Forest Econ Practice Midterm and Quizzes
To correct for a positive externality, policymakers should _________________________.
pay users a subsidy
The optimal amount of pollution is usually not zero because _____________.
pollution is often a side affect of producing things that have economic value
This type of economics attempts to address what is, without engaging in value judgements.
positive economics
This occurs when the benefits of an action do not entirely accrue to the person doing the action.
positive externality
What type of good is an electric car?
private good
A local hiking trail that does not have an entrance gate and is usually not crowded is an example of what type of good?
public good
What type of good is public radio?
public good
These revolts were largely aimed at moving lands out of federal control and under either state or private ownership.
sagebrush rebellions
A condition that occurs when wants exceed the resources available to satisfy them.
scarcity
Which of the following is likely to occur if the market price is fixed below the equilibrium price?
shortage
Federal listing of which species under the Endangered Species Act had a large part in leading to the Timber Wars and large reductions in timber harvests on federal lands?
spotted owl
During a study on what to do with the land surrounding the old Hughes Stadium on the west side of Fort Collins, people tended to overstate their willingness to pay for new biking trails, even though they weren't regular bike riders. They were overstating their WTP not because they wanted trails, but because they wanted to prevent new housing developments in that part of town. This phenomenon is known as....
strategic bias
Definition: A cost previously incurred. It does not affect current decisions.
sunk cost
If the current price is above the equilibrium price, would you expect there to be a shortage or a surplus?
surplus
The ___________________ cost curve is always increasing.
variable
This type of sustainability allows for the possibility of natural capital to decline as long as it is substituted with gains in human-built capital.
weak sustainability
Which of the following is not likely to lead to a market failure?
well-defined property rights
To get market demand, we sum individual demands
horizontally
Scrubbers are installed in a smokestack of a refinery to reduce the amount of harmful particles released. This is an example of a/an
Abatement Technology
Approximately what percentage of land in Colorado is managed by the federal government?
37 percent
Every time is snows, my neighbor wakes up extra early and shovels everybody's sidewalk. His actions are an example of what?
?
Firms maximize profits when what condition is true?
?
Given a highly elastic demand curve and a highly inelastic supply curve, if supply shifts (either left of right), which of the following is true regarding the expected change in price relative to the change in quantity?
?
If demand for a good is highly inelastic and the price for that good increases, which of the following is true?
?
This form of ownership and land tenure implies a resource is available for everyone to use. Rights to use the resource and benefits from it are not restricted to a certain group.
?
This type of costs should not influence an economic decision.
?
What type of good is a crowded fishing pond owned by the city?
?
What type of good is global climate regulation?
?
Which of the following will cause a demand curve to shift right?
?
Which of the following will cause a supply curve to shift right?
?
A price elasticity of demand is calculated as .5%. What conclusion can be drawn from this estimation?
A 1% decrease in price will increase demand by .5%
Which good would likely be more elastic?
A Disney cruise
A market failure occurs when the market fails to produce the efficient amount of output and occurs in the case of
Both Positive and Negative Externalities
If a price increase for one good causes the quantity demanded for a related good to fall, these goods are __________________ .
complements
A dentist has an office below some residential dwellings. The drilling is very loud and disrupts the resident living above the office. Upset the resident tells the dentist about the issue. They decide that the dentist will pay a portion of the resident's rent to compensate for the noise. The resident is willing to accept the compensation to listen to the noise. This is an example of
Coasian Bargaining
What is an example of a non-market good?
Ecological benefits
Addressing market failures is important because
Efficient use of resources, Social welfare, Opportunity costs of scare resources.
True or False? Demand is less elastic in the long run than it is in the short run.
False
True or False? To correct an externality, the optimal level of a Pigouvian tax should be set above the marginal environmental damages.
False
The Western US has experienced more severe and larger wildfires over the past decade. This is likely attributed to
Fuel buildup from managing wildfire through suppression, Development of homes and structures in the Wildland Urban Interface (WUI), Drought and insect infestations
The concept that describes how total cost changes when one more unit of production takes place
Marginal Cost
If I build a new home in the wildland urban interface (WUI) and I am not concerned about the threat of wildfire to my property because I know that the Forest Service would construct a fireline and defend my home. This is an example of a/an
Moral hazard
When common property increases in size and number of users it could approach the problems faced with what other type of tenure?
Open Access
On the Front Range a local timber mill closes and forest treatment contractors do not have a facility to take their wood products for processing. Because of this some contractors leave the market causing a shift in supply. What impact would this have on the price of forest treatments?
Prices would rise.
A steeper supply curve would be most likely for which goods
Superbowl tickets
If excess profits exist in a perfectly competitive market, which would likely occur
Supplier entry
The best (most highly valued) alternative given up when a choice is made
opportunity cost
In a perfectly competitive market for forest restoration treatments demand increases and causes a shift in the demand curve, what will likely happen in this scenario?
The price of treatments will rise.
If the demand curve is highly inelastic and the supply curve is highly elastic, would you expect a small or a large change in the price of the good following a shift in demand?
There will be a relatively small change in the price of the good.
Given a highly elastic demand curve and a highly inelastic supply curve, if demand shifts (either left or right), which of the following is true regarding the expected change in price relative to the change in quantity?
There would be a relatively large change in price and a small change in quantity.
