Question 1

A city government engages in cost-benefit analysis when it estimates the social costs and social benefits of providing trash-collection services.

Accepted Answer

A) True 
 B)False

Question 2

You work in an office and one of your coworkers has announced his retirement.You have offered to purchase the retirement gift,so you place a collection jar in the lunch room for anonymous donations to help pay for the gift.After a week,you find very little money in the jar,so you end up paying for a large share of the retirement gift.You are the victim of the _____ problem.

Accepted Answer

A) common resource 
B) private good 
C) overuse of a common resource 
D) free-rider 
A) common resource 
B) private good 
C) overuse of a common resource 
D) free-rider

Question 3

In a market economy,goods that are nonexcludable and nonrival will be produced at inefficiently low levels (if they are produced at all),and goods that are excludable but nonrival in consumption will be produced at inefficiently low consumption levels.

Accepted Answer

A) True 
 B)False

Question 4

(Figure: Marginal Social Cost and Supply)Use Figure: Marginal Social Cost and Supply.The marginal social cost curve lies above the supply curve: Figure: Marginal Social Cost and Supply

Accepted Answer

A) because the marginal social benefit is greater for a common resource. 
B) and the efficient quantity of this common resource is point E. 
C) because the marginal social cost includes the cost to society of depleting this common resource. 
D) because this is a public good. 
A) because the marginal social benefit is greater for a common resource. 
B) and the efficient quantity of this common resource is point E. 
C) because the marginal social cost includes the cost to society of depleting this common resource. 
D) because this is a public good.

Question 5

Whether or not they pay for them,people cannot be excluded from receiving the benefits of _____,but they can be excluded from the benefits of _____.

Accepted Answer

A) private goods;public goods and common resources 
B) public goods;private goods and common resources 
C) common resources;public goods and private goods 
D) either public goods or common resources;private goods 
A) private goods;public goods and common resources 
B) public goods;private goods and common resources 
C) common resources;public goods and private goods 
D) either public goods or common resources;private goods

Question 6

Use the following to answer question:  
-(Table: Total Cost and Total Individual Benefit)Use Table: Total Cost and Total Individual Benefit.If there are 1,000 residents and they all have the same total individual benefit,as shown in the table,what is the marginal social benefit of the fourth animal control officer?

Accepted Answer

A) $10 
B) $9,000 
C) $10,000 
D) $90,000 
A) $10 
B) $9,000 
C) $10,000 
D) $90,000

Question 7

The marginal social cost of a common resource is _____ than an individual's marginal cost,and without government intervention the market will allow provision of _____ of the common resource than is socially optimal.

Accepted Answer

A) less;more 
B) less;less 
C) greater;more 
D) greater;less 
A) less;more 
B) less;less 
C) greater;more 
D) greater;less

Question 8

The private market will lead to _____ of clean air because _____.

Accepted Answer

A) too little consumption;it is nonexcludable but rival in consumption 
B) too much consumption;it is nonexcludable but rival in consumption 
C) production of the socially optimal amount;the marginal cost is zero 
D) government provision;it is a public good 
A) too little consumption;it is nonexcludable but rival in consumption 
B) too much consumption;it is nonexcludable but rival in consumption 
C) production of the socially optimal amount;the marginal cost is zero 
D) government provision;it is a public good

Question 9

A Pigouvian tax can lead to the efficient level of production and consumption of:

Accepted Answer

A) a public good. 
B) a common resource. 
C) an artificially scarce good. 
D) no goods since all taxes cause inefficiency. 
A) a public good. 
B) a common resource. 
C) an artificially scarce good. 
D) no goods since all taxes cause inefficiency.

Question 10

An electronic book is an artificially scarce good because the private market _____ prevent consumption by people who do not pay for it.Further,the same e-book _____ be consumed by more than one person at the same time.

Accepted Answer

A) can;can 
B) cannot;cannot 
C) can;cannot 
D) cannot;can 
A) can;can 
B) cannot;cannot 
C) can;cannot 
D) cannot;can

Question 11

The problem with public goods is similar to the problem with positive externalities: the marginal social benefit exceeds any individual's marginal benefit.

Accepted Answer

A) True 
 B)False

Question 12

Which example is BEST characterized as an artificially scarce good?

Accepted Answer

A) diamonds because their supply is artificially restricted by monopoly producers 
B) music that is downloadable from the Internet for a fee 
C) a daily newspaper 
D) hot dogs in a sports stadium because the number of suppliers is restricted 
A) diamonds because their supply is artificially restricted by monopoly producers 
B) music that is downloadable from the Internet for a fee 
C) a daily newspaper 
D) hot dogs in a sports stadium because the number of suppliers is restricted

Question 13

A public good is a good or service for which exclusion is _____ and that is _____ in consumption.

Accepted Answer

A) possible;rival 
B) possible;nonrival 
C) not possible;rival 
D) not possible;nonrival 
A) possible;rival 
B) possible;nonrival 
C) not possible;rival 
D) not possible;nonrival

Question 14

For a public good,which statement(s)accurately describe(s)the marginal social benefit (MSB)? I.MSB equals the sum of the individual marginal benefits for all of the consumers of that unit.
II.MSB equals the sum of each consumer's willingness to pay for that unit.
III.MSB is greater than any individual marginal benefit.

