Answers from Sample Midterm 2

Question 1

What economic theory provides information about the price of a non-renewable resource over time?

Answer 1

Hotelling’s rule

Question 2

Economic theory states that the optimal depletion rate will

Answer 2

increase as the discount rate is raised

Question 3

The optimal level of pollution occurs when

Answer 3

marginal benefits equal marginal costs

Question 4

Which one of the following pollutant types is most difficult to regulate?

Answer 4

a global stock pollutant

Question 5

If price exceed marginal cost, we say that a firm receives

Answer 5

scarcity rent

Question 6

The total revenue curve for a fishery with changes in fishing effort will typically look like

Answer 6

an inverted U-shape

Question 7

The open-access equilibrium is

Answer 7

economically irrational and usually ecologically destructive

Question 8

A higher discount rate will tend to do all of the following except

Answer 8

reduce the mean annual increment