Question 1

To ensure efficient use of a common resource,the government could assign property rights.

Accepted Answer

A) True 
 B)False  True

Question 2

Use the following to answer question:
Figure: An Individual's Marginal Benefit from a Public Good  
-(Figure: An Individual's Marginal Benefit from a Public Good)Use Figure: An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good;each individual has the marginal benefit curve shown in the figure.If the marginal cost of the good is $24,what is the total benefit of the level of the public good that maximizes society's welfare?

Accepted Answer

A) $0 
B) $24 
C) $124 
D) $248 
A) $0 
B) $24 
C) $124 
D) $248 D

Question 3

Josh has an iPhone,and he frequently downloads songs from iTunes.He pays a small price for each download,but downloading a song does not remove it from the iTunes inventory,which is available for other buyers.The iTunes service is BEST described as a(n):

Accepted Answer

A) private good. 
B) public good. 
C) artificially scarce good. 
D) common resource. 
A) private good. 
B) public good. 
C) artificially scarce good. 
D) common resource. C

Question 4

Which example is BEST characterized as a common resource?

Accepted Answer

A) national defense 
B) a bottle opener 
C) a dorm kitchen 
D) a pair of boots 
A) national defense 
B) a bottle opener 
C) a dorm kitchen 
D) a pair of boots

Question 5

Use the following to answer question:
Figure: Correcting for Market Failure  
-(Figure: Correcting for Market Failure)Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.If the government intervenes to correct for the external cost,the new _____ will now reflect _____ costs.

Accepted Answer

A) supply curve S1;both private and external 
B) supply curve S2;private but not external 
C) supply curve S2;both private and external 
D) demand curve (not shown);external but not private 
A) supply curve S1;both private and external 
B) supply curve S2;private but not external 
C) supply curve S2;both private and external 
D) demand curve (not shown);external but not private

Question 6

Use the following to answer question:
Figure: Market Failure  
-(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity E:

Accepted Answer

A) marginal benefit is equal to marginal cost. 
B) marginal benefit is less than marginal cost. 
C) marginal benefit is greater than marginal cost. 
D) price is equal to marginal cost and greater than marginal benefit. 
A) marginal benefit is equal to marginal cost. 
B) marginal benefit is less than marginal cost. 
C) marginal benefit is greater than marginal cost. 
D) price is equal to marginal cost and greater than marginal benefit.

Question 7

Suppose the Alaskan king crab harvest is unregulated,and any person with a boat can go offshore,lower a crab pot,and harvest king crab.This common resource will likely be _____ because the marginal social cost of harvesting crabs _____ the market price of crab.

Accepted Answer

A) overfished;is equal to 
B) overfished;is less than 
C) efficiently fished;is equal to 
D) overfished;exceeds 
A) overfished;is equal to 
B) overfished;is less than 
C) efficiently fished;is equal to 
D) overfished;exceeds

Question 8

What is difficult about using cost-benefit analysis to estimate the level of a public good that will maximize social welfare?

Accepted Answer

A) The government cannot use cost-benefit analysis to estimate this. 
B) It is difficult to estimate the marginal costs of supplying a public good. 
C) It is difficult to estimate the marginal social benefits of supplying a public good. 
D) The costs of using it may make the provision of the public good prohibitive. 
A) The government cannot use cost-benefit analysis to estimate this. 
B) It is difficult to estimate the marginal costs of supplying a public good. 
C) It is difficult to estimate the marginal social benefits of supplying a public good. 
D) The costs of using it may make the provision of the public good prohibitive.

Question 9

No individual is willing to pay to provide the efficient level of a public good since the:

Accepted Answer

A) marginal cost of production is zero. 
B) good will be nonrival and thus underconsumed. 
C) individual's marginal benefit is less than the marginal social benefit. 
D) marginal benefit of allowing one more individual to consume the good is zero. 
A) marginal cost of production is zero. 
B) good will be nonrival and thus underconsumed. 
C) individual's marginal benefit is less than the marginal social benefit. 
D) marginal benefit of allowing one more individual to consume the good is zero.

Question 10

For a public good,the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

Accepted Answer

A) True 
 B)False

Question 11

Which good BEST fits the characteristics of a private good?

Accepted Answer

A) national defense 
B) clean water 
C) a pizza 
D) police protection 
A) national defense 
B) clean water 
C) a pizza 
D) police protection

Question 12

(Scenario: Alexander and Vanessa)Use Scenario: Alexander and Vanessa.What is the socially optimal amount of scientific research for this economy? Scenario: Alexander and Vanessa
Alexander and Vanessa benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation MPB = 200 - Q,where Q refers to the amount of research undertaken and MPB captures the marginal private benefit Alexander gets from different marginal quantities.Meanwhile,Vanessa's marginal private benefit from such research is given by the equation MPB = 100 - Q.The marginal social cost of such research is constant at $100.

Accepted Answer

A) 60 units 
B) 300 units 
C) 100 units 
D) 200 units 
A) 60 units 
B) 300 units 
C) 100 units 
D) 200 units

Question 13

(Scenario: Ben and Nik)Use Scenario: Ben and Nik.At Q2 in the figure,the marginal social benefit from the last unit of the public good is: Scenario: Ben and Nik
Ben and Nik are the only members of a community.They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known.In addition,the marginal social cost (MSC)of the public good is known and is constant.

