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economics test 1 > econ test 1 > Flashcards

econ test 1 Flashcards

1
Q

dynamic efficient management of a fishery is complicated by

A

mobility of the fish

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2
Q

for dynamic efficient management, recognizing non market values typically means

A

more conservation

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3
Q

there is less incentive for a harvester of fish to conserve because

A

there is no guarantee that any conserved fish will be available for harvest in the future

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4
Q

for dynamic efficient management of a natural resource, an increase in the interest rate should

A

reduce conservation

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5
Q

the existence of non market values for a renewable resource

A

implies overuse of the resouce

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6
Q

when the growth in value of a renewable resource is less than the rate of interest, then the economic decision that maximizes the NPV is

A

harvest

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7
Q

all other things equal, an increase in the cost of replanting trees

A

increases the optimal rotation time

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8
Q

the economically efficient harvest in a forest

A

maximizes the NPV of the forest

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9
Q

site value is

A

the value of the land in its best use

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10
Q

an alternative technology should eventually cause the MUC of a non-renewable resource to

A

remain constant

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11
Q

when the growth in value exceeds the rate of interest

A

NVP increases by postponing use

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12
Q

sustainable use of a non-renewable resource is

A

literally not possible

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13
Q

a renewable resource is one in which

A

a population or stock may naturally increase

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14
Q

the four categories of market failures are

A

externalities, market power, public goods, and imperfect formation

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15
Q

when there is a negative externality associated with the production of a good or service then the market will typically produce

A

too much of a good or service

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16
Q

an externality is an example of

A

so incomplete market

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17
Q

a public good is an example of

A

an incomplete market

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18
Q

the tragedy of the common is characterized by a

A

non-excludability and negative externalities by users

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19
Q

marginal user cost is

A

the PV of the cost of the unavailability of that amount in the future

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20
Q

the net present value of a natural resource is maximized when its use

A

gv=r

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21
Q

a public good has the characteristics of

A

non excludability and non rivalry use

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22
Q

scarcity rent refers of

A

the marginal user cost

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23
Q

efficient free market equilibrium

A

maximize the sum of consumer and producer surplus

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24
Q

a competitive market is one in which

A

there is no market power- all market participants take the market price as given

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25
Q

a cognizant market is one in which

A

all relevant information is available

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26
Q

a complete market is one in wich

A

all relevant costs and benefits are borne by participants

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27
Q

pareto efficiency occurs when

A

there are no possible Pareto improvements

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28
Q

the economically efficient level of pollution is always

A

> = 0

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29
Q

cost refers to

A

whar is given up

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30
Q

the law of diminishing returns means that

A

MB and MC will eventually intersect

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31
Q

net benefits are

A

maximized when marginal benefit equals marginal cost

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32
Q

dynamic efficiency refers to

A

applying the rules of economic efficiency over time

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33
Q

characteristics of fisheries

A

mobility - they move
lack of jurisdictions - difficulty in forming census
lack of property rights.- hard to enforce boundaries

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34
Q

gv> r

A

npv increases if conserves

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35
Q

gv< r

A

decrease npv - should have been used

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36
Q

issues with dynamic management of species

A

cant manage access to harvesting and the quality of the ecosystem

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37
Q

methods of managing harvesting

A

establish property rights
raise the cost of harvest - tax what they’ve caught
regulate technology used - boat, nets etc.

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38
Q

forests are relatively immobile

A

makes assessments of size easy to tell of growing or shrinking

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39
Q

the decisions to harvest requires a subsequent decision to

A

replant or not

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40
Q

faustmann’s rotation

A

when land can be planted an unlimited number of times
-interested in the value of the land
gv=r

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41
Q

steady-state model

A

the fish population remains the same from period to period, thus the fishing harvest is equal to net growth of the stock

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42
Q

Forests are relatively slow growing

A

planning and harvesting times require patience

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43
Q

forests have multiple conflicting uses

A

output of wood, habitat, ecological, recreation and agriculture

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44
Q

Wicksell rotation

A

refers to the age at which a stand of even-aged tress will be harvested at one time one (one harvest)
- interested in the volume of timber

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45
Q

gv= r

A

nvp is maximized

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46
Q

gv> r

A

post pone use

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47
Q

gv <r

A

waited to long to harvest

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48
Q

sustainable use for a renewable resource

A

cant run out or exhaust

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49
Q

sustainable use for a nonrenewable resource

A

it can run out and exhaust

50
Q

weak sustainability

A

the use of a natural resource or a waste processing service faster than it is generated by the environment can be sustainable if these losses are offset by an increase in either economic capital or social institutions

51
Q

strong sustainability

A

the value of the remaining stock of natural capital should not decrease

52
Q

environmental sustainability

A

developing strategies and practices that create a world economy that the planet can support indefinitely

53
Q

usage of natural resources is affected by

A

interest rate, demand, recycling, alternative technologies

54
Q

property rights

A

the ability of an individual to own and exercise control over scarce resources

55
Q

property rights a part of a

A

complete market

56
Q

exhaustible resources have

A

no externalities of any type

57
Q

user of some exhaustible resources generates some

A

negative externalities

58
Q

renewable resources

A

maximization of NPV of any captial asset

59
Q

GV > R

A

not using allows NPV grow

60
Q

growth of non market value 1

A

it is hard to measure

61
Q

growth of nonmarket value 2

A

usually not captured by the users

62
Q

growth of nonmarket value of 3

A

easily ignored

63
Q

history of owner ship

A

exhaustible resources are owned

64
Q

are renewable resources owned

A

spotty history with ownership but they are used

65
Q

mobility (exhaustible resources)

