Practice Problem 4

Question 1

In the context of water resources, the term efficiency refers to what?

Answer 1

Allocating water resources in a manner that maximizes economic output.

Question 2

What factor determines the allocation of water resources among different users according to the equimarginal principle?

Answer 2

Marginal benefit and marginal cost of water use. Resources are reallocated until the marginal benefit of water use is the same for all users. This avoids scenarios where one user could gain more benefit from a unit of water than another.

Question 3

The bid rent function illustrates the relationship between land rent and distance from urban centers? True or False

Answer 3

True

Question 4

What is most likely to influence the efficiency of land allocation?

Answer 4

Property rights and land tenure systems

Question 5

What is the primary objective of land use planning and zoning regulations?

Answer 5

To promote sustainable land development and conservation

Question 6

In the context of land allocation, what does the bid rent function illustrate?

Answer 6

The relationship between land rent and land use intensity based on the distance from urban centres. The change in rent as one moves away from the central business district.

Question 7

How does the concept of efficient allocation apply to land resources?

Answer 7

By minimizing the opportunity cost of land use decisions.

Question 8

What is a characteristic of two part tariffs for water?

Answer 8

They charge a fixed fee regardless of water usage.

Question 9

What is the equimarginal principle

Answer 9

Resources are allocated optimally when the marginal benefit per dollar spent is equal across all uses.

Question 10

What is the difference between open access and private ownership

Answer 10

Risk of overexploitation vs stronger incentives for sustainability

Question 11

List three policies that promote sustainable fishery practices

Answer 11

Quotas, licensing, and maximum catch limits

Question 12

What policy remedies are there for inefficient land utilization and conversion?

Answer 12

Policies like zoning and taxes correct inefficiencies. Example: A land tax disincentivizes leaving land idle.

Question 13

What causes inefficiency in water allocation?

Answer 13

Caused by underpricing or misallocation. Water priced below cost encourages over usage.