Name ______________________________________________________Natural Resource Economics, Econ 3535University of Colorado, Spring 2001Exam 1Answer all 30 multiple-choice questions. Each question is worth 1 point.1. Which is true?a. Current rate of utilization of natural resources never restricts their future uses.b. Free market utilization of natural resources may not be optimal for the society.c. Utilization of natural resources never causes environmental damage.d. Both b and c2. Why do economists emphasize efficient rate of utilization of resources?a. To provide the society with the largest possible total net benefitsb. To provide producers (a section of the society) with the largest possible profitc. To provide each income and ethnic group an equal share of natural resourcesd. All of the above3. Which can be inferred from a downward-sloping demand curve?a. Marginal cost of production progressively increases with increase in quantity of production.b. Consumers' marginal willingness to pay for a good progressively declines with increase in consumption. c. Both a and bd. None of the above 4. Economizing behavior refers to human behavior of choosinga. the minimum cost alternative, with no regard to potential benefits associated with alternatives.b. the highest benefit alternative, with no regard to costs associated with alternatives.c. the highest net benefit alternative, after comparing both benefits and costs associated with alternatives. d. irrationally among alternatives.5. Market failure refers to market's inability a. to supply a commodity.b. to create demand for a commodity.c. to generate profit to producers.d. to deliver socially efficient quantity of a commodity.6. Which is correct?a. Imperfectly competitive market produces less than efficient quantity.b. Market produces more than efficient quantity of public goods.c. Market produces less than efficient quantity of goods with negative externality.d. All of the above7. Which is not a characteristics of an efficient private property rights system?a. Universality (privately owned resources with fully specified entitlements)b. Transferability (no restriction on voluntary transfers of property rights)c. Nonexclusivity (possibility of owners unintentionally spilling over benefits or costs to non-owners)d. Enforceability (secure from involuntary seizure or encroachment by others)8. Which is not a government intervention to correct market failure?a. Emission tax to control pollutionb. Guaranteed minimum price to farmers at a time of bumper cropc. Direct provision or production of public goods by the governmentd. Antitrust laws against monopolistic practices of large firms9. Government failure refers to government's inability a. to supply a commodity.b. to create demand for a commodity.c. to generate profits to producers.d. to make a market produce the efficient quantity of a commodity.10. Rational voter ignorance refers to a. voters' tendency of ignoring personal benefits and costs of being informed on issues.b. voters' choice of remaining ignorant on issues, because personal costs of being informed exceed personal benefits.c. voters' disinterested voting behavior, irrespective of personal benefits or personal costs of being informed on issues.d. none of the above.11. Exclusion of non-payers or non-owners from consuming or using a resource is a characteristics of a. open-access resources. b. public goods.c. both a and b.d. private goods.12. Which is true of economic rent?a. Economic rent is the price of a resource that is in fixed supply.b. Economic rent does not increase when demand increases.c. An increase in economic rent enables suppliers to increase quantity supplied.d. All of the above13. The efficient level of activity is where a. marginal benefit exceeds marginal cost.b. marginal cost exceeds marginal benefit.c. marginal benefit equals marginal cost.d. average benefit equals average cost.14. Which goods would private suppliers be not interested to supply?a. Goods that have only few suppliers and, thus, lack competitionb. Public goodsc. Goods that are likely to generate negative externalitiesd. open-access resources (e.g. fish from an open-access fishery)15. Which market failure case cannot be attributed to lack of well-defined private property rights?a. Imperfect competitionb. Public goodsc. externalitiesd. open-access resources16. Which goods have the non-rival characteristics?a. all open-access resourcesb. all public goodsc. all private goodsd. all goods with negative externalities17. When is user charge (charging a price for use or consumption) not enforceable?a. When the resource is non-rival in characteristicsb. When the resource is rival in characteristicsc. When the resource is exclusive in characteristicsd. When the resource is non-exclusive in characteristics18. Which case of market failure lowers utilization rate below the socially efficient rate?a. imperfect competitionb. negative externalities c. open-access resources d. all of the above19. How would rate of utilization of an open-access resource compare with the efficient level of utilization?a. Utilization is likely to fall short of the efficient level.b. Utilization is likely to exceed the efficient level.c. Utilization is likely to be efficient.d. Utilization is likely to be zero.20. Special interest issues refer to a. programs that deliver substantial benefits to a large population, but impose costs on a small group of people.b. programs that deliver benefits to a small group of people, but spread costs over a large population.c. programs that deliver both benefits and costs to a large population.d. programs that deliver both benefits and costs to a small group of people. 21. According to the principle of diminishing marginal returns,a. the higher the consumption, the lower the marginal benefit.b. the lower the consumption, the lower the marginal benefit.c. the marginal benefit diminishes with time.d. the higher the price, the lower the marginal benefit.22. Consumer surplus is a measure of ____________ and is measured as the difference between _______________________.a. consumer welfare, consumers' total willingness to pay and producers' total costb. consumer welfare, consumers' total willingness to pay and how much they actually payc. producer welfare, producers' total revenue and their total costd. producer welfare, producers' total revenue and consumers' actual payment23. Which is an apprehension with government intervention in a market?a. possibility