Question 1

Private goods are both

Accepted Answer

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

Question 2

An FM radio signal is an example of a good that is

Accepted Answer

A)  private. 
B)  nonrival in consumption. 
C)  social. 
D)  nonexcludable in production. 
A)  private. 
B)  nonrival in consumption. 
C)  social. 
D)  nonexcludable in production.

Question 3

When goods are available free of charge,the market forces that normally allocate resources in our economy are absent.

Accepted Answer

A) True 
 B)False

Question 4

Governments can improve market outcomes for

Accepted Answer

A)  public goods but not common resources. 
B)  common resources but not public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources. 
A)  public goods but not common resources. 
B)  common resources but not public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources.

Question 5

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Accepted Answer

A)  Washington,D.C. 
B)  Sydney 
C)  Tokyo 
D)  London 
A)  Washington,D.C. 
B)  Sydney 
C)  Tokyo 
D)  London

Question 6

One way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)  increase law enforcement in public areas. 
B)  limit access to the commons. 
C)  increase access to the commons. 
D)  decrease taxes. 
A)  increase law enforcement in public areas. 
B)  limit access to the commons. 
C)  increase access to the commons. 
D)  decrease taxes.

Question 7

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Accepted Answer

The government assigns and protects the

Question 8

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

Accepted Answer

A)  drive at times other than rush hour. 
B)  use public transit rather than driving. 
C)  drive more fuel-efficient cars. 
D)  car-pool. 
A)  drive at times other than rush hour. 
B)  use public transit rather than driving. 
C)  drive more fuel-efficient cars. 
D)  car-pool.

Question 9

A tax on gasoline often reduces road congestion because gasoline

Accepted Answer

A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good,while driving is an inferior good. 
D)  is an inferior good,while driving is a normal good. 
A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good,while driving is an inferior good. 
D)  is an inferior good,while driving is a normal good.

Question 10

Which of the following is not a reason why government agencies subsidize basic research?

Accepted Answer

A)  The private market devotes too few resources to basic research. 
B)  The general knowledge developed through basic research can be used without charge. 
C)  The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D)  The government wants to attract the brightest researchers away from private research firms. 
A)  The private market devotes too few resources to basic research. 
B)  The general knowledge developed through basic research can be used without charge. 
C)  The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D)  The government wants to attract the brightest researchers away from private research firms.

Question 11

The government provides public goods because

Accepted Answer

A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers. 
A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers.

Question 12

Table 11-5
A small strip mall contains four retail stores,and crime has recently been on the increase in the neighborhood of the strip mall.The owners of the four stores - Stores A,B,C,and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards.The table represents their willingness to pay,that is,the maximum amount that each store owner is willing to contribute,per day,to hire each security guard.
  
-Refer to Table 11-5.Suppose the cost to hire each individual guard is $100 per day.Then total surplus for the 4 store owners is

Accepted Answer

A)  $45 if 1 guard is hired. 
B)  $60 if 2 guards are hired. 
C)  $45 if 3 guards are hired. 
D)  All of the above are correct. 
A)  $45 if 1 guard is hired. 
B)  $60 if 2 guards are hired. 
C)  $45 if 3 guards are hired. 
D)  All of the above are correct.

Question 13

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Accepted Answer

A) True 
 B)False

Question 14

When something of value has no price attached to it,

Accepted Answer

A)  externalities will be present. 
B)  production of the product has no cost. 
C)  government should not intervene to produce the product. 
D)  private companies will eventually produce the product,and the good will no longer be free. 
A)  externalities will be present. 
B)  production of the product has no cost. 
C)  government should not intervene to produce the product. 
D)  private companies will eventually produce the product,and the good will no longer be free.

Question 15

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Accepted Answer

A) True 
 B)False

Question 16

Which two types of goods are rival in consumption?

Accepted Answer

Private goods and co

Question 17

Table 11-5
A small strip mall contains four retail stores,and crime has recently been on the increase in the neighborhood of the strip mall.The owners of the four stores - Stores A,B,C,and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards.The table represents their willingness to pay,that is,the maximum amount that each store owner is willing to contribute,per day,to hire each security guard.
  
-Refer to Table 11-5.Suppose the cost to hire each guard is $120 per day and the 4 store owners have agreed to split the costs of hiring guards equally.How many guards would the owner of Store C prefer to hire?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 18

Table 11-2
Consider a small town with only three families,the Johnson family,the Marshall family,and the Walker family.The town does not currently have any streetlights so it is very dark at night.The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install.The table below shows each family's willingness to pay for each streetlight.
  
-Refer to Table 11-2.Suppose the cost to install each streetlight is $180 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Johnson's like the town to install?

Accepted Answer

A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights 
A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights

Question 19

National defense is provided by the government because

Accepted Answer

A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues. 
A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues.

Question 20

It should not be surprising if the public sector fails to pay for the right amount or right kinds of basic research because

Accepted Answer

A)  basic research is not a public good. 
B)  the benefits of basic research are hard to measure. 
C)  members of Congress usually have little expertise in science. 
D)  Both b and c are correct. 
A)  basic research is not a public good. 
B)  the benefits of basic research are hard to measure. 
C)  members of Congress usually have little expertise in science. 
D)  Both b and c are correct.

Exam 11: Public Goods and Common Resources

Private goods are both

An FM radio signal is an example of a good that is

When goods are available free of charge,the market forces that normally allocate resources in our economy are absent.

Governments can improve market outcomes for

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

One way to eliminate the Tragedy of the Commons is to

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

A tax on gasoline often reduces road congestion because gasoline

Which of the following is not a reason why government agencies subsidize basic research?

The government provides public goods because

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

When something of value has no price attached to it,

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Which two types of goods are rival in consumption?

National defense is provided by the government because

It should not be surprising if the public sector fails to pay for the right amount or right kinds of basic research because

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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