phases of the program, including the current one [Phase IV] d. All of the above are correct.

b. Later phases involved further limitations on emissions, i.e. a tighter or stricter cap.

Which is true about water rights in most states in the United States? a. Most states assign water rights to the party that has water on their land b. Most states basically designate all water rights as actually being the property of the state c. Most states designate the person with the oldest standing water right as the rightful owner of the water d. a and c are correct

b. Most states basically designate all water rights as actually being the property of the state

In a simple little model of steel production, where the steel producers pollute the air: a. A divergence between social and private marginal costs will prevail because steel producers basically ignore marginal social costs, resulting in producers supplying less than the level of socially desirable steel b. Social marginal costs (SMC) will be higher than private marginal costs because of things like medical costs from pollution, and steel producers will produce too much steel because they will ignore SMC c. Social marginal costs will be lower than private marginal costs, except at the point where demand becomes too big d. As long as steel producers produce steel at the point where demand equals supply, which is based on private MC, society will be happy with the level of pollution

b. Social marginal costs (SMC) will be higher than private marginal costs because of things like medical costs from pollution, and steel producers will produce too much steel because they will ignore SMC

The rationale behind the travel cost approach is: a. That when a person who does recreation is asked how much they would be willing to pay for it, they are telling the truth b. That a person would only take a recreation trip if the benefits that he or she would receive would be at least as big, or bigger, than the travel costs of the trip, thus "revealing preference" for recreation c. That a person chooses a house near amenities to be able to more easily do their outdoor recreation d. None of the above are correct

b. That a person would only take a recreation trip if the benefits that he or she would receive would be at least as big, or bigger, than the travel costs of the trip, thus "revealing preference" for recreation

There are a variety of biological growth functions but all of them have in common that: a. There is a point on the far right of a graph where growth is at its maximum. b. There are two points on a typical graph, where growth rates are actually zero. c. There is no point on a graph for any growth function where growth rates can be negative. d. All species growth rates can be modelled using the same biological growth function

b. There are two points on a typical graph, where growth rates are actually zero.

The nominal price of oil hit $145 per barrel in July of 2008. The CPI in 2008 was 215.3 and for 2016 it is 237. Using the October 21, 2016 Brent Crude oil price of about $51 per barrel, and adjusting for inflation, the real price of oil in 2016 (i.e., in 2016 terms) is about how many times lower than the 2008 real price? a. It is roughly twice as low, in real terms. b. Three times lower, approximately. c. 4 times lower d. About 1.5 times lower

b. Three times lower, approximately.

A short-cut to doing the iterative calculation of the "best" combination of the allocation of resources over time between the present and the future is: a. to just recognize that it is always optimal and efficient just to equally split the amount of the resource give to each period's users. b. to allocate resources such that the present value of the marginal net benefit in each period is equal c. to allocate resources such that the present value of net benefits in each period is minimized d. to recognize that discounting cannot be defended under any assumptions, so the discount rate can be ignored.

b. to allocate resources such that the present value of the marginal net benefit in each period is equal

Suppose demand (Q) is a linear function of price (P), such that Q = 100 - 2P. The commodity has no observable price so we can think of the area under the entire curve as consumer's surplus. Thus, in thiis case CS is: a. $100 b. $1500 c. $2500 d. $450

c. $2500

The Clean Water Act was passed into law in: a. 1955 b. 1970 c. 1972 d. 1960

c. 1972

The state of Maryland has pricing of electricity that is an example of: a. An increasing block rate structure b. A two-tier increasing pricing structure c. A multiple tier decreasing block rate structure, providing the lowest per unit price for the largest volumes used d. A constant price, no matter what volume of electricity is consumed

c. A multiple tier decreasing block rate structure, providing the lowest per unit price for the largest volumes used

The sector that takes or consumes the majority of groundwater in the United States is: a. Residential - cities b. Manufacturing c. Agriculture d. Industry

c. Agriculture

Consumer's surplus is: a. Possible to find using non-market valuation methods, even if no price is actually paid for a good. b. The triangular area above a horizontal line representing the price paid, and below a linear demand function. c. All of these answers are correct d. Might decrease under a program or policy that increases producer's surplus.

c. All of these answers are correct

About how many people in the world do NOT have access to clean drinking water? a. About one million people. b. 100,000 people, world wide. c. Approximately one billion people, and this leads to high rates of illness and death in the developing world. d. Very few, as almost all people in the world today have access to clean drinking water.

c. Approximately one billion people, and this leads to high rates of illness and death in the developing world.