Accepted Answer

A) equal to the marginal social cost. 
B) equal to P4 + P3. 
C) the optimal level of provision of the public good. 
D) zero for Nik. 
A) equal to the marginal social cost. 
B) equal to P4 + P3. 
C) the optimal level of provision of the public good. 
D) zero for Nik.

Question 14

Use the following to answer question:  
-(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 15

Whenever a species is threatened with extinction,it is likely that:

Accepted Answer

A) clearly defined property rights exist. 
B) no one has exclusive property rights to it. 
C) greedy people in society are increasing their share of social surplus. 
D) it is the result of too much government regulation. 
A) clearly defined property rights exist. 
B) no one has exclusive property rights to it. 
C) greedy people in society are increasing their share of social surplus. 
D) it is the result of too much government regulation.

Question 16

A private good is _____ in consumption.

Accepted Answer

A) excludable and rival 
B) nonexcludable and nonrival 
C) excludable and nonrival 
D) nonexcludable and rival 
A) excludable and rival 
B) nonexcludable and nonrival 
C) excludable and nonrival 
D) nonexcludable and rival

Question 17

When a good is nonrival in consumption,it means that the marginal cost of any individual's consumption is zero.

Accepted Answer

A) True 
 B)False

Question 18

Computer software that you can download from the Internet for a price is an artificially scarce good because it is _____ but _____ in consumption.

Accepted Answer

A) nonexcludable;rival 
B) excludable;nonrival 
C) nonexcludable;nonrival 
D) excludable;rival 
A) nonexcludable;rival 
B) excludable;nonrival 
C) nonexcludable;nonrival 
D) excludable;rival

Question 19

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained for free is called the free-_____ problem.

Accepted Answer

A) cost 
B) rider 
C) goods 
D) market 
A) cost 
B) rider 
C) goods 
D) market

Question 20

The government can intervene to avoid overfishing by using which approach(es)? I.assigning property rights
II.imposing a tax on usage
III.granting a limited number of tradable fishing permits

Accepted Answer

A) I only 
B) II only 
C) I and II only 
D) I,II,and III 
A) I only 
B) II only 
C) I and II only 
D) I,II,and III

To ensure efficient use of a common resource,the government could assign property rights.

Josh has an iPhone,and he frequently downloads songs from iTunes.He pays a small price for each download,but downloading a song does not remove it from the iTunes inventory,which is available for other buyers.The iTunes service is BEST described as a(n):

Which example is BEST characterized as a common resource?

Use the following to answer question: Figure: Market Failure -(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity E:

Suppose the Alaskan king crab harvest is unregulated,and any person with a boat can go offshore,lower a crab pot,and harvest king crab.This common resource will likely be _ because the marginal social cost of harvesting crabs _ the market price of crab.

What is difficult about using cost-benefit analysis to estimate the level of a public good that will maximize social welfare?

No individual is willing to pay to provide the efficient level of a public good since the:

For a public good,the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

Which good BEST fits the characteristics of a private good?

Use the following to answer question: -(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

Whenever a species is threatened with extinction,it is likely that:

A private good is _____ in consumption.

When a good is nonrival in consumption,it means that the marginal cost of any individual's consumption is zero.

Computer software that you can download from the Internet for a price is an artificially scarce good because it is _ but _ in consumption.

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained for free is called the free-_____ problem.

The government can intervene to avoid overfishing by using which approach(es)? I.assigning property rights II.imposing a tax on usage III.granting a limited number of tradable fishing permits

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 17: Public Goods and Common Resources

To ensure efficient use of a common resource,the government could assign property rights.

Josh has an iPhone,and he frequently downloads songs from iTunes.He pays a small price for each download,but downloading a song does not remove it from the iTunes inventory,which is available for other buyers.The iTunes service is BEST described as a(n):

Which example is BEST characterized as a common resource?

Use the following to answer question: Figure: Market Failure -(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity E:

Suppose the Alaskan king crab harvest is unregulated,and any person with a boat can go offshore,lower a crab pot,and harvest king crab.This common resource will likely be _____ because the marginal social cost of harvesting crabs _____ the market price of crab.

What is difficult about using cost-benefit analysis to estimate the level of a public good that will maximize social welfare?

No individual is willing to pay to provide the efficient level of a public good since the:

For a public good,the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

Which good BEST fits the characteristics of a private good?

Use the following to answer question: -(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

Whenever a species is threatened with extinction,it is likely that:

A private good is _____ in consumption.

When a good is nonrival in consumption,it means that the marginal cost of any individual's consumption is zero.

Computer software that you can download from the Internet for a price is an artificially scarce good because it is _____ but _____ in consumption.

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained for free is called the free-_____ problem.

The government can intervene to avoid overfishing by using which approach(es)? I.assigning property rights II.imposing a tax on usage III.granting a limited number of tradable fishing permits

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Suppose the Alaskan king crab harvest is unregulated,and any person with a boat can go offshore,lower a crab pot,and harvest king crab.This common resource will likely be _ because the marginal social cost of harvesting crabs _ the market price of crab.

Computer software that you can download from the Internet for a price is an artificially scarce good because it is _ but _ in consumption.