Question 1

Crowding at a common property site both reduces the benefits of visitors and increases the costs
of being a visitor.

Accepted Answer

A) True 
 B)False  False

Question 2

The producer of a public good creates a positive externality,so that such goods tend to be overproduced.

Accepted Answer

A) True 
 B)False  False

Question 3

There are two people in an economy.Person A's demand for a public good is Q = 10 - P and person B's demand is Q = 20 - 2P.The highest total that A and B will be willing to pay for six units of the public good is

Accepted Answer

A)  $3 
B)  $4 
C)  $7 
D)  $11 
A)  $3 
B)  $4 
C)  $7 
D)  $11 D

Question 4

Which of the following goods is an example of a good that is nonexcludable but not nonrivalrous?

Accepted Answer

A)  National defense. 
B)  A fishing lake. 
C)  A lighthouse. 
D)  A radio broadcast. 
A)  National defense. 
B)  A fishing lake. 
C)  A lighthouse. 
D)  A radio broadcast.

Question 5

A market failure occurs when

Accepted Answer

A)  shortages or surpluses of some good cannot be eliminated. 
B)  a private market cannot provide a good in socially efficient quantities. 
C)  consumers' surplus falls to zero. 
D)  property is privately owned and people behave competitively. 
A)  shortages or surpluses of some good cannot be eliminated. 
B)  a private market cannot provide a good in socially efficient quantities. 
C)  consumers' surplus falls to zero. 
D)  property is privately owned and people behave competitively.

Question 6

People use a common property up to the point where the marginal cost of using it equals the social marginal benefit received from it.

Accepted Answer

A) True 
 B)False

Question 7

Whether or not people have identical tastes,a commonly owned property creates no social value.

Accepted Answer

A) True 
 B)False

Question 8

Common Property I

The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property.

-Refer to Common Property I.If access to the common property cannot be prohibited,then the resulting social gain equals

Accepted Answer

A)  zero. 
B)  area E. 
C)  area A + B. 
D)  area C + D. 
A)  zero. 
B)  area E. 
C)  area A + B. 
D)  area C + D.

Question 9

The problem with splitting checks is that no one orders as much as they truly want to eat in order to keep the total bill low.

Accepted Answer

A) True 
 B)False

Question 10

A 100 acre wood used by four people for collecting firewood is common property.The socially efficient use of the wood could be achieved by assigning property rights

Accepted Answer

A)  only if they go to whichever of the four most values the wood. 
B)  only if they are divided equally among all four users. 
C)  only if the are divided according to those who have been using it the longest. 
D)  to any of all of the four. 
A)  only if they go to whichever of the four most values the wood. 
B)  only if they are divided equally among all four users. 
C)  only if the are divided according to those who have been using it the longest. 
D)  to any of all of the four.

Question 11

Which of the following is excludable but not rivalrous in consumption?

Accepted Answer

A)  Cable television 
B)  Non congested toll roads 
C)  Near empty gold courses. 
D)  All of the above. 
A)  Cable television 
B)  Non congested toll roads 
C)  Near empty gold courses. 
D)  All of the above.

Question 12

When access to a common property is unrestricted,why does the resulting social gain fail to be as large as possible? How can an entrance fee increase social gain in this situation?

Accepted Answer

As long as the value a person receives f

Question 13

If the government conducts a survey asking it citizens how much they value having potholes filled in,we can expect

Accepted Answer

A)  an accurate evaluation of the work. 
B)  citizens to understate the value of the work. 
C)  citizens to exaggerate the value of the work. 
D)  most citizens to refuse to answer. 
A)  an accurate evaluation of the work. 
B)  citizens to understate the value of the work. 
C)  citizens to exaggerate the value of the work. 
D)  most citizens to refuse to answer.

Question 14

Which of the following would be the most accurate means for the government to obtain information about the value of irrigation water for farmers to be supplied by the construction of a new dam?

Accepted Answer

A)  Survey the farmers. 
B)  Hire experts to provide an estimate. 
C)  Use the current cost to farmers of withdrawing water from underground sources. 
D)  Conduct an economic study of how an increase in water supply would affect farmer income. 
A)  Survey the farmers. 
B)  Hire experts to provide an estimate. 
C)  Use the current cost to farmers of withdrawing water from underground sources. 
D)  Conduct an economic study of how an increase in water supply would affect farmer income.

Question 15

Why is the social marginal benefit of a common property smaller than the value that people,on average,receive from it?

Accepted Answer

A)  Because use of a common property is nonrivalrous. 
B)  Because when one additional person uses the common property,it lowers the value that others receive from it. 
C)  Because entrance fees must be taken into account when determining the social benefit derived from a common property. 
D)  Because "free riders" will use the common property without contributing to its costs. 
A)  Because use of a common property is nonrivalrous. 
B)  Because when one additional person uses the common property,it lowers the value that others receive from it. 
C)  Because entrance fees must be taken into account when determining the social benefit derived from a common property. 
D)  Because "free riders" will use the common property without contributing to its costs.

Question 16

The purpose of a Clarke tax is to

Accepted Answer

A)  give people an incentive to truthfully reveal their preferences for a public good. 
B)  raise enough revenue to pay for a public good. 
C)  give producers an incentive to supply nonrivalrous public goods in socially efficient quantities. 
D)  prevent the dissipation of rents that would occur with a nonexcludable public good. 
A)  give people an incentive to truthfully reveal their preferences for a public good. 
B)  raise enough revenue to pay for a public good. 
C)  give producers an incentive to supply nonrivalrous public goods in socially efficient quantities. 
D)  prevent the dissipation of rents that would occur with a nonexcludable public good.

