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Forest Resources Economics > FINALS > Flashcards

FINALS Flashcards

1
Q

The three ways to identify the best option for production

A

total product function
the least cost option,
benefit-cost analysis

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2
Q

the flow of cash payments to or by an organization. Cost maybe regarded as a
negative cash flow returns or a positive cash flow.

A

Cash flow

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3
Q

the process of calculating the future value of money at a given interest rate.

A

Compounding

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4
Q

Vn = Vo (1+ I)n

A

Compounding

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5
Q

the interest of the first period is added automatically to the principal and the interest of the following period is also added on the new principal, and so on, thus the interest each year amounts to more than that of the preceding year

A

Compound interest

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6
Q

This interest is usually applied in forestry because we have to consider the growth increment of trees.

A

Compound interest

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7
Q

a technique or an economic tool that attempts to evaluate a project in terms of all relevant costs and benefits associated with such a project, including social costs and benefits.

A

Cost-benefit analysis

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8
Q

If the project benefits are greater than the project cost, then the project is economically ___________.

A

feasible/profitable.

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9
Q

the allocation of the value of fixed asset investments to the period of their usefulness.

A

Depreciation

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10
Q

the process of converting the future value of money to present value with the given interest rate

A

Discounting

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11
Q

…………Vn
Vo = ——–
(1 +I)n

A

Discounting

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12
Q

Formula of discounting

A

………..Vn
Vo = ——–
(1 +I)n

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13
Q

the rate at which production costs are deflated to a value at the present time.

A

Discount rate

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14
Q

any part of the firm’s business concerned with a particular product or group of similar products

A

Enterprise

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15
Q

an applied science of accounting in which the financial problems of businesses are analyzed to determine the policies that should govern investments and expenditures in order to secure the return of invested capital with adequate profit.

A

Finance

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16
Q

the value represented by the land, timber, production, and physical improvements altogether making a forest property.

A

Forest capital

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17
Q

an applied field that is concerned with the application of the tools of economics to problems of production, supply and demand, marketing and pricing of forest goods and services such as lumber, stumpage, plywood, fuel wood, recreation, wildlife, and similar products, and to the problems of industries that produce them.

A

Forest economics

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18
Q

deals with the operational activity of a business in forest production

A

Forest financ

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19
Q

the average annual net revenue obtained from a stand of trees; or the net revenue divided by age.

A

Forest rent

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20
Q

appraises the present value of forest property, including standing mature timber, young growing crops, and soil, either in the form of a single stand or a large tract with a diversity of ages, kinds of timber, and conditions of forest cover.

A

Forest valuation

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21
Q

a process of raising prices, giving rise to a reduction in the purchasing power of money.

A

Inflation

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22
Q

the purchase of an asset, or the undertaking of any commitment which involves an initial sacrifice followed by subsequent benefits.

A

Investment

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22
Q

the average rate earned on all costs made prior to the time of timber harvest. It is the rate at which compounded revenue equals the compounded costs of timber production.

A

Internal rate of return

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23
Q

the added output that comes with one extra input.

A

Marginal output

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24
Q

the present value of returns minus the present value of cost. Both returns and costs should be discounted by the value and interest factor.

A

Net present value

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25
Q

s the real cost of goods and/or services measured in terms of sacrificing the best alternative.

A

Opportunity cost

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26
Q

the margin-left after returning all operating costs and loses on depreciation on invested capital

A

Profit

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27
Q

the value after deducting the cost of production plus a margin for profit and risks from the estimated selling price.

A

Residual cost

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28
Q

s the income derived by multiplying the unit price by the quantity of goods sold.

A

Revenue

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29
Q

This is expressed by: R = P x Q

A

Revenue

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30
Q

refers to event whose probable occurrence can be quantitatively assessed.

A

Risk

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31
Q

refers to standing timber (or other forest crops) that have some economic and market values.

A

Stumpage

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32
Q

the negotiated price at which the owner of stumpage sells his timber or other forest crops.

A

Stumpage price

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33
Q

the residual value after deducting the cost of converting timber into its intended products plus the margin for profits and risks from the established selling price of the said end product.

A

Stumpage value

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34
Q

. Also known as the stumpage price computed using the formula: SV = MV - (TC + PR). TC is the total cost of processing the said product, PR is the allowance for profit and risk.

A

Stumpage value

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35
Q

the measure of satisfaction obtained from consuming a good.

A

Utility

36
Q

the application of the basic economic principles to problems of production, distribution and utilization of forest resources which highlight the basic function of economics to forestry

A

Forestry Economics

37
Q

four divisions of economics

A

production, exchange, distribution, and consumption.

38
Q

the creation of goods and services.

A

Production

39
Q

the transfer of ownership of goods and services using the price system.

A

Exchange

40
Q

the movement of goods and services through the channels of trade.

A

Distribution

41
Q

the final utilization of goods and services.

A

Consumption

42
Q

one of the most important products of our economy

A

Timber production

43
Q

five factors that generally affect timber production

A

peculiarities of timber production
ownership of commercial forest land
credit availability
taxes
borrowing interest rate.