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

Question 15

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 forces the private-sector firms to internalize any external costs:

Accepted Answer

A) the supply curve shifts to the right,from S2 to S1. 
B) the supply curve shifts to the left,from S1 to S2. 
C) the supply curve is unaffected. 
D) price per unit decreases. 
A) the supply curve shifts to the right,from S2 to S1. 
B) the supply curve shifts to the left,from S1 to S2. 
C) the supply curve is unaffected. 
D) price per unit decreases.

Question 16

If policy makers provide only enough tradable permits to provide efficient use of a common resource,only those who _____ will use the resource.

Accepted Answer

A) gain the most 
B) initially obtain the permit 
C) have the largest market share 
D) have monopoly power 
A) gain the most 
B) initially obtain the permit 
C) have the largest market share 
D) have monopoly power

Question 17

As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

Accepted Answer

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

Question 18

If the market produces an efficient level of a good,then we know that the good must be _____ and _____ in consumption.

Accepted Answer

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

Question 19

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.What is the total social benefit from four units of the public good?

Accepted Answer

A) $16 
B) $60 
C) $140 
D) $200 
A) $16 
B) $60 
C) $140 
D) $200

Question 20

Artificially scarce goods are inefficiently consumed because the market price is zero.

Accepted Answer

A) True 
 B)False

A city government engages in cost-benefit analysis when it estimates the social costs and social benefits of providing trash-collection services.

In a market economy,goods that are nonexcludable and nonrival will be produced at inefficiently low levels (if they are produced at all),and goods that are excludable but nonrival in consumption will be produced at inefficiently low consumption levels.

(Figure: Marginal Social Cost and Supply)Use Figure: Marginal Social Cost and Supply.The marginal social cost curve lies above the supply curve: Figure: Marginal Social Cost and Supply

Whether or not they pay for them,people cannot be excluded from receiving the benefits of _,but they can be excluded from the benefits of _.

The marginal social cost of a common resource is _ than an individual's marginal cost,and without government intervention the market will allow provision of _ of the common resource than is socially optimal.

The private market will lead to _ of clean air because _.

A Pigouvian tax can lead to the efficient level of production and consumption of:

An electronic book is an artificially scarce good because the private market _ prevent consumption by people who do not pay for it.Further,the same e-book _ be consumed by more than one person at the same time.

The problem with public goods is similar to the problem with positive externalities: the marginal social benefit exceeds any individual's marginal benefit.

Which example is BEST characterized as an artificially scarce good?

A public good is a good or service for which exclusion is _ and that is _ in consumption.

If policy makers provide only enough tradable permits to provide efficient use of a common resource,only those who _____ will use the resource.

As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

If the market produces an efficient level of a good,then we know that the good must be _ and _ in consumption.

Artificially scarce goods are inefficiently consumed because the market price is zero.

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

A city government engages in cost-benefit analysis when it estimates the social costs and social benefits of providing trash-collection services.

In a market economy,goods that are nonexcludable and nonrival will be produced at inefficiently low levels (if they are produced at all),and goods that are excludable but nonrival in consumption will be produced at inefficiently low consumption levels.

(Figure: Marginal Social Cost and Supply)Use Figure: Marginal Social Cost and Supply.The marginal social cost curve lies above the supply curve: Figure: Marginal Social Cost and Supply

Whether or not they pay for them,people cannot be excluded from receiving the benefits of _____,but they can be excluded from the benefits of _____.

The marginal social cost of a common resource is _____ than an individual's marginal cost,and without government intervention the market will allow provision of _____ of the common resource than is socially optimal.

The private market will lead to _____ of clean air because _____.

A Pigouvian tax can lead to the efficient level of production and consumption of:

An electronic book is an artificially scarce good because the private market _____ prevent consumption by people who do not pay for it.Further,the same e-book _____ be consumed by more than one person at the same time.

The problem with public goods is similar to the problem with positive externalities: the marginal social benefit exceeds any individual's marginal benefit.

Which example is BEST characterized as an artificially scarce good?

A public good is a good or service for which exclusion is _____ and that is _____ in consumption.

If policy makers provide only enough tradable permits to provide efficient use of a common resource,only those who _____ will use the resource.

As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

If the market produces an efficient level of a good,then we know that the good must be _____ and _____ in consumption.

Artificially scarce goods are inefficiently consumed because the market price is zero.

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

Whether or not they pay for them,people cannot be excluded from receiving the benefits of _,but they can be excluded from the benefits of _.

The marginal social cost of a common resource is _ than an individual's marginal cost,and without government intervention the market will allow provision of _ of the common resource than is socially optimal.

The private market will lead to _ of clean air because _.

An electronic book is an artificially scarce good because the private market _ prevent consumption by people who do not pay for it.Further,the same e-book _ be consumed by more than one person at the same time.

A public good is a good or service for which exclusion is _ and that is _ in consumption.

If the market produces an efficient level of a good,then we know that the good must be _ and _ in consumption.