You are working as an economist for the State of Colorado. The Colorado governor decides that fuel treatment prices by contractors are too high and wants to institute a price ceiling of $300 per acre. The current market price is $1200 per acre. What would you recommend about what might happen given the market conditions?
There would likely be a shortage of suppliers.
The forest has special considerations in the field of economics including
Timber is a slow growing crop, High percentage of public ownership, The forest produces intermediate and final products.
Non-price determinants are the only factor(s) that causes shifts in the demand curve.
True
Point source pollution problems are generally easier to manage than non-point source pollution problems.
True
Property rights in an environmental problem internalizes the full (private + internal) costs of an action.
True
If the marginal cost curve shifts up and the marginal benefit curve shifts down, what happens to the equilibrium price?
We cannot tell if the new equilibrium price is higher or lower.
Economist Julian Simon and ecologist Paul Ehrlich made a famous bet in 1980 where Simon asserted that the long term price of non-government controlled raw materials will not rise in the long run. Simon argued that technological advancement would likely never let us run out of resources. It is clear that Simon was a believer in what type of sustainability?
Weak
In 1872 Ulysses S. Grant signed the Yellowstone National Park Protection act that designated which first national park?
Yellowstone
A 'need' can be shown with what type of demand curve?
a completely vertical demand curve
In analyzing fire protection in the national forests it is found that an additional acre of wildfire suppression costs $22,000. This is an example of
a marginal cost
A tire company is adjacent to a river and in the production of tires a byproduct is discarded into the river. As a result a downstream user of the river experiences a decline in the fish harvested. The person fishing is experiencing
a negative externality
A survey is conducted to estimate Willingness to Pay for continued use of public land for mountain biking. It is found that as income increases there is more demand for use. Based on economic theory this would be example of
a normal good
A negative externality can be shown graphically by ___________.
an upward shift in the marginal cost curve equal to the size of the externality.
The area under the demand curve, but above the price is called
consumer surplus
This is the minimum payment accepted by a consumer for that consumer to do without a given resource. It can be thought of as how much they would have to be paid to do without something.
compensating variation
What is the only thing that causes a movement along the demand curve?
change in price
One way to correct an externality is to set a maximum level of output (ideally of the social optimum) and tell firms to produce at this amount. This type of policy is called:
command and control
This type of property is owned by an identified group of people who has the right to exclude non-owners, and the duty to maintain the property
common property
This type of property is owned by an identified group of people who has the right to exclude non-owners, and the duty to maintain the property.
common property
The value of the next best alternative to something is the __________.
opportunity cost
If marginal cost is below average total cost then we know that average total cost is
decreasing
Assume lift tickets at Winter Park and lodging in Winter Park are complements. If the price of lift tickets at Winter Park increases, what will happen to demand for lodging in Winter Park?
demand for lodging will decrease
A local forest products producer decides to build a larger factory and experiences decreasing average total costs as the level of production increases. You could conclude that they are experiencing
economies of scale
One way to correct a negative externality is to charge a tax. The size of the tax should be ________________ the externality.
equal to
Consider the market for lawn mowing in Fort Collins. If the population increases and the price of lawn mowers decreases, which of the following is true?
equilibrium number of lawns mowed increases
This is the maximum payment a consumer would spend over and above the current cost of using the resource. It can be thought of as the most they would pay to enjoy something. It is commonly known as willingness to pay (WTP).
equivalent variation
A recreational guide in the national forest must carry insurance for the safety of her clients that she pays monthly. This is an example of a
fixed cost
Someone who benefits from a public good without contributing anything is a _______________.
free-rider
During a study on wolf reintroduction in Colorado, economists have found people had a hard time visualizing how wolves in Colorado would actually impact their lives. They had nothing to base their decision on. This phenomenon is known as:
hypothetical bias
A forester is making a decision about doing a silviculture treatment in a fee area of Larimer County Open Space. The area will need to be closed for two weeks during the treatment and they will hire a contractor to accomplish the work. In making their decision they calculate the amount of revenue that would be lost during the closure and include it in the cost of accomplishing the work. This would be accounting for which type of cost?
implicit
If a good is a normal good, an increase in income will
increase demand
For a given quantity Q, If the marginal benefit of a good is $10, and the marginal cost of the good is $15, is the equilibrium quantity less than or more than Q?
less than
I own a local timber mill and decide I need to increase the pace and scale at which I accomplish my work. I make the decision to build a new factory to increase production and can vary all levels of production. This is an example of operating in the __________________.
long run
The optimal level of pollution occurs where
marginal benefits of pollution abatement equal marginal costs of pollution abatement
The number of people living along the Colorado Front Range is expected to continue growing. For the most part, the western US has decent, tradable property rights for water. Is there likely to be a shortage (in the economic sense of the word) of water in the future?
no, ?
Designing a hiking trail system that provides opportunities for current users without compromising the needs of future users adheres to what principle?
sustainability
The demand curve is downward sloping because
the income effect, Substitution effects, Diminishing marginal utility.
In the optimum pollution model, the slope of the cost curve for abatement is ________________________.
the marginal cost of abatement
The area under the demand curve is called __________.
total value
If there is a negative externality, the market outcome is usually too high. True or false?
true
A negative externality shifts the marginal cost curve in which direction?
up