Question 1

Markets may fail to allocate resources efficiently when property rights are not well established.

Accepted Answer

A) True 
 B)False

Question 2

When property rights are not well established,

Accepted Answer

A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently. 
A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently.

Question 3

Which of the following is a disadvantage of government provision of a public good?

Accepted Answer

A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage. 
A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage.

Question 4

Which of the following is an example of the Tragedy of the Commons?

Accepted Answer

A)  The number of professional football teams increases to the point where the quality of the games decreases,as does television viewership. 
B)  The number of satellites increases to the point where they begin running into each other. 
C)  Disney World becomes so crowded that it institutes a lottery for admissions. 
D)  A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats. 
A)  The number of professional football teams increases to the point where the quality of the games decreases,as does television viewership. 
B)  The number of satellites increases to the point where they begin running into each other. 
C)  Disney World becomes so crowded that it institutes a lottery for admissions. 
D)  A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.

Question 5

Economists think that the best way to determine the value of a human life is to

Accepted Answer

A)  evaluate the value of a person's expected earnings in the labor market. 
B)  evaluate the risks people are willing to take and what they would have to be paid to take them. 
C)  determine a person's accumulated wealth at the time of death. 
D)  do nothing;human life is priceless. 
A)  evaluate the value of a person's expected earnings in the labor market. 
B)  evaluate the risks people are willing to take and what they would have to be paid to take them. 
C)  determine a person's accumulated wealth at the time of death. 
D)  do nothing;human life is priceless.

Question 6

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

Accepted Answer

A) True 
 B)False

Question 7

A free-rider problem exists for any good that is not

Accepted Answer

A)  rival in consumption. 
B)  a private good. 
C)  free. 
D)  excludable. 
A)  rival in consumption. 
B)  a private good. 
C)  free. 
D)  excludable.

Question 8

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential),the troubling implication is that

Accepted Answer

A)  it is possible for a retired or disabled person to have no value to society. 
B)  economists are more valuable than entrepreneurs. 
C)  retired people who volunteer in their communities are more valuable than physicians. 
D)  all workers have equal value. 
A)  it is possible for a retired or disabled person to have no value to society. 
B)  economists are more valuable than entrepreneurs. 
C)  retired people who volunteer in their communities are more valuable than physicians. 
D)  all workers have equal value.

Question 9

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is correct?

Accepted Answer

A)  Common resources are nonexcludable and nonrival in consumption. 
B)  Uncongested toll roads are an example of the free rider problem. 
C)  When African elephants were privatized,the survival of the species improved. 
D)  Fish in the ocean are excludable but nonrival in consumption. 
A)  Common resources are nonexcludable and nonrival in consumption. 
B)  Uncongested toll roads are an example of the free rider problem. 
C)  When African elephants were privatized,the survival of the species improved. 
D)  Fish in the ocean are excludable but nonrival in consumption.

Question 11

Because public goods are

Accepted Answer

A)  excludable,people have an incentive to be free riders. 
B)  excludable,people do not have an incentive to be free riders. 
C)  not excludable,people have an incentive to be free riders. 
D)  not excludable,people do not have an incentive to be free riders. 
A)  excludable,people have an incentive to be free riders. 
B)  excludable,people do not have an incentive to be free riders. 
C)  not excludable,people have an incentive to be free riders. 
D)  not excludable,people do not have an incentive to be free riders.

Question 12

Four friends decide to meet at a Chinese restaurant for dinner.They decide that each person will order an item off the menu,and they will share all dishes.They will split the cost of the final bill evenly among each of the people at the table.A Tragedy of the Commons problem is likely for each of the following reasons except

Accepted Answer

A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats,he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption. 
A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats,he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption.

Question 13

The privately-owned school system in Smalltown has a virtually unlimited capacity.It accepts all applicants and operates on both tuition and private donations.Although every resident places value on having an educated community,the school's revenues have suffered lately due to a large decline in private donations from the elderly population.Since the benefit that each citizen receives from having an educated community is a public good,which of the following would not be correct?

