1. Which of the following represents the five important property rights elements that together imply ownership?
   Access, opportunity, management, exclusion and liberty.
   Access, withdrawal, management, liberty, and justice.
   Access, withdrawal, management, exclusion and alienation.
   Private, state, common, government, and open-access.
   

2. True or false: Along a standard supply curve, price and quantity supplied are inversely related--when one increases, the other decreases.
   True.
   False.
   

3. True or false: In the short run marginal costs eventually decline as output rises; this occurs because as output rises, economies of specialization eventually exceed the diseconomies due to congestion.
   True.
   False.
   

4. A profit maximizing firm in a competitive market will set output level where...
   price equals fixed cost.
   fixed cost equal total revenue.
   total costs equal total revenue.
   marginal revenue (price per unit) equals marginal cost.
   

5. Suppose that supply is given by the expression P=10+.2Q, and demand is given by the expression P=110-0.05Q. Assume that marginal external cost is $10. Compute the amount of overproduction due to market failure.
   0.
   10.
   25.
   40.
   

6. Referring back to question 5, compute the implicit price subsidy to consumers that exists in this market as a consequence of unconstrained pollution.
   $0.
   $2.
   $4.
   $6.
   

7. Referring back to question 5, if there is no Pigouvian tax or other regulatory mechanism for controlling pollution, compute the dollar estimate of total external cost created by unconstrained market exchange.
   $0.
   $2,500.
   $4,000.
   $10,000.
   

8. Referring back to question 5, if there is no Pigouvian tax or other regulatory mechanism for controlling pollution, compute the deadweight loss that occurs because of negative externalities.
   $400.
   $250.
   $200.
   $0.
   

9. When is a market for a scarce depletable resource dynamically efficient?
   When total surplus is maximized in the current period.
   When total output is maximized in the current period.
   When the present discounted value of total surplus over time is maximized.
   When price in the current period is minimized.
   

10. True or false: An aspect of recyclable resources is that the secondary market of salvaged or recycled resource acts as a market substitute for the primary market of the virgin resource.
    True.
    False.
    

11. As a natural resource that is traded in a competitive market becomes increasingly scarce (yet demand remains strong), marginal Hotelling rent rises because:
    Marginal Hotelling rent reflects the opportunity cost of consuming a unit of the resource today (the net value of consuming the resource in a future period), and as the resource becomes increasingly scarce, that future net value of consumption becomes larger.
    Marginal extraction costs will rise faster than resource price.
    New extraction technologies, combined with conservation and the development of substitutes, will keep future prices from rising.
    Ownership is not assigned to natural resource commodities that are bought and sold in markets.
    None of the above.
    

12. When dealing with the wild resource stock of marine fisheries, a recurrent problem is...
    the essentially open access nature of property rights regimes in international waters.
    excessive capitalization brought on in part by management based on seasonal closures.
    All of the above.
    None of the above.
    

Questions:
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