midterm 1 Flashcards
Why are forest and wildland resources economic resources?
-provide good and services for society
- some are scarce or limited in nature
- used as factor of production for the production of other Goods and Services.
Compare how management decisions are made for (1) a government-owned forest and
wildland resource in a socialist system, (2) a privately owned forest and wildland resource
in a capitalist system, and (3) a forest and wildland resource in a primitive subsistence
economy
(1)- allocation of resources and objectives are determined by the government
(2)- Market forces of demand and supply organize the objectives and allocation of
resources
(3)- Customs and tradition dictates the uses of the resources.
Give an example of how land, labor, and capital are substitutable in the timber
production
It is almost always possible to substitute one input in the production process for another.
For example, a landowner can maintain the same yield of pine on his tract of land by using
more labor and less fertilizer or less labor and more fertilizer, other things equal.
What are the roles of the government in a mixed capitalist system? why are they
important?
Allocative role: Providing public goods (e.g., roads, defense, etc.)
- Distributive role: Transfer payments between different groups (e.g., social security from
working to retired, etc.)
- Stabilization role: Through fiscal and monetary policies
In the market for factors of production in the circular diagram flow, firms are producers
and households are consumers.
False
Forest and wildland resources produces goods and services which are ALL priced.
false
Forest valued for industrial timber are both productive capital and product.
True
Extractive values from forest and wildland resources include timber, fruits, games, and
other benefits harvested from forest and wildland resources.
True
The values that individuals place in preserving the forest and wildland resources from
human disturbance for future generations refers to the bequest value.
True
Ecosystem services from forest and wildland resources such as erosion protection,
water cleaning, and biodiversity are example of non-extractive values.
True
In A mixed capitalist system the allocation of resources and the goods and services
produced are determined exclusively by the market forces of demand and supply
False
Factors of production are final consumers goods and services.
False
The four categories of factors of production in economics generally comprise _______,
labor, _______, and ___________.
a.) land, b.) capital, c.) entrepreneurship
The economic return from land is called ___________ while _________ are the economic
return from capital.
a.) rent, b.) interests.
The allocation of resources that generates the greatest value from the resources used
exhibits_________.
Efficiency
Forest resources fall into two categories of factors of production, namely __________
which is the forest land, and the forest itself which falls into the category of _________.
a.) land, b.) capital
The value of output that a factor of production could generate in its best alternative use
is its ______________________________.
Opportunity Cost
A _______________________________is a market comprising many buyers and sellers with
negligible influence on market price.
Competitive Market
What are the characteristics of a competitive market?
- Large number of buyers
- Large number of sellers
- None of the buyers and the sellers can influence the market price of the good or
service
Discuss the law of diminishing return in timber production or in forestry industry
For example, let’s assume that Timber Inc. combines labor, fertilizer, and forestland to
produce timber. Suppose that Timber Inc. decides to increase the volume of timber on
its property by increasing the quantity (in pounds) of fertilizer while holding constant
all other factors of production (labor and forestland). After a certain amount of
fertilizer, an additional amount of fertilizer produces less of an increase in timber
volume than the last amount of fertilizer added. When Timber Inc. starts experiencing
the fall in the marginal product of fertilizer, it starts experiencing the law of
diminishing return
A group of producers of hardwood determines the market of hardwood.
False (Producers AND Consumers determine the market)
The group of buyers of hunting lease determines the supply on the hunting lease
market.
False (Sellers would determine the supply)
The market of Oak barrels is competitive, whenever, Wood Family raises the
price of the barrels, the other producers do so.
False (when market is competitive, no one has impact on price)
The production function of carbon in loblolly pine shows the minimum amount
of carbon that can be produced using the factors of production.
False (Production Function shows the MAXIMUM amount of output)
The isoquant for paperboard shows the combinations of inputs that can produce
the same quantities of paperboard.
True
The curvature of the isoquant of bed furniture reflects the substitutability
between the factors of production used to produce bed furniture.
True
The marginal rate of technical substitution of labor for capital tells us the rate at
which capital should be decreased for each unit increase of labor to produce higher level of
output.
False ( It shows the rate capital and labor can be substituted to produce the SAME level of output)
Law of diminishing marginal returns states that when more of one input is used
while holding all the other inputs constant, the increase in the associated output increases
at a decreasing rate.
True
The isocost of oak barrel shows all the combination of inputs that yield the
maximum cost of production of the barrel.
False (The isocost curve show combinations of inputs that yield the SAME cost)
Brook Inc. combines land, labor, and capital to produce oak on its property. To
efficiently use its factors of production, the companies must combine them such that the
marginal physical product of each input per dollar spent on that input is equal across all
inputs.
True
Great Value (GV) Inc. combines labor and logs to produce wood furniture.
Aiming at efficiently use its factors of production, GV must reduce labor and increase logs
when the marginal physical product of labor per dollar spent on labor is greater than the
one of logs.
False (you should increase whichever has the greater marginal physical product of labor)
Jack Mill uses logs and labor to produce lumber. Thus, logs and labor are examples of
_________________________________ used in the production of lumber
Inputs/ Factors of production
Ellie Inc. produces paper packages for tea. The increase in the quantity of packages
associated with one additional unit logs represents the ____________________________of logs.
marginal (physical) product
The _______________________________of hunting lease refers to the change in the revenue
associated with one additional unit of hunting lease sold.
Marginal Revenue
Fair Inc. produces paper packages. The increase in its total cost associated with one
additional unit of paper package refers to its__________________________________ of production.
marginal cost
Carpenter Inc. is a company specialized in lumber production. To maximize profit,
Carpenter Inc. must produce the quantity of lumber at which the_______________________
and_______________________________ are equal
a.) marginal cost, b.) marginal revenue