Question 17

If the value that people,on average,receive from a common property exceeds the marginal cost of its use,then

Accepted Answer

A)  more people will use the common property. 
B)  social gain is as large as possible. 
C)  the common property creates zero economic rent. 
D)  demand for the common property will fall. 
A)  more people will use the common property. 
B)  social gain is as large as possible. 
C)  the common property creates zero economic rent. 
D)  demand for the common property will fall.

Question 18

When one person consumes a nonexcludable good,

Accepted Answer

A)  others cannot be prevented from also consuming it. 
B)  it can be provided to others for no additional cost. 
C)  the amount available for others to consume is reduced. 
D)  any other users will receive zero economic rent from it. 
A)  others cannot be prevented from also consuming it. 
B)  it can be provided to others for no additional cost. 
C)  the amount available for others to consume is reduced. 
D)  any other users will receive zero economic rent from it.

Question 19

Why do private markets tend to undersupply nonrivalrous goods?

Accepted Answer

A)  Because free riders will refuse to pay for these goods. 
B)  Because the tragedy of the commons will reduce their value to zero. 
C)  Because people have an incentive to understate their preferences for these goods. 
D)  Because the efficient price for these goods is zero. 
A)  Because free riders will refuse to pay for these goods. 
B)  Because the tragedy of the commons will reduce their value to zero. 
C)  Because people have an incentive to understate their preferences for these goods. 
D)  Because the efficient price for these goods is zero.

Question 20

Describe how a Clarke tax is designed and explain how it leads a person to correctly reveal his preferences for a public good.

Accepted Answer

When a public good is provided using a C

Crowding at a common property site both reduces the benefits of visitors and increases the costs of being a visitor.

The producer of a public good creates a positive externality,so that such goods tend to be overproduced.

There are two people in an economy.Person A's demand for a public good is Q = 10 - P and person B's demand is Q = 20 - 2P.The highest total that A and B will be willing to pay for six units of the public good is

Which of the following goods is an example of a good that is nonexcludable but not nonrivalrous?

A market failure occurs when

People use a common property up to the point where the marginal cost of using it equals the social marginal benefit received from it.

Whether or not people have identical tastes,a commonly owned property creates no social value.

Common Property I The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property. -Refer to Common Property I.If access to the common property cannot be prohibited,then the resulting social gain equals

The problem with splitting checks is that no one orders as much as they truly want to eat in order to keep the total bill low.

A 100 acre wood used by four people for collecting firewood is common property.The socially efficient use of the wood could be achieved by assigning property rights

Which of the following is excludable but not rivalrous in consumption?

When access to a common property is unrestricted,why does the resulting social gain fail to be as large as possible? How can an entrance fee increase social gain in this situation?

If the government conducts a survey asking it citizens how much they value having potholes filled in,we can expect

Which of the following would be the most accurate means for the government to obtain information about the value of irrigation water for farmers to be supplied by the construction of a new dam?

Why is the social marginal benefit of a common property smaller than the value that people,on average,receive from it?

The purpose of a Clarke tax is to

If the value that people,on average,receive from a common property exceeds the marginal cost of its use,then

When one person consumes a nonexcludable good,

Why do private markets tend to undersupply nonrivalrous goods?

Describe how a Clarke tax is designed and explain how it leads a person to correctly reveal his preferences for a public good.

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters

Exam 14: Common Property and Public Goods

Crowding at a common property site both reduces the benefits of visitors and increases the costs of being a visitor.

The producer of a public good creates a positive externality,so that such goods tend to be overproduced.

There are two people in an economy.Person A's demand for a public good is Q = 10 - P and person B's demand is Q = 20 - 2P.The highest total that A and B will be willing to pay for six units of the public good is

Which of the following goods is an example of a good that is nonexcludable but not nonrivalrous?

A market failure occurs when

People use a common property up to the point where the marginal cost of using it equals the social marginal benefit received from it.

Whether or not people have identical tastes,a commonly owned property creates no social value.

Common Property I The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property. -Refer to Common Property I.If access to the common property cannot be prohibited,then the resulting social gain equals

The problem with splitting checks is that no one orders as much as they truly want to eat in order to keep the total bill low.

A 100 acre wood used by four people for collecting firewood is common property.The socially efficient use of the wood could be achieved by assigning property rights

Which of the following is excludable but not rivalrous in consumption?

When access to a common property is unrestricted,why does the resulting social gain fail to be as large as possible? How can an entrance fee increase social gain in this situation?

If the government conducts a survey asking it citizens how much they value having potholes filled in,we can expect

Which of the following would be the most accurate means for the government to obtain information about the value of irrigation water for farmers to be supplied by the construction of a new dam?

Why is the social marginal benefit of a common property smaller than the value that people,on average,receive from it?

The purpose of a Clarke tax is to

If the value that people,on average,receive from a common property exceeds the marginal cost of its use,then

When one person consumes a nonexcludable good,

Why do private markets tend to undersupply nonrivalrous goods?

Describe how a Clarke tax is designed and explain how it leads a person to correctly reveal his preferences for a public good.

Supply,demand,and Equilibrium

Prices,costs and Gains From Trade

The Behavior of Consumers

Consumers in the Marketplace

The Behavior of Firms

Production and Costs

Competition

Welfare Economics and the Gains From Trade

Knowledge and Information

Monopoly

Market Power,collusion,and Oligopoly

The Theory of Games

External Costs and Benefits

The Demand for Factors of Production

The Market for Labor

Allocating Goods Over Time

Risk and Uncertainty

What Is Economics

Filters