Question 1

Private provision of public goods

Accepted Answer

A) fails because the private firm will always go broke. 
B) succeeds because public provision is often more costly. 
C) succeeds if consumers expect to obtain a benefit from the consumption of the public good. 
D) fails because of the free-rider problem. 
E) fails because private firms generally charge higher prices than public firms, and therefore lose customers. 
A) fails because the private firm will always go broke. 
B) succeeds because public provision is often more costly. 
C) succeeds if consumers expect to obtain a benefit from the consumption of the public good. 
D) fails because of the free-rider problem. 
E) fails because private firms generally charge higher prices than public firms, and therefore lose customers.

Question 2

Which one of the following goods exhibits nonexcludability?

Accepted Answer

A) a cheeseburger 
B) the Internet 
C) rides on the U.S.Space Shuttle 
D) cable TV 
E) air-traffic control 
A) a cheeseburger 
B) the Internet 
C) rides on the U.S.Space Shuttle 
D) cable TV 
E) air-traffic control

Question 3

Use the figure below to answer the following questions.
   
Figure 17.3.2
-Figure 17.3.2 shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.The efficient quantity is

Accepted Answer

A) 0 goats. 
B) 40 goats. 
C) 50 goats. 
D) 55 goats. 
E) 35 goats. 
A) 0 goats. 
B) 40 goats. 
C) 50 goats. 
D) 55 goats. 
E) 35 goats.

Question 4

The economy's demand curve for a public good is obtained by summing the individual

Accepted Answer

A) marginal cost curves horizontally. 
B) marginal cost curves vertically. 
C) marginal benefit curves horizontally. 
D) marginal benefit curves vertically. 
E) benefit curves diagonally. 
A) marginal cost curves horizontally. 
B) marginal cost curves vertically. 
C) marginal benefit curves horizontally. 
D) marginal benefit curves vertically. 
E) benefit curves diagonally.

Question 5

Rational ignorance suggests that

Accepted Answer

A) all voters are ignorant. 
B) all voters will be ignorant on issues that are not of special interest to them. 
C) all voters will pursue information about each issue before voting. 
D) low voter turnout is due to a lack of understanding of the importance of the political platforms. 
E) it is easier to aim at the median voter because it is a less costly strategy for the politicians. 
A) all voters are ignorant. 
B) all voters will be ignorant on issues that are not of special interest to them. 
C) all voters will pursue information about each issue before voting. 
D) low voter turnout is due to a lack of understanding of the importance of the political platforms. 
E) it is easier to aim at the median voter because it is a less costly strategy for the politicians.

Question 6

If property rights are assigned to a common resource,then the

Accepted Answer

A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost. 
A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost.

Question 7

Which one of the following goods is nonexcludable?

Accepted Answer

A) a taxi 
B) a toll bridge 
C) the atmosphere 
D) an art museum 
E) all of the above 
A) a taxi 
B) a toll bridge 
C) the atmosphere 
D) an art museum 
E) all of the above

Question 8

Use the table below to answer the following questions.
Table 17.2.1
  
-In Table 17.2.1,which of the proposals would be supported by political parties according to the principle of minimum differentiation?

Accepted Answer

A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C 
A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C

Question 9

Public choice theory predicts that government

Accepted Answer

A) acts to promote the redistribution of wealth and income. 
B) acts to maximize the amount of campaign contributions. 
C) acts to eliminate waste and promote an efficient allocation of resources. 
D) makes choices that result in efficient provision of public goods. 
E) makes choices that result in inefficient overprovision of public goods. 
A) acts to promote the redistribution of wealth and income. 
B) acts to maximize the amount of campaign contributions. 
C) acts to eliminate waste and promote an efficient allocation of resources. 
D) makes choices that result in efficient provision of public goods. 
E) makes choices that result in inefficient overprovision of public goods.

Question 10

Use the table below to answer the following questions.
Table 17.2.1
  
-In Table 17.2.1,which one of the proposals will have the least support?

Accepted Answer

A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C 
A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C

Question 11

Use the figure below to answer the following questions.
   
Figure 17.3.2
-Figure 17.3.2 shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.If property rights to the pasture are granted to a farmer so that the farmer owns the pasture,the farmer raises

Accepted Answer

A) 0 goats. 
B) 35 goats. 
C) 50 goats. 
D) 55 goats. 
E) 40 goats. 
A) 0 goats. 
B) 35 goats. 
C) 50 goats. 
D) 55 goats. 
E) 40 goats.

