ECON 310 Chapter 8 Study Quiz Answers

______1. In his writings, the Rev. Thomas Malthus predicted that

a. production would grow faster than the resources available.

b. the market would correctly allocate resources between time periods.

c. the growth rate of the population would outstrip the growth rate of food resulting in disaster.

d. the growth in population would destroy the quality of the environment.

Answer: c

______2. Harold Hotelling demonstrated that the current market price includes

a. a user cost, which is the opportunity cost of not having the oil available in other periods in the future.

b. a marginal extraction cost, which is the opportunity cost of not having the oil available in other periods in the future.

c. a user cost, which is the addition to cost of adding another user of the resource.

d. all of the above.

Answer: a

______3. The restriction of oil retrieval by domestic producers resulted in

a. decrease the price of oil.

b. increase reliance upon foreign sources of oil.

c. monopoly profits for domestic oil producers.

d. both b and c.

Answer: d

______4. A cartel is an organization of producers who agree to act in concert to influence the price of their product. The cartel does this by

a. limiting output.

b. acting as a single firm and producing at a level greater than that associated with a competitive market structure.

c. acting as a competitive market but limiting output.

d. selecting a single firm to produce the output.

Answer: a

______5. Saudi Arabia has different incentives from the other members of OPEC because

a. Saudi Arabia's reserves are considerably smaller than the others.

b. Saudi Arabia's reserves are considerably larger than the others.

c. Saudi Arabia has a different population makeup than the other members.

d. Saudi Arabia is a U.S. ally.

Answer: b

_____6. Arguments against dependence upon foreign production of oil include

a. monopoly profits flowing from domestic consumers to foreign firms.

b. military and political costs associated with foreign dependence.

c. lack of development of domestic reserves.

d. both a and b.

e. all of the above.

Answer: d

_____7. Performance bonds

a. are useful in addressing the problems of episodic releases of pollutants.

b. require a firm to pay a large amount of money upfront, before they begin their activities.

c. are useful in addressing the problems of production which alters natural ecosystems.

d. both b and c.

Answer: d

______8. The primary environmental impact of relying on hydropower for energy is _______.

a. problems with the long term requirement for waste storage.

b. the high cost of dam construction.

c. the impact on riverine systems and aquatic life in those systems.

d. both b and c.

Answer: c

______9. An annual emission tax with both Federal and state components would

a. allow taxes to be linked to the emission level of the individual automobile.

b. provide some freedom of consumer choice based on the need for a mileage efficiency and pollution efficiency.

c. give some ability to respond to regional differences in the ambient pollution levels.

d. all of the above.

Answer: d

______10. The current design of management within the nuclear power industry takes a scientific approach and fails to consider

a. the potential gains from relying on passive safety systems.

b. management problems which arise when human beings are involved in an operation.

c. the high cost associated with eliminating the potential for catastrophic damage.

d. both a and b.

Answer: d

______11. The development of competitive energy alternatives within the United States will not occur unless

a. the U.S. policy regarding low energy prices changes.

b. the government allocated additional funds and changes tax incentives for research and development into these alternative fuels.

c. the U.S. becomes self sufficient in the supply of energy.

d. both a and b.

e. all of the above.

Answer: d