TRUE OR FALSE (3 points each) 10. As interest rates rise, the net present value
ID: 1117823 • Letter: T
Question
TRUE OR FALSE (3 points each) 10. As interest rates rise, the net present value of a project will fall 11. Farming is a major source of pollution 12. The following statement is an illustration of the marginal principle: a farmer will produce more food as lo ng as the price per unit of food exceeds the cost of producing it 13. From an economic standpoint, a forest stand that will be harvested only once for timber should be harvested in the year when the volume of timber is the highest 14. The best cure for high oil prices is high oil prices because high prices will induce companies to more oil reserves, find alternative energy sources and induce consumers to conserve energy find and drill 15. Agriculture relies on natural resources but not on environmental resources 16. The criteria for environmental justice is met when a public environmental resource project confers 60 percent of the benefits to a group that make up 30% of the population 17. If the price of a pesticide used in food production increases, less of the pesticide will be used and less environmental pollution will result 18. A natural resource project with a positive net present value should be rejected 19. As the interest rate increases, the net present value (NPV) wll increase 20. An environmental or natural resources project may be efficient and unjustExplanation / Answer
Answer 10. True, It's because as interest rate rises the discount rate will also eventually rise and thus the present value of the given amount will increase and hence the NPV will decrease. More the amount of interest than before , more the fall in NPV.
Answer 11. True. Aggriculture leads to degradtion of land and also the pesticides make the air unbreathable. In case of dairy farming the waste needs to be disposed off in some water body. Which adds to water pollution. Thus it is a major source of pollution.
Answer 12. True. Marginal means any additional benefit or cost incurred when we produce any additonal unit of a good. If the benefit derived is more it will be recommended to produce more but not in the opposite case.
Answer 13. True. It's reason is because it will reduce the cost of harvesting by some marging which will ultimatelt lead to increased profits. Also harrvesting timber once a year will make it enough time to grow again.
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