Multiple Choice Questions (2 point each) 1. Water subsidies to irrigators... a. Tend to increase economic efficiency b. Tend to internalize externalities c. Tend to increase water prices d. Tend to increase the quantity of water used e. Tend to promote water conservation 2. Which of the following statements is false? a. The economic supply of a nonrenewable resource is generally less than the physical supply b. Identified reserves are those known with a high degree of certainty c. Sub-economic reserves may be extracted if prices or technology change d. Economically recoverable reserves cannot increase over time e. The physical supply of a nonrenewable is finite 3. Which one of the following statements about water pricing in the United States is true? a. As most water utilities are unregulated monopolies, they tend to make excessive profits b. Water prices are normally set according to the average cost of providing water c. Water prices are normally set according to the marginal water cost of providing water d. Water prices are normally set according to the interaction of supply and demand e. Water price fluctuate significantly based on changes in seasonal demands 4. If price exceeds marginal cost, we say that firms receive... a. Extraction surplus b. User costs c. Consumer surplus d. Royalty payments e. Resource rents