LAND AND NATURAL RESOURCE ECONOMICS Questions

Winter 2016 Midterm II Review Dr. McLaren Page 1

LAND AND NATURAL RESOURCE ECONOMICS MIDTERM II REVIEW

 

1. Water is distributed (used) efficiently when . . . A) the marginal benefits of each user are equalized B) the total marginal benefit gained by all users equals the marginal benefit of delivery C) when all property rights are satisfied D) All of the above E) A and B above

2. The Riparian use doctrine A) Encourages conservation of water B) Protects the rights of those who got there first C) properly weighs the marginal benefits of water use to all users D) all of the above

3. The “beneficial use” of water principle A) allows the state to determine who gets priority of use in the event of a water shortage B) protects farmer’s water rights, encouraging them to invest in more efficient means of

using water C) may encourage urban development D) all of the above E) A and C above

4. Water in the western US tends to be inefficiently underpriced because . . .

A) much of its cost of delivery was paid for by national taxpayer funded projects B) the quantity of water delivered to farms is expensive to measure C) if it weren’t, the cost of food would rise sharply D) none of the above

 

 

 

Winter 2016 Midterm II Review Dr. McLaren Page 2

5. Consider the “Bid-Rent” functions in the figure (above). If the forest service began building

logging roads in the wilderness this would cause the . . . A) the bid rent for wilderness to decrease causing land to be converted to agriculture

(forestry) B) the bid rent for agriculture to increase causing land to be converted to agriculture

(forestry) C) the bid rent for wilderness to increase causing land to remain wilderness, attracting

sight seers D) it would have no effect

6. Using the diagram below, describe the difference between the strong and weak forms of the food scarcity hypothesis. Which hypothesis is most likely correct? What evidence do we have to support that conclusion?

 

7) Have food prices in the US been increasing, and / or the quantities of food consumed in the US

declining? If not, why not? 8) Explain why it is sometimes difficult for developing countries to exploit their comparative

advantage in some export crop (such as jute) and import food?

 

 

Winter 2016 Midterm II Review Dr. McLaren Page 3 9) Use the cobweb model (below) to explain the feast and famine cycle of food production that is

sometimes observed in developing countries.

10) Explain the difference between a conservation land bank, a land trust, and an extractive

reserve. 11) The Value function (shown below) shows the value of the lumber in a stand of trees ar they

grow over time. Draw (and explain) how this function would change if the value was discounted by a low or a high discount rate. How would this model determine the moost efficient time to harvest the lumber?

 

12) In Brazil, trees in the Amazon rainforest are being cut down at an efficient and unsustainable

rate. What government policies are responsible?

 

 

Winter 2016 Midterm II Review Dr. McLaren Page 4 13) Consider an open-access resource such as an ocean fishery as compared to a common pool resource from which a fixed number of individuals can draw. Why is the common pool resource less likely to be over used than the open access resource.

 

14) Using the figure below: explain why fishermen will expend more effort fishing if they find a new method that makes fishing easier (i.e. it lowers the marginal cost of fishing).

15) Generally it is thought that assignment of property rights leads to efficient use of resources. We noted two cases however (the Latifundio-minifundio system in Latin America, and tenant farming in Asia) where property rights lead to innificient use of land.

16) Since the 1930’s the productivity of agriculture in developed countries has increased dramatically. Explain why this increase is not likely to continue.