Question 12

A good that is nonrival and excludable is a

Accepted Answer

A) private good. 
B) public good. 
C) government good. 
D) natural monopoly. 
E) common resource. 
A) private good. 
B) public good. 
C) government good. 
D) natural monopoly. 
E) common resource.

Question 13

Rational ignorance

Accepted Answer

A) results when the cost of acquiring information exceeds the benefit of acquiring the information. 
B) allows special interest groups to exert political influence. 
C) combined with special-interest groups can yield inefficient provision of public goods. 
D) results in all of the above. 
E) results in none of the above. 
A) results when the cost of acquiring information exceeds the benefit of acquiring the information. 
B) allows special interest groups to exert political influence. 
C) combined with special-interest groups can yield inefficient provision of public goods. 
D) results in all of the above. 
E) results in none of the above.

Question 14

According to public choice theory government failure occurs because

Accepted Answer

A) government officials do not listen to the pleading of special interest groups. 
B) lobbyists write legislation. 
C) government officials act in their own self-interest. 
D) voters are fully informed about the effects of policies. 
E) government cannot calculate the levels of externalities because there is no market for them. 
A) government officials do not listen to the pleading of special interest groups. 
B) lobbyists write legislation. 
C) government officials act in their own self-interest. 
D) voters are fully informed about the effects of policies. 
E) government cannot calculate the levels of externalities because there is no market for them.

Question 15

According to public choice theory,a voter will favour a candidate whose political program is

Accepted Answer

A) perceived by the voter to be in his self-interest. 
B) best for the majority of the people. 
C) closest to efficiency. 
D) favoured by the median voter. 
E) all of the above. 
A) perceived by the voter to be in his self-interest. 
B) best for the majority of the people. 
C) closest to efficiency. 
D) favoured by the median voter. 
E) all of the above.

Question 16

Sustainable production is

Accepted Answer

A) the rate of production that can be maintained indefinitely. 
B) the production output with the lowest average total cost. 
C) the production output where MC=ATC. 
D) the rate of production that maximizes marginal private benefit. 
E) the rate of production where MB=MC. 
A) the rate of production that can be maintained indefinitely. 
B) the production output with the lowest average total cost. 
C) the production output where MC=ATC. 
D) the rate of production that maximizes marginal private benefit. 
E) the rate of production where MB=MC.

Question 17

Private goods are

Accepted Answer

A) nonrival and excludable. 
B) nonrival and nonexcludable. 
C) always produced in a non-regulated market. 
D) rival and excludable. 
E) rival and nonexcludable. 
A) nonrival and excludable. 
B) nonrival and nonexcludable. 
C) always produced in a non-regulated market. 
D) rival and excludable. 
E) rival and nonexcludable.

Question 18

Competitors who make themselves identical to appeal to the maximum number of voters illustrate the

Accepted Answer

A) principle of maximum differentiation. 
B) principle of minimum differentiation. 
C) principle of rational ignorance. 
D) principle of nonrivalry. 
E) principle of excludability. 
A) principle of maximum differentiation. 
B) principle of minimum differentiation. 
C) principle of rational ignorance. 
D) principle of nonrivalry. 
E) principle of excludability.

Question 19

When a good is nonrival and nonexcludable,it is a

Accepted Answer

A) natural monopoly. 
B) private good. 
C) regulated good. 
D) public good. 
E) common resource. 
A) natural monopoly. 
B) private good. 
C) regulated good. 
D) public good. 
E) common resource.

Question 20

A good that is rival and nonexcludable is a

Accepted Answer

A) private good. 
B) public good. 
C) government good. 
D) regulated good. 
E) common resource. 
A) private good. 
B) public good. 
C) government good. 
D) regulated good. 
E) common resource.

Exam 17: Public Goods and Common Resources

Private provision of public goods

Which one of the following goods exhibits nonexcludability?

Use the figure below to answer the following questions. Figure 17.3.2 -Figure 17.3.2 shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.The efficient quantity is

The economy's demand curve for a public good is obtained by summing the individual

Rational ignorance suggests that

If property rights are assigned to a common resource,then the

Which one of the following goods is nonexcludable?

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1,which of the proposals would be supported by political parties according to the principle of minimum differentiation?

Public choice theory predicts that government

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1,which one of the proposals will have the least support?

A good that is nonrival and excludable is a

Rational ignorance

According to public choice theory government failure occurs because

According to public choice theory,a voter will favour a candidate whose political program is

Sustainable production is

Private goods are

Competitors who make themselves identical to appeal to the maximum number of voters illustrate the

When a good is nonrival and nonexcludable,it is a

A good that is rival and nonexcludable is a

What Is Economics?

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