Which of the following non-market valuation methods should be used if the thinking is that there are significant passive use or non-use values? a. Travel cost or recreation demand models b. Revealed preference approaches such as the hedonic property valuation approach c. Contingent valuation d. None of the above, because all have been discredited as being hypothetical nonsense which does not allow accurate calculation of damages or lost benefits

c. Contingent valuation

We can safely say that the fishery economists' recommended level of effort under DYNAMIC efficiency is: a. Never going to be as large as the open access level of effort, unless the discount rate is equal to zero b. Never going to be equal to the biologist's recommended level of fishing effort that maximizes the sustainable yield c. Could actually be anywhere in between the static efficiency level of recommended effort, and the level that corresponds to TB = TC. d. None of these answers are correct

c. Could actually be anywhere in between the static efficiency level of recommended effort, and the level that corresponds to TB = TC.

Which is an example of non-excludability in the context of water resources? a. A farmer uses harmful fertilizers and chemicals return to the river to flow downstream. b. Return flows of all kinds. c. Each of these answers is correct d. One farmer or rancher pumps groundwater so quickly, it draws down the aquifer for all users.

c. Each of these answers is correct

U.S. air pollution policy is likely what it is because of which of the following reasons: a. the political process of actually getting pollution legislation is not very time intensive, and although it is likely that taxes would have to be continually updated, the tax is easily changed. b. Each of these reasons is NOT correct, i.e. None of the above. c. It is in reality, quite difficult to determine a "once and for all time" level of emissions for all of the various pollutants, and then carefully construct the best pollution taxes that match those levels of emissions d. Lobbyists are supportive of things like an emissions charge or pollution tax

c. It is in reality, quite difficult to determine a "once and for all time" level of emissions for all of the various pollutants, and then carefully construct the best pollution taxes that match those levels of emissions

New technology could lead to fast-burning nuclear reactors which will: a. Unfortunately lead to a longer "half-life" of spent fuel than conventional reactors b. Consume virtually all of the fuel material, resulting in zero nuclear waste material c. Result in nuclear waste with a half-life of less than about one tenth the half-life of conventional reactors (assuming 100% efficiency in burning the fuel) d. Result in nuclear waste that has a half-life of 10,000 to 20,000 years

c. Result in nuclear waste with a half-life of less than about one tenth the half-life of conventional reactors (assuming 100% efficiency in burning the fuel)

Which of the following would an economist recommend to curb overfishing? a. Setting a limit on fishing vessel size b. Shortening the fishing season c. Setting a tax on the catch, per ton of fish d. Setting a tax on inputs such as the amount of fishing effort used

c. Setting a tax on the catch, per ton of fish

Which African country is not a member of OPEC? a. Algeria b. Angola c. South Africa d. Nigeria

c. South Africa

As per our discussion in class of the "Boogie Man", brought up by a student, what role does it play in energy production? a. The boogie man represents the federal government and its endless subsidies of oil companies b. The boogie man represents the high marginal cost of providing electric power using solar energy c. The boogie man represents the fear that people have of nuclear reactors releasing highly radioactive waste via something like a plant meltdown d. None of the above were what we talked about in class

c. The boogie man represents the fear that people have of nuclear reactors releasing highly radioactive waste via something like a plant meltdown

Suppose there are two polluters, 1 and 2, with unequal transfer coefficients a1 and a2, and each with their own MC of abatement. Let MC1 = $10, and MC2 = $5. The transfer coefficients are a1 = 1, and a2 = 0.5. The correct solution for economic efficiency in clean up or abatement would be: a. There can be no solution, because clearly firm two contributes a larger pollution concentration at the receptor (where the impact is) and thus, economics does not work. b. We desire equi-marginal costs and clearly $10 does not equal $5, so we need to push the first firm to abate less, and the 2nd firm to abate more, to bring about an efficient solution, when MC1 = MC2. c. The current levels of MC because we are already looking at the optimal solution. This is because when MCs are adjusted for the transfer coefficients we divide the MCs by them and thus, the solution is firm one's adjusted MC is $10, and so is firm two's. d. None of these answers is correct

c. The current levels of MC because we are already looking at the optimal solution. This is because when MCs are adjusted for the transfer coefficients we divide the MCs by them and thus, the solution is firm one's adjusted MC is $10, and so is firm two's.

