The question of resource exhaustion

Resource exhaustion is a phenomenon that has been of concern to economists and policymakers for decades. The idea is simple: as humans continue to consume natural resources at an unsustainable rate, we will eventually run out of them. This, in turn, will have significant economic implications, as resource scarcity drives up prices and makes it more difficult for businesses to operate.

The question of resource exhaustion has been debated among economists for many years. Some economists argue that resource depletion is not a significant issue, as advances in technology and innovation will allow us to find alternative energy and other resources. Others believe that the depletion of natural resources is a serious problem that needs to be addressed immediately.

From an economic perspective, the depletion of natural resources can significantly affect the global economy. For one, it can increase prices for many goods and services. As natural resources become scarcer, the cost of extracting them increases, which drives up the cost of production. This, in turn, leads to higher prices for consumers.

Moreover, the depletion of natural resources can also lead to reduced economic growth. Businesses facing higher costs may become less competitive, leading to job losses and reduced economic activity. This can have a domino effect, as decreased economic activity can lead to decreased demand for goods and services, leading to even more job losses and reduced economic growth.

Another economic impact of resource exhaustion is the potential for political instability. As resources become scarcer, countries may become more protective of their resources and less willing to share them with others. This could lead to geopolitical tensions and even conflicts between nations.

Given these potential economic impacts, it is clear that resource exhaustion is a severe issue that needs to be addressed. One potential solution is to focus on sustainability and resource conservation. This could involve investing in renewable energy sources, developing more efficient technologies, and reducing waste and consumption.

Another solution is to encourage innovation and entrepreneurship. By supporting research and development in clean energy and sustainable agriculture, we can find new ways to use natural resources more efficiently and reduce our reliance on non-renewable resources.

In conclusion, resource exhaustion is an important economic issue that requires our attention. As we continue to consume natural resources at an unsustainable rate, we risk increasing prices, reducing economic growth, and even causing political instability. By focusing on sustainability, innovation, and conservation, we can work to mitigate the effects of resource depletion and ensure a more prosperous future for all.

1.Which of the following is true of the proved world reserves of minerals such as Copper, Iron Ore, and Zinc?

They are approaching zero by the year 2035

They have failed to change due to inaccurate reporting by governments

They are the same today as they were in 1950

They are much higher today than they were in 1950 due to discoveries and improved technology

2.Which of the following would be the most reliable indicator that the supply of a resource was running out?

the price of the resource increasing

the supply of the resource increasing

the quantity of the resource increasing

the demand for the resource increasing

3.Which of the following is most likely to lead to deforestation?

Poorly defined property rights

Miscalculation of proved reserves

Technological advances that increase the productivity of farmland

The use of market prices to allocate resources

4.Which of the following is true of proved reserves?

They include the total supply of renewable resources in an economy but do not include the supply of nonrenewable resources

They are the specific reserves that are extractable and deliverable to the market for use, with current technology and expected market conditions

They refer to the minimum fraction of total deposits that commercial banks have to hold as reserves with the central bank

They are the capital reserves held by a bank or a financial institution in excess of what is required by regulators

5.Which of the following is true of a nonrenewable resource?

Unlike other resources, its price increases when there is an increase in its availability

It is not likely to be exhausted over time because there is an unlimited supply of proved reserves

It is not created or renewed naturally at a significant rate and therefore can potentially be used up over time

Its price is generally not a very good indicator of the supply relative to the demand for the resource due to issues with measuring reserves

6.Which of the following is true of technology?

High-tech farming has reduced the productivity of fertile lands in many countries

Greater land productivity enabled by new technologies has resulted in an increase in the marginal cost of production of food and fiber

Greater land productivity enabled by new technologies has resulted in an increase in the world price of food and fiber

Technology has reduced the amount of land required to produce food and fiber by increasing productivity per acre

7.As a resource becomes less available, its price will rise causing:

users and potential suppliers to search for substitutes

fewer incentives to recycle the resource

suppliers to cut production and exploration

consumers of the resource to increase their rate of usage

8.Which of the following is most likely to be true in an economy where natural resources are government regulated or owned and not allowed to be privately traded?

The problem of waste is eliminated

A shortage or misallocation of resources is likely to occur

The democratic process can be counted on to efficiently price the resource

An excess supply of goods and services produced with the resource is likely to occur

9.Which of the following is true of an economy with well-defined property rights to resources?

Private owners will hoard resources and refuse to allow access to their use

Resources are better used and subject to less waste

Market prices will be a poor reflection of resource supply relative to demand

Rapid depletion of resources is more likely to occur than if collective ownership was used

10.An increase in the price of oil in an economy is likely to lead to a(n):

decrease in the incentive for producers to discover new oil

decrease in the purchase of fuel-efficient cars

strong incentive to search for and find new oil fields

strong incentive to increase the consumption of oil

11.Which of the following is most likely to lead to inefficiencies and problems in the water market in an economy?

Private control or ownership over the sources of water

Well-defined property rights in the economy

Transferable ownership rights of the sources of water

Government subsidies to current water uses and users

12.The forecasts of resource supply crisis and exhaustion have repeatedly been wrong when markets are allowed to work because:

markets create incentives to conserve, find substitutes, develop technology, and locate additional supplies

carefully crafted government announcements have properly prepared people to accurately identify the dates we will run out of key resources

consumers tend to get tired of using a resource repeatedly and keep switching to other resources to get a variety

it is impossible to measure resource use and availability when resources are privately owned

13.Which of the following is true of the price of a resource?

If the supply of a resource decreases relative to demand, its price will rise

Unlike product prices which are set in markets, resource prices are all set by government agencies

It has little effect on the incentives to consume and produce the resource

If the supply of a resource decreases relative to demand, its price will fall

14.Which of the following makes the depletion of a resource highly unlikely?

Eliminating any private property rights to the resource

The use of markets and prices to coordinate the supply and demand for the resource

Government announcements of the dwindling supplies

Collective ownership of the resource

15.In 2005, Lee Raymond, CEO of Exxon, the largest energy company in the world, said publicly, “Gas production has peaked in North America.” Since that time the United States has:

seen natural gas production remain steady

become one of the countries producing the least amount of natural gas

almost doubled its natural gas production through technological advancements

suffered a major decrease in natural gas production due to dwindling reserves

16.Which of the following would increase the incentive for consumers to purchase, and suppliers to produce, more fuel-efficient electric vehicles?

An increase in the price of oil and gasoline

A ban on the construction of new electric power plants

Higher electricity prices

Higher taxes on electric vehicle producers

17.A resource such as timber, that can be continually replanted and regrown is an example of an:

Human resource

Renewable resource

Nonrenewable resource

Mineral ore

18.Forecasts that the world will soon run out of various key resources:

have never been issued, but need to be done soon to allow people time to adjust

have repeatedly been wrong due to the failure to consider other factors

generally are only correct when they come from government sources

have been remarkably accurate, generally predicting the exact date within a window of a year or two

19.The innovative extraction method developed in Texas in the 1990s that has allowed the extraction of a much larger share of oil from existing pools than was previously possible is known as:

cut drilling

fracking

pooling

gassing

20.Which of the following is true of proved reserves?

They overstate the total quantity of resources available in an economy

They are cheap to maintain as inventory

They are a poor indicator of the total future supply of a resource

They are equal to the total quantity of resources ever available in an economy

The question of resource exhaustion

The question of resource exhaustion

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