44
Q

What is the shortest timber production rotation

A

6-7 years

45
Q

the product itself is immobile and it also requires that it be sold on-site

A

Stumpage selling

46
Q

It means higher interest rates imposed

A

Risk

47
Q

an annual tax levied on real and personal properties

A

Property tax

48
Q

It behaves like a fixed cost, it has no effect on the optimum output but affects the overall cost of production.

A

Property Tax

49
Q

a tax levied on areas utilized in production such as timber at the time of harvest.

A

Yield Tax.

50
Q

a tax made in accordance to the time of harvest and which eliminates the time bias present in property tax due to long period of production

A

“Ad Valorem Tax” or Forest Charges

51
Q

It is recognized as the opportunity cost in the use of money. It highlights the importance of the time value of money.

A

Interest

52
Q

where initial sum (V0) is considered constant or only the principal sum is considered in computing the interest.

A

Simple interest

53
Q

where (V0) vary because the interest grows exponentially, or where the principal sum and the interest gain is included in computing interest

A

Compound interest

54
Q

What is the difference between the values of SI (simple interest) and CI (compound
interest)

A

the interest gain from compounding the interest that is added to the
principal.

55
Q

“producer’s good”

A

Lumber

56
Q

factors affecting demand for lumber are

A

price of lumber,
income of consumers
tastes and preferences
home financing/credit availability and its interest rate
construction methods
building codes

57
Q

factors affecting supply for lumber are

A

price of lumber
labor productivity
cost of stumpage

58
Q

It started from the Chinese discovery of the art of paper-making

A

Pulp and Paper Industry

59
Q

Species used in making paper

A

Mollucan sau, Bagras, Kaatoan Bangkal, Eucalyptus and Benguet pine

60
Q

From the forestry’s standpoint the most significant aspect of paper industry is

A

the manufacture of pulp

61
Q

Why is the paper industry an oligopolistic market?

A

Due to its high capital cost

62
Q

Reasons why the Ph is abnormally high in consuming paper

A

very high consumption by commercialized sectors,
high consumption in rural sector which depressed per capita income
high level of literacy and newspaper circulation relative to per capita income

63
Q

a substitute and complementary good for lumber especially as sub-flooring, sheathing and ceiling

A

Plywood

64
Q

Why is the plywood industry an oligopolistic market?

A

due to its requirement for specialized equipment

65
Q

the newest wood-based sheet material ranging from the pure wood to those mixed with substitute materials and wastes like bagasse, and cement.

A

Particle Board

66
Q

a substitute good for plywood and lumber.

A

Particle Board

67
Q
A
68
Q

deals with the business aspect of forestry that looks into income, asset, and product accounting, and helps ensure the financial viability of the production system.

A

Forest Finance

69
Q

It helps us evaluates our cost and income data, in order for us to set targets that are realistic and time bound.

A

Forest Finance

70
Q

one of the approaches in valuating resources in the past. It is often applied to uneven-aged type of forest or naturally growing forest, old growth and second growth.

A

Stumpage valuation

71
Q

to determine as accurately as possible the monetary value of standing timber available for cutting on a particular area to be converted into commercial products such as lumber or pulpwood.

A

stumpage valuation

72
Q

Formula for SV

A

SV=P-(C+M)

73
Q

It is applied where: (a) heavy expenditures are not required, (b) simple products such as saw-log and pulpwood are produced, and (c) logs are not for exports

A

Overturn method

74
Q

refers to a continuing increase in asset investments or profits yearly

A

Accumulation

75
Q

It accumulates the annual payments for a fix period by discounting them to the present.

A

Present Value of Terminating Annual Series

76
Q

Used to determine the money to be set aside annually to pay for a projected future amount

A

sinking problem

77
Q

one of the most used interest-based formula specially for loan and mortgages

A

Amortization

78
Q

It determines the annual payment that has to be made for a present loan that has to be paid in specific period and interest rate

A

Amortization

79
Q

This form of discounting formula assumes an infinite series of fix sum that can be used to determine the present value of a good or service if we are given an interest rate.

A

Capitalized Value

80
Q

the capitalized value of the land this is contrasted to NPV which only account for the value of the stand since SEV account for the value of the land and the stand.

A

Soil Expectation Value

81
Q

the average annual net revenue obtained from a stand of trees; or the net revenue divided by age.

A

Forest rent

82
Q

refers to the ratio of the present value of total benefits to the present value of total costs.

A

Benefit Cost Ratio

83
Q

the number of years required to recover the initial capital investment or the cost of the project or an economic venture.

A

Payback period

84
Q

the allowable borrowing rate should not be greater than the computed IRR, otherwise

A

the income will be negative

85
Q

the higher the ratio, the

A

greater the return

86
Q

, the shorter the payback period

A

the better

87
Q

The higher is the value of NPV, SEV, ROI and Fr,

A

the higher the income

88
Q
A

Forest Resources Economics (2 decks)

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