The initial "bubble" concept scheme: a. has been expanded legally today, so that anyone can legally trade pollution (SO2) permits wherever they live in the U.S. today (i.e. in 2020) b. Treats each pollution source (e.g. a smoke stack), as a single pollution problem to be dealt with,, i.e. there is only a "bubble" around one smoke stack. c. Was a step in the direction that economists wanted (flexible trading), but it only allowed trading of source-specific pollution within multiple sources within ONE plant. d. Allows trading of pollution permits between different plants (e.g. between say, a paper plant, and an automotive industry plant), but only if the plants are within the same state in the U.S.

c. Was a step in the direction that economists wanted (flexible trading), but it only allowed trading of source-specific pollution within multiple sources within ONE plant.

In recent years (since 2009), the per capita global supply of fish for food: a. Decreased because of overfishing around the world b. Went up slightly, because human consumption decreased while the fish stocks decreased less than this c. Went up slightly, including aquaculture (fish farming) d. Went up slightly, but aquaculture production slightly decreased over this period

c. Went up slightly, including aquaculture (fish farming)

The top specific category supplied within the broader supply of renewable energy is: a. solar photo voltaics b. hydropower c. biomass d. nuclear power

c. biomass

In the models we can examine for resource extraction, P, or Total MC: a. must rise to meet the choke price b. must rise at an increasing rate, to meet the MC of the backstop resource c. could rise, at an increasing or decreasing rate, depending on the assumption for what happens to the MC of extraction over time, and could meet either the choke price or the MC of the backstop resource d. None of the above

c. could rise, at an increasing or decreasing rate, depending on the assumption for what happens to the MC of extraction over time, and could meet either the choke price or the MC of the backstop resource

Under new laws, what percentage of the fines imposed on the responsible parties in the Macondo (Deep Water Horizon) oil spill go toward restoration? a. None of it may be used for restoration b. All of the fines may be used for restoration c. 50% d. 80%

d. 80%

Which of the following solutions to the overfishing or environmental problems might an economist like Ronald Coase (he won the Nobel Prize in Economics) have advocated? a. Giving all rights to fishing in some body of water to one angler. b. Giving equal rights to fishing in some body of water to all anglers who fish, or giving a lake (like Lake Erie) the same legal rights as a person has. c. Banning fishing until the stock size grows back to "normal". d. A and B

d. A and B

In a simple, single harvest model with constant marginal cost of the harvest, which of the following is true? a. The MCC has no influence on the optimal rule b. MUC is ignored because there is no 2nd, or 3rd future harvest, there is only one c. The optimal rotation occurs when total benefits are maximized d. A and B are both correct

d. A and B are both correct

For optimal allocation of natural resources over team, efficiency requires that: a. the present value of marginal net benefits be equal in each period b. if the discount rate is 10%, and the value of the last barrel of oil used in the second period is $45, and the value of the last barrel of oil used in the first period is $60, then more oil should be taken in the first period than is being taken c. the discount rate must be equal to zero, for there to be an optimal allocation d. A and B are correct

d. A and B are correct

The plight of the American Bison and Red Snapper in the Gulf, have in common that: a. Both resources are part of a "common" property b. Both were, or are in "open access" situations c. Bison hunters and Red Snapper anglers basically both harvest until TB = TC d. Both B and C are correct

d. Both B and C are correct

Which of the following is true about forest management when the risk of forest fires is factored into the equation? a. With simplifying assumptions, such as ignoring the fact that some trees have more fire-resistant bark than others, the optimal rotation would be sooner because bigger volumes of stands would increase fire damages b. Economists can factor in the loss in forest-based recreation benefits, which would enter the analysis as a social cost c. Allowing for the risk of fire damages would lengthen, not shorten, the optimal rotation periiod d. A and B are correct

