chapter 6

Question 1

human reliability for resources

Answer 1

for some resources the continuation and volume of their floe is dependent upon humans

Question 2

storing deplorable resources

Answer 2

extends their economic life

Question 3

storing renewable resources

Answer 3

smooths out the cyclical imbalance of supply and demand

Question 4

TMC

Answer 4

= MEC + MUC

Question 5

switch point

Answer 5

TMC1 = TMC2

opportunity cost of current extraction drops to zero, and total MC = MEC

Question 6

when extraction cost increases

Answer 6

MUC declines over time because every unit extracted now raises the cost of future extraction which diminishes the net benefit received in the future

Question 7

a resource in the ground has 2 potential values:

Answer 7

1) a use value when sold

2) an asset value when it remains in the ground

Question 8

if environment damage is not part of the extraction decision

Answer 8

price of the depletable resource is too low

extraction of the depletable resource is too high