Question 1

If a voter is ignorant of some of the issues that affect public policy, then the voter is definitely behaving irrationally.

Accepted Answer

A) True 
 B)False

Question 2

-Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The efficient number of police officers in Broomfield is

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  6. 
A)  2. 
B)  3. 
C)  4. 
D)  6.

Question 3

Food is an example of a ________ good.

Accepted Answer

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

Question 4

When people determine the quantity of education they will undertake, they ________ the external benefits. As a result, if education were left to an unregulated market, people would undertake too ________ education.

Accepted Answer

A)  overvalue; much 
B)  ignore; much 
C)  ignore; little 
D)  overvalue; little 
A)  overvalue; much 
B)  ignore; much 
C)  ignore; little 
D)  overvalue; little

Question 5

John receives a marginal benefit of $80 from one missile. Nick receives a marginal benefit of $50 from one missile. Christina receives a marginal benefit of $65 from one missile. John, Nick, and Christina are the only people in the economy. What is the economy's marginal social benefit from one missile?

Accepted Answer

A)  $50 
B)  $65 
C)  $80 
D)  $195 
A)  $50 
B)  $65 
C)  $80 
D)  $195

Question 6

An uncrowded toll road is ________ because it is ________.

Accepted Answer

A)  a public good; both nonrival and nonexcludable 
B)  not a public good; nonrival but excludable 
C)  not a public good; nonexcludable but rival 
D)  not a public good; both rival and excludable 
A)  a public good; both nonrival and nonexcludable 
B)  not a public good; nonrival but excludable 
C)  not a public good; nonexcludable but rival 
D)  not a public good; both rival and excludable

Question 7

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then producers will receive a total amount (price plus subsidy) equal to

Accepted Answer

A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit. 
A)  $20 per unit. 
B)  $15 per unit. 
C)  $10 per unit. 
D)  $5 per unit.

Question 8

-In the above table, the efficient level of output can be achieved through a per unit

Accepted Answer

A)  subsidy of $20. 
B)  tax of $20. 
C)  subsidy of $60. 
D)  tax of $60. 
A)  subsidy of $20. 
B)  tax of $20. 
C)  subsidy of $60. 
D)  tax of $60.

Question 9

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

Accepted Answer

A)  marginal private benefit; marginal external benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal external benefit; marginal social benefit 
A)  marginal private benefit; marginal external benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal external benefit; marginal social benefit

Question 10

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then the private market outcome is inefficient because

Accepted Answer

A)  no students will go to college. 
B)  society places less value on educating the next student than it will cost society to educate that student. 
C)  society places greater value on educating the next student than it will cost society to educate that student. 
D)  the marginal cost will shift upward. 
A)  no students will go to college. 
B)  society places less value on educating the next student than it will cost society to educate that student. 
C)  society places greater value on educating the next student than it will cost society to educate that student. 
D)  the marginal cost will shift upward.

Question 11

A good or service or a resource is nonrival if

Accepted Answer

A)  it is possible to prevent someone from enjoying its benefits. 
B)  it is not possible to prevent someone from enjoying its benefits. 
C)  its use by one person decreases the quantity available for someone else. 
D)  its use by one person does not decrease the quantity available for someone else. 
A)  it is possible to prevent someone from enjoying its benefits. 
B)  it is not possible to prevent someone from enjoying its benefits. 
C)  its use by one person decreases the quantity available for someone else. 
D)  its use by one person does not decrease the quantity available for someone else.

Question 12

-In the above figure, if the market is competitive and unregulated,

Accepted Answer

A)  more than the efficient amount of output will be produced. 
B)  less than the efficient amount of output will be produced. 
C)  the efficient amount of output will be produced. 
D)  the distribution of income will be fair. 
A)  more than the efficient amount of output will be produced. 
B)  less than the efficient amount of output will be produced. 
C)  the efficient amount of output will be produced. 
D)  the distribution of income will be fair.

Question 13

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant.
-In the figure above, if the government provides the efficient amount of education, what is the tuition?

Accepted Answer

A)  $10,000 per year 
B)  $14,000 per year 
C)  $8,000 per year 
D)  $6,000 per year 
A)  $10,000 per year 
B)  $14,000 per year 
C)  $8,000 per year 
D)  $6,000 per year

Question 14

The principle of minimum differentiation reflects the

Accepted Answer

A)  tendency for firms to produce at minimum marginal cost in order to compete with one another. 
B)  tendency for political parties to make themselves identical to appeal to the median voter. 
C)  concept of minimizing the difference between total benefit and total cost to produce efficiently. 
D)  attempt to minimize the free-rider problem. 
A)  tendency for firms to produce at minimum marginal cost in order to compete with one another. 
B)  tendency for political parties to make themselves identical to appeal to the median voter. 
C)  concept of minimizing the difference between total benefit and total cost to produce efficiently. 
D)  attempt to minimize the free-rider problem.