d. A and B are correct

Which of the following makes a social discount rate higher, rather than lower: a. More impatience, on the part of society b. A higher economic growth rate c. A lower economic growth rate, say, one that even could be negative d. A and B are correct

d. A and B are correct

Which of the following is true regarding our ability to fish sustainably? a. Sustainable fishing would be characterized by the level of effort that corresponds to the "steady state," i.e. when growth offsets catch and when achieved, this does not change over time b. Sustainable fishing is probably not possible wiith an open access fishery c. Sustainable fishing is a myth, and cannot be achieved as eventually human population growth will lead to the extinction of highly sought fish to feed us d. A and B are true

d. A and B are true

What problems might arise in actually trying to find the Minimum Willingness to Accept compensation that people with a legal right to the environment have? a. It may be unwise to actually pay this to the victims, because it might encourage some people to want to be exposed to environmental degradation that could cause them harm. b. The laws say that maximum willingness to pay (WTP), not WTA, is the right valuation concept. c. Methods like contingent valuation might result in extremely high WTA estimates that may not be realistic. d. A and C

d. A and C

Which of the following factors or relationships make extinction of a species less likely? a. The species population growth rate greatly exceeds the social discount rate b. The benefit of catching the last few fish is much greater than the cost of doing so. c. The cost of catching the last few fish is much greater than the benefit of doing so d. A and C are both correct

d. A and C are both correct

Which of the following is true of a public good? a. The amount of the public good that will be provided for by the market will be smaller than what would be economically efficient. b. The public good has the feature of it that is called an externality, but it is always negative. c. The public good has the feature known as non-rivalry, so that if you use it, it is still there for me to use it. d. A and C are both correct.

d. A and C are both correct.

Suppose there are two asset markets, one for oil, and one for bonds. Hotelling suggested that: a. If the rates of return were unequal, then market adjustments would occur to eventually move the two asset markets supply and demand up until the rates of return are equal b. that if the rate of return on oil is 10% and the rate of return on bonds is 5%, then those that hold oil will sell some off and buy bonds c. that if the rate of return on oil is 5% and the rate of return on bonds is 10%, then those that hold oil will sell some oil and purchase bonds d. A and C are correct

d. A and C are correct

Which is true of the economic analysis for the calculation of damages for the BP oil spill? a. The contingent valuation approach was used to estimate total damages at a range of roughly $15 to $17 billion. b. A recreation demand model was used to estimate lost beach use after the spill occurred, resulting in damages that were roughly equivalent to those calculated by using the contingent valuation approach. c. A recreation demand, or travel cost approach was used to estimate lost beach use after the spill occurred, resulting in damage estimates that were much smaller than those calculated by using the contingent valuation approach. d. A and C are correct

d. A and C are correct

The little paperback book, Limits to Growth, led to which of the following: a. Predictions that we would be out of oil before the year 2000. b. Economist like Robert Solow embarking on research to analyze the role of resource prices and other economic factors in allocating natural resources over time c. Predictions that were not confirmed as time passed. d. All of the above

d. All of the above

Which of the following factors lead to overfishing, as compared to the static level of efficient fishing? a. An open access fishery b. a management plan based on the biologist's simple proposal to maximize the sustainable yield. c. Total costs of fishing being equal to zero. d. All of the above

d. All of the above

Which of the following might help improve the situation of overfishing? a. Harbor gangs, even though they might engage in illegal activities b. Aquaculture c. A tax on catch of fish, in some quantity d. All of the above

d. All of the above

Which of the following t-shirts might not be a private good? a. A t-shirt with depiction of a famous rock band on it. b. A t-shirt with promotion of Donald Trump for president c. A t-shirt with depiction of a particular religious point of view d. All of the above

d. All of the above

From a global, social perspective, forests might be being cut down too fast for which of the following reasons? a. A large percentage of world forest is located in 10 to 15 developing countries that are in poverty, and have a lot of international debt b. Some countries that struggle with poverty try to increase income for farmers by giving them subsidies for growing conventional agricultural crops on cleared forest land c. Some countries have an extremely large percentage of poor people who rely on forests for fuelwood, and have little or no incentive to preserve forested lands d. All of the above are correct