Term
| Provide and Example of a stock resource that is traded in a market |
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Definition
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Term
| Provide and example of a flow resource that is not traded in a market |
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Definition
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Term
When must flow resources be used if they are to be of economic value?
Provide an answer using economic concepts. |
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Definition
When they are available
If a resource isn't used when there is demand for it there is a loss in value |
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Term
| Explain why the price of demand for electricity in the home is very elastic? |
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Definition
| Because there are few substitutes |
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Term
| Explain why the price elasticity of demand for tickets at a particular ski resort or for a particular airline is price elastic. |
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Definition
| Because there are other places that can be used as substitutes for both of those demands |
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Term
| What are two reasons a supply curve may shift to the left (decrease) for a natural resource. Explain. Use examples if you wish |
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Definition
War- Within a war there is also decrease in supply
Government restrictions- with a restriction you can't supply as much therefor there is a shift (decrease) in supply |
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Term
| What are two reasons a demand curve may shift to the left for a natural resource. Explain. Use examples if you wish |
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Definition
Decrease in income- With people making less money the result is not having alot of money to spend. (demand decreases)
Decrease in population- With not many people around a decrease in demand will occur |
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Term
| Explain the conditions that occur when the real price of a resource rises using the terms nominal price and inflation |
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Definition
| For real price to increase the percent increase in nominal price must be greater than the percent increase in inflation |
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Term
Suppose a serioes of hurricanes has increases the demand for plywood and lumber that has lead to a shortage of these items. When a market shortage exists what will happen to ______?
Price?
Quantity demanded?
Quantity supplied? |
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Definition
Price- Increases
Quantity demanded- decreases
Quantity supplied- Increases |
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Term
| What may happen to the demand for alternative building materials such as those from recycled material or metals? Explain why! Discuss the economic factor causes the demand for the alternative materials to change? |
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Definition
| Increase, Because if the price rises for plywood the consumers don't want to pay for it because it would change in the short run. So there would be more incentive to move to substitutes |
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Term
| What are the problems with a market oriented system which relies on price to distribute resources to their best use. What are three of these? |
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Definition
Unfair if monopoly takes place
Can't put a price on all natural resources
Some resources are inelastic with no substitutes |
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Term
| What are two problems in allocating or managing resources in an economic system where market prices are not relied on very much such as in a centrally planned economy where directives, quotas, rationing, and other non-market resource allocation procedures |
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Definition
Not flexible
No incentive to move towards equilibrium |
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Term
| Would you be more optimistic that an increase in water rates would help reduce water use if the price elasticity of demand for water were -.85 or -.25? Choose one and explain why. |
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Definition
-.85
Because with a greater elasticity you will get a greater reduction rate |
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Term
| Would the amount of dollars the city collected from increased water rates go up more if the price elasticity of demand for water were -.85 or -.25? |
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Definition
-.25
Because a smaller price elasticity would make revenue go up. |
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Term
| If real incomes increased and income elasticity of water is +.35 over several years, would this reduce or increase the effect of raising water rates on consumption. |
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Definition
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Term
| Why is an elasticity estimate important to know in this situation? |
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Definition
| We need to know our elasticity estimate of a resource to know the percent increase or decrease of consumption. |
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Term
What would be an alternative to raising rates to reduce water? (An alternative to using price changes)
What might be one problem with the alternative approach you suggest in the last part? |
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Definition
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Term
| If the cross price elasticity of water rates is positive, what would happen to the purchase of low flow shower heads as water rates increase? |
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Definition
| With an increase in the price of water rates the purchase of low flow shower heads would increase |
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Term
| What are the major factors that would influence quantity demanded (1)? and demand for gasoline (3)? |
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Definition
-Price-
Income
Population
Price of substitutes |
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Term
The EPA has approved a new and less expensive input (Input E) used in the production prices for gasoline that only had a more expensive substitute (Input M) that has been used to produce gasoline.
What would happen to the demand of input M |
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Definition
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Term
The EPA has approved a new and less expensive input (Input E) used in the production prices for gasoline that only had a more expensive substitute (Input M) that has been used to produce gasoline.
What would happen to the supply of gasoline produced u |
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Definition
Supply of gasoline- Increase
Price of gasoline- decrease |
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Term
| Provide and example which explains the concept of marginal cost |
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Definition
| The cost of a farmer to produce an extra bushel of corn |
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Term
| What are three factors that will influence the demand for a recreation site? Explain them! |
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Definition
Increased population- more people in that area with increase the demand for the recreational site.
Increased income- they have more money for hobbies so this will cause an increase in demand for recreational sites
Increased price of substitutes- With an Increase in other Recreational sites the demand for our recreational site will increase |
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Term
| What is one factor that will influence the use of recreation site if demand is constant? explain! |
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Definition
Price
If the demand is constant a greater price will decrease the quantity demanded. With a decrease in price the use of the site will increase |
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