Chapter 14, Natural Resource Management: Depletable and Replenishable Resources Video Solutions, Environmental Economics and Natural Resource Management, 3rd Edition

Problem 1

Given the assumptions of Hotelling's rule and constant extraction costs, what is the total value of a stock of 1 million "dry long ton units" of extractable iron ore if the current price is 40 cents per dry long ton unit and the extraction cost is 25 cents per dry long ton unit?

Brett Boyer

Numerade Educator

07:57

Problem 2

Consider the graph of crude oil prices in Figure 14.1.
a) Explain how a decrease in price could be consistent with Hotelling's rule.
b) Some investigators have concluded that Hotelling's rule does not apply. List two of Hotelling's assumptions that are inconsistent with the real-world oil situation.

John Lee

Numerade Educator

02:15

Problem 3

Do you agree with Klaus Toepfer that wars over water are inevitable? What do you see as the most realistic policy approach to minimizing future conflicts over water? Would you be in favor of water rationing in your area? Why or why not?

Prashant Bana

Numerade Educator

01:39

Problem 4

Indicate whether the following statement is true, false, or uncertain, and explain your answer: Riparian water rights are more efficient than prior appropriation rights.

Priyanka Sadarangani

Numerade Educator

02:19

Problem 5

The section on water allocation discusses the division of water between industry and agriculture in Taiwan. Using a graph similar to Figure 14.3, explain how this analysis would change in the following circumstances:
a) There is a positive marginal extraction
cost of water.
b) The demand for computer chips increases.
c) The local supply of water increases.

Tristan Wille

Numerade Educator

02:19

Problem 6

Draw a graph with the price per unit on the vertical axis and the number of units purchased on the horizontal axis. Draw the relationship between per-unit price and quantity for each of the following plans on the same graph:
a) A flat fee
b) A flat rate

Kara Liskey

Numerade Educator

02:19

Problem 7

Draw another graph with the price per unit on the vertical axis and the number of units purchased on the horizontal axis. Draw the relationship between price and quantity for each of the following plans on the same graph:
a) A decreasing block plan under which the price decreases after each 10-unit increase in usage.
b) An increasing block plan under which the price increases after each 10-unit increase in usage.

Kara Liskey

Numerade Educator

06:07

Problem 8

Of the plans you graphed in Problems 6 and 7 , rank them in order from best to worst in their ability to promote efficient resource use. Which of these plans most closely resembles the pricing plan you face for water? Which most closely resembles the pricing plan you face for oil? Discuss why these pricing plans might be in place.

Tawana Stiff

Numerade Educator

00:12

Problem 9

Indicate whether the following statement is true, false, or uncertain, and explain your answer: If every type of water use were 100 percent nonconsumptive, the only major problems regarding the world water supply would involve allocation and distribution.

Brandon Fox

Numerade Educator

00:28

Problem 10

Indicate whether the following statement is true, false, or uncertain, and illustrate your answer using a set of graphs similar to those in Figure 14.6: If the marginal cost of extraction increases over time and the marginal benefit curve is the same for each period, then the undiscounted net marginal benefit decreases over time and the resource price must rise in order for marginal rents to rise.

Tanishq Gupta

Numerade Educator