A

immobile

66
Q

exhaustible resources are

A

non renewable resources

67
Q

mobility

A

renewable resources can be mobile or immobile

68
Q

nonrenewable resources tend to have positive

A

non market existence value

69
Q

renewable resources can grow in value from

A

growth in population, size of units, and health of the population

70
Q

the hotelling rules state that

A

the optimal extraction rate of nonrenewable resources maintains an asset market equilibrium in which the rate of return to stocks in the ground equals the rate of return to alternative investments

71
Q

marginal user cost

A

the opportunity cost of future consumption that is foregone when on more unit of a resource is extracted in the current period

72
Q

basic model 1

A

demand is constant

73
Q

basic model 2

A

no alternative technology

74
Q

basic model 3

A

known or fixed amount

75
Q

basic model 4

A

MEC is constant

76
Q

marginal efficiency or capital

A

the rate of return of the extra profit earned from the last unit of capital employed

77
Q

marginal user cost grows by ____ each period

A

r

78
Q

if one can achieve a goal through various costly activities, the cost is ___ when MC is ___ per activity

A

minimized, equal

79
Q

if R increases

A

future use is less valued than the current use

80
Q

new alternative technology

A

higher prices provides incentives for searching for new deposits (new way to produce)

81
Q

simple model 1

A

demand is constant

82
Q

simple model 2

A

no alternative technology

83
Q

simple model 3

A

reserves are fixed/know

84
Q

simple model 4

A

MEC is fixed

85
Q

simple model 5

A

R is constant

86
Q

rate of growth will be _ when recycling and the _ will decline slowly

A

slowed and use

87
Q

net present value

A

the present value of current and future benefits minus the present value of current and future costs

88
Q

positive externality

A

a benefit received by someone who had nothing to do with the activity that generated the benefit

89
Q

private goods

A

goods provided by private businesses that can be used only by those who pay for them

90
Q

public goods

A

goods such as clean air and clean water that everyone must share

91
Q

the tragedy of the commons

A

the notion that any resource that’s open to everyone, like air, or part of the ocean, will eventually be destroyed because everyone can use it but no one is held responsible for preserving it

92
Q

marginal user cost

A

extra cost of using a non renewable resource that could have been used in the future

93
Q

time value of money

A

idea that future money has less value then available capital

94
Q

static efficiency

A

making the most of your resources at a given time

95
Q

dynamic efficiency

A

markets’ ability to promote cost-reducing or product-enhancing technological change

  • facebook was popular but then instagram came so facebook has to keep updating its production/ technology and lowering the cost to keep consumers
96
Q

law of diminishing returns

A

states that successive increases in inputs eventually lead to less additional output

-if it takes 5 hours to do hw and i only get 10 points, it will marginal decline

97
Q

marginal benefit

A

the additional benefit consumer from consuming one more unit of a good or service

98
Q

economic efficiency

A

optimal production and distribution of scare resources

99
Q

net benefit

A

the difference between the marginal benefit and the marginal cost of an option

100
Q

pareto improvement

A

an action that makes at least one person better off, and harms no one

101
Q

pareto optimality

A

a distribution of things such that no one can be made better off without someone becoming worse off

102
Q

what makes a market economically efficient?

A

when it is complete, cognizant and competetive

103
Q

complete market

A

where all benefits and all costs associated w the market activity only applies to the market participant

104
Q

competitive market

A

a market in which there are many buyers and sellers of the same good and service, none of whom can influence the price at which the good and service is sold

105
Q

cognizant market

A

all markets have access to all relevant information for products

106
Q

demand curve

A

shows the amount consumers are willing and able to purchase at various prices

107
Q

supply curve

A

the amount of producers are willing and able to sell at various prices

108
Q

demand curve slopes

A

up

109
Q

market equilibrium

A

a situation in which quantity demanded equals quantity supplied

110
Q

the economically efficient level of pollution is always

A

greater than and equal to 0

111
Q

all market based information for environment work by

A

forcing the relevant parties to internalize the external costs

112
Q

market-based approaches to negative externalities

A

reduce deadweight loss

113
Q

coase therom

A

shows that participants may reach an economically efficient outcome in limited circumstances

114
Q

a potential barrier to achieving the efficient level of an externality through voluntary incentives is

A

-a large number of participants
- realizations on the part of generators and victims that they are participants

115
Q

placing a fee or tax on a negative externality

A

-provides an incentive to innovate
-reduces the deadweight loss from the externality
- provides for the potential for a double dividend

116
Q

creation of efficient property right structures

A

may achieving the efficient outcome under limited circumstances

117
Q

a tax on emissions of 5 is instituted to achieve a target of emissions Et we know

A

MAC = 5 for all emitters

118
Q

A tax on emissions of 5 is instituted to achieve a target level of emissions Et. We know

A

MDF= 5

119
Q

major sources of inefficiency in the management/ use of species and fisheries are

A
  1. species are usually common property resources, so that there is no economic incentive
  2. inefficient property rights in those cases where species are not common property
  3. externalitys
  4. poorly designed public policy that may inefficiently raise the cost of harvest
120
Q

how to alleviate those inefficiencies in fisheries

A
  1. properly designed harvesting taxes
  2. transferable harvesting rights/quotas
  3. establishment of private marine reserves and
  4. establishment of 200-mile fishing limits

economics test 1 (2 decks)

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