Accepted Answer

A)  The free-rider problem causes the private market to undersupply education to the community. 
B)  The government can potentially help the market reach a socially optimal level of education. 
C)  A tax increase to pay for education could potentially make the community better off. 
D)  The private market is the best way to supply education. 
A)  The free-rider problem causes the private market to undersupply education to the community. 
B)  The government can potentially help the market reach a socially optimal level of education. 
C)  A tax increase to pay for education could potentially make the community better off. 
D)  The private market is the best way to supply education.

Question 14

Suppose the cost to erect a tornado siren in a small town is $20,000.In addition,suppose the value of a human life is $10 million.By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

Accepted Answer

A)  By at least 0.2 percentage points. 
B)  By at least 0.5 percentage points. 
C)  By at least 2 percentage points. 
D)  By at least 5 percentage points. 
A)  By at least 0.2 percentage points. 
B)  By at least 0.5 percentage points. 
C)  By at least 2 percentage points. 
D)  By at least 5 percentage points.

Question 15

Table 11-1
Three wealthy families - the Johnsons,the Lincolns,and the Washingtons -are the only residents of a certain neighborhood in which the lawns are large and the streets are wide.The three families are considering the placement of one,two,or three elegant statues at entrances to the neighborhood.The table represents the individual families' willingness to pay,that is,the maximum amount that each family is willing to contribute to purchase and erect each statue.
  
-Refer to Table 11-1.Suppose the cost of each statue is $25,000.Then total surplus for the three families is

Accepted Answer

A)  maximized if one statue is erected. 
B)  $5,000 if one statue is erected. 
C)  $3,500 if three statues are erected. 
D)  All of the above are correct. 
A)  maximized if one statue is erected. 
B)  $5,000 if one statue is erected. 
C)  $3,500 if three statues are erected. 
D)  All of the above are correct.

Question 16

The U.S.government protects fish,a common resource,by

Accepted Answer

A)  subsidizing the fishing industry. 
B)  heavily taxing competing industries. 
C)  selling fishing licenses and regulating fish lengths. 
D)  None of the above is correct. 
A)  subsidizing the fishing industry. 
B)  heavily taxing competing industries. 
C)  selling fishing licenses and regulating fish lengths. 
D)  None of the above is correct.

Question 17

Which of the following is not a common resource?

Accepted Answer

A)  clean air 
B)  clean water 
C)  open grazing land 
D)  national defense 
A)  clean air 
B)  clean water 
C)  open grazing land 
D)  national defense

Question 18

What can the government do to solve the problem of excessive use of common resources?

Accepted Answer

Government can impose regulati

Question 19

A free rider is a person who

Accepted Answer

A)  will only purchase a product on sale. 
B)  receives the benefit of a good but avoids paying for it. 
C)  can produce a good at no cost. 
D)  rides public transit regularly. 
A)  will only purchase a product on sale. 
B)  receives the benefit of a good but avoids paying for it. 
C)  can produce a good at no cost. 
D)  rides public transit regularly.

Question 20

All goods that are excludable are also rival in consumption,but not all goods that are rival in consumption are excludable.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

Markets may fail to allocate resources efficiently when property rights are not well established.

When property rights are not well established,

Which of the following is a disadvantage of government provision of a public good?

Which of the following is an example of the Tragedy of the Commons?

Economists think that the best way to determine the value of a human life is to

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

A free-rider problem exists for any good that is not

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential),the troubling implication is that

The pollution market failure is an example of the free rider problem.

Which of the following statements is correct?

Because public goods are

Suppose the cost to erect a tornado siren in a small town is $20,000.In addition,suppose the value of a human life is $10 million.By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

The U.S.government protects fish,a common resource,by

Which of the following is not a common resource?

What can the government do to solve the problem of excessive use of common resources?

A free rider is a person who

All goods that are excludable are also rival in consumption,but not all goods that are rival in consumption are excludable.

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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