15.1 Describe
Thomas Malthus’s theory of human reproduction. Does it make sense for
some species—say, bacteria or rabbits? What do you think makes humans
different? LO1
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15.2 Demographers
have been surprised that total fertility rates have fallen below 2.0,
especially because most people in most countries tell pollsters that
they would like to have at least two children. Can you think of any
possible economic factors that may be causing women in so many countries
to average fewer than two children per lifetime? What about other
social or political changes? LO1
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15.3 Resource
consumption per person in the United States is either flat or falling,
depending on the resource. Yet living standards are rising because of
technological improvements that allow more output to be produced for
every unit of input used in production. What does this say about the
likelihood of our running out of resources? Could we possibly maintain
or improve our living standards even if the population were expected to
rise in the future rather than fall? L01
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15.4 Suppose
that you hear two people arguing about energy. One says that we are
running out of energy. The other counters that we are running out of
cheap energy. Explain which person is correct and why. L03
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15.5 A
community has a nighttime energy demand of 50 megawatts but a peak
daytime demand of 75 megawatts. It has the chance to build a 90-megawatt
coal-fired plant that could easily supply all of its energy uses even
at peak daytime demand. Should it necessarily proceed? Could there be
lower-cost options? Explain. L02
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15.6 Recall
the model of nonrenewable resource extraction presented in Figure 15.7.
Suppose that a technological break through means that extraction costs
will fall in the future (but not in the present). What will this do to
future profits and, therefore, to current user cost? Will current
extraction increase or decrease? Compare this to a situation where
future extraction costs remain unchanged but current extraction costs
fall. In this situation, does current extraction increase or decrease?
Does the firm’s behavior make sense in both situations? That is, does
its response to the changes in production costs in each case maximize
the firm’s stream of profits over time? L04
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15.7 If
the current market price rises, does current extraction increase or
decrease? What if the future market price rises? Do these changes in
current extraction help to ensure that the resource is extracted and
used when it is most valuable? L04
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15.8 ADVANCED ANALYSIS
Suppose that a government wants to reduce its economy’s dependence on
coal and decides as a result to tax coal mining companies $1 per ton for
every ton of coal that they mine. Assuming that coal mining companies
treat this tax as an increase in extraction costs this year, what effect
will the tax have on current extraction in the model used in Figure
15.7? Now, think one step ahead. Suppose that the tax will be in place
forever, so that it will also affect extraction costs in the future.
Will the tax increase or decrease user cost? Does this effect increase
or decrease the change in current extraction caused by the shift of the
EC curve? Given your finding, should environmental taxes be temporary? L04
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15.9 ADVANCED ANALYSIS
User cost is equal to the present value of future profits in the model
presented in Figure 15.7. Will the optimal quantity to mine in the
present year increase or decrease if the market rate of interest rises?
Does your result make any intuitive sense? (Hint: If interest rates are
up, would you want to have more or less money right now to invest at the
market rate of interest?) LO4
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15.10 Various
cultures have come up with their own methods to limit catch size and
prevent fishery collapse. In old Hawaii, certain fishing grounds near
shore could be used only by certain individuals. And among lobstermen in
Maine, strict territorial rights are handed out so that only certain
people can harvest lobsters in certain waters. Discuss specifically how
these systems provide incentives for conservation. Then think about the
enforcement of these property rights. Do you think similar systems could
be successfully enforced for deep-sea fishing, far off shore? L05
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15.11 Aquaculture
is the growing of fish, shrimp, and other seafood in enclosed cages or
ponds. The cages and ponds not only keep the seafood from swimming away
but also provide aqua culturists with strong property rights over their
animals. Does this provide a good incentive for low-cost production as
compared with fishing in the open seas where there are few if any
property rights? L05
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15.12 LAST WORD
The figure in the Last Word section shows that a 10-fold increase in a
country’s GDP per person is associated with about a 20-point increase in
EPI. On the other hand, GDP per person was $38,165 in the United States
in 2007 but only $32,775 in Switzerland; yet Switzerland had an EPI
score of 95.5, while the United States had an EPI score of only 81.0. So
does getting rich guarantee doing well environmentally? Discuss.
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