Question 15

When people make decisions about the quantity of education to undertake, they balance the marginal social benefit against the marginal private cost.

Accepted Answer

A) True 
 B)False

Question 16

-If the government regulates the market in the above figure in a way to achieve efficiency, then ________ vaccinations will be produced and consumed.

Accepted Answer

A)  0 
B)  30 thousand 
C)  50 thousand 
D)  None of the above answers is correct. 
A)  0 
B)  30 thousand 
C)  50 thousand 
D)  None of the above answers is correct.

Question 17

A free-rider problem occurs when the

Accepted Answer

A)  good is excludable. 
B)  good is offered at no charge. 
C)  good is rival. 
D)  good is nonexcludable. 
A)  good is excludable. 
B)  good is offered at no charge. 
C)  good is rival. 
D)  good is nonexcludable.

Question 18

A cost that arises from the production of a good that is paid by someone who did not participate in the production is called

Accepted Answer

A)  a free rider. 
B)  an externality. 
C)  rent seeking. 
D)  a public failure. 
A)  a free rider. 
B)  an externality. 
C)  rent seeking. 
D)  a public failure.

Question 19

The economy's marginal social benefit curve for a public good is equal to the ________.

Accepted Answer

A)  horizontal sum of the individual demand curves 
B)  vertical sum of the individual marginal benefit curves 
C)  horizontal sum of the individual marginal benefit curves 
D)  vertical sum of the individual supply curves 
A)  horizontal sum of the individual demand curves 
B)  vertical sum of the individual marginal benefit curves 
C)  horizontal sum of the individual marginal benefit curves 
D)  vertical sum of the individual supply curves

Question 20

To ensure that all families are protected from influenza, Berkeley's Public Health division is giving free flu vaccines at a Free Flu Clinic on October 28, 2010. Dr. Berreman states,"By protecting ourselves from flu, we also protect our families and neighbors." What does Berreman mean?

Accepted Answer

A)  The production of flu vaccines creates an external benefit. 
B)  When you have the flu, you are an external cost. 
C)  When the government provides free flu vaccines, they minimize an external cost. 
D)  The consumption of flu vaccines creates an external benefit. 
A)  The production of flu vaccines creates an external benefit. 
B)  When you have the flu, you are an external cost. 
C)  When the government provides free flu vaccines, they minimize an external cost. 
D)  The consumption of flu vaccines creates an external benefit.

Exam 16: Public Choices and Public Goods

If a voter is ignorant of some of the issues that affect public policy, then the voter is definitely behaving irrationally.

Food is an example of a ________ good.

When people determine the quantity of education they will undertake, they ________ the external benefits. As a result, if education were left to an unregulated market, people would undertake too ________ education.

An uncrowded toll road is ________ because it is ________.

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then producers will receive a total amount (price plus subsidy) equal to

-In the above table, the efficient level of output can be achieved through a per unit

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

-The above figure shows the marginal private benefit and marginal social cost of a college education. If society's external benefits from college graduates is $10,000 each, then the private market outcome is inefficient because

A good or service or a resource is nonrival if

-In the above figure, if the market is competitive and unregulated,

The figure shows the supply curve (S) and the demand curve (D) for college education. The external benefit from college education is $6,000 per student per year and is constant. -In the figure above, if the government provides the efficient amount of education, what is the tuition?

The principle of minimum differentiation reflects the

When people make decisions about the quantity of education to undertake, they balance the marginal social benefit against the marginal private cost.

-If the government regulates the market in the above figure in a way to achieve efficiency, then ________ vaccinations will be produced and consumed.

A free-rider problem occurs when the

A cost that arises from the production of a good that is paid by someone who did not participate in the production is called

The economy's marginal social benefit curve for a public good is equal to the ________.

To ensure that all families are protected from influenza, Berkeley's Public Health division is giving free flu vaccines at a Free Flu Clinic on October 28, 2010. Dr. Berreman states,"By protecting ourselves from flu, we also protect our families and neighbors." What does Berreman mean?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

When people determine the quantity of education they will undertake, they the external benefits. As a result, if education were left to an unregulated market, people would undertake too education.

An uncrowded toll road is because it is .

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called and the benefit the rest of the neighborhood enjoys is called .