Question 1

A pair of jeans is rival but non-excludable.

Accepted Answer

A) True 
 B)False

Question 2

The free-rider problem exists with

Accepted Answer

A)  apples. 
B)  knowledge. 
C)  cable TV service. 
D)  congested toll roads. 
A)  apples. 
B)  knowledge. 
C)  cable TV service. 
D)  congested toll roads.

Question 3

Table 11-3
This table describes the defense demands for three equal sized groups of people in Nirvanaville.The second,third,and fourth column shows the quantity that a group will demand for a given price (the first column).
  
-Refer to Table 11-3.If the marginal cost of national defense is constant at $12 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A)  3 units 
B)  13 units 
C)  22 units 
D)  33 units 
A)  3 units 
B)  13 units 
C)  22 units 
D)  33 units

Question 4

Suppose that a small county is considering adding a guard rail to a dangerous curve by a river.The guard rail will cost $70,000.The average damage done to vehicles that slide off the road at the curve is $10,000.It is expected that the guard rail will prevent 5 vehicles from sliding off the road during its usable life.What should the county do?

Accepted Answer

A)  Install the guard rail because safety is priceless. 
B)  Install the guard rail because the benefits exceed the costs. 
C)  Do not install the guard rail because the costs exceed the benefits. 
D)  Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles. 
A)  Install the guard rail because safety is priceless. 
B)  Install the guard rail because the benefits exceed the costs. 
C)  Do not install the guard rail because the costs exceed the benefits. 
D)  Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles.

Question 5

The value and cost of goods are easiest to determine when the goods are

Accepted Answer

A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  club goods. 
A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  club goods.

Question 6

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Accepted Answer

A)  undervalue knowledge in their pursuit of revenues. 
B)  overuse their patents. 
C)  tend to free-ride on the knowledge that others have developed. 
D)  tend to rely on existing employee knowledge. 
A)  undervalue knowledge in their pursuit of revenues. 
B)  overuse their patents. 
C)  tend to free-ride on the knowledge that others have developed. 
D)  tend to rely on existing employee knowledge.

Question 7

Goods that are rival in consumption include both

Accepted Answer

A)  club goods and public goods. 
B)  public goods and common resources. 
C)  common resources and private goods. 
D)  private goods and club goods. 
A)  club goods and public goods. 
B)  public goods and common resources. 
C)  common resources and private goods. 
D)  private goods and club goods.

Question 8

One benefit of the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 9

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Accepted Answer

A)  The aquifer is a public good which must be publicly owned to be used efficiently. 
B)  The aquifer is a private good which must be privately owned to be used efficiently. 
C)  The aquifer is a common property resource which will be overused if no one owns it. 
D)  The aquifer is a club good which should be left as it is. 
A)  The aquifer is a public good which must be publicly owned to be used efficiently. 
B)  The aquifer is a private good which must be privately owned to be used efficiently. 
C)  The aquifer is a common property resource which will be overused if no one owns it. 
D)  The aquifer is a club good which should be left as it is.

Question 10

One of the least regulated common resources today is

Accepted Answer

A)  state parks. 
B)  the ocean. 
C)  forest preserves. 
D)  the Great Lakes. 
A)  state parks. 
B)  the ocean. 
C)  forest preserves. 
D)  the Great Lakes.

Question 11

Pete is a non-union employee at The Electric Co.The majority of the employees at The Electric Co.are unionized.The union at The Electric Co.has negotiated very good benefits.Even though he is not a union member and he does not have to pay union dues,Pete receives all the benefits that the union has negotiated.Pete's behavior is an example of

Accepted Answer

A)  rivalry. 
B)  a barrier to entry. 
C)  free riding. 
D)  Taft-Hartley opposition. 
A)  rivalry. 
B)  a barrier to entry. 
C)  free riding. 
D)  Taft-Hartley opposition.

Question 12

When Rick uses a common resource and diminishes other people's enjoyment of it,he creates

Accepted Answer

A)  a free rider problem. 
B)  an externality. 
C)  a nonrenewable resource. 
D)  general knowledge. 
A)  a free rider problem. 
B)  an externality. 
C)  a nonrenewable resource. 
D)  general knowledge.

Question 13

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Accepted Answer

A)  Cows are a common resource,whereas elephants are owned by governments. 
B)  Elephants are larger than cows,requiring more economic resources. 
C)  Elephants live in Africa,where economic resources are scarce. 
D)  Elephants are a common resource,whereas cows are privately owned. 
A)  Cows are a common resource,whereas elephants are owned by governments. 
B)  Elephants are larger than cows,requiring more economic resources. 
C)  Elephants live in Africa,where economic resources are scarce. 
D)  Elephants are a common resource,whereas cows are privately owned.

Question 14

A city street is

Accepted Answer

A)  always a public good,whether or not it is congested. 
B)  a public good when it is congested,but it is a common resource when it is not congested. 
C)  a common resource when it is congested,but it is a public good when it is not congested. 
D)  always a common resource,whether or not it is congested. 
A)  always a public good,whether or not it is congested. 
B)  a public good when it is congested,but it is a common resource when it is not congested. 
C)  a common resource when it is congested,but it is a public good when it is not congested. 
D)  always a common resource,whether or not it is congested.

Question 15

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Accepted Answer

A)  fiscal analysis. 
B)  monetary analysis. 
C)  welfare analysis. 
D)  cost-benefit analysis. 
A)  fiscal analysis. 
B)  monetary analysis. 
C)  welfare analysis. 
D)  cost-benefit analysis.

Question 16

Under which of the following scenarios would a park be considered a public good?

Accepted Answer

A)  Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables. 
B)  Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge,but frequently all of the picnic tables are in use. 
A)  Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables. 
B)  Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge,but frequently all of the picnic tables are in use.

Question 17

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Accepted Answer

A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good. 
A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good.

Question 18

The Tragedy of the Commons results when a good is

Accepted Answer

A)  rival in consumption and not excludable. 
B)  excludable and not rival in consumption. 
C)  both rival in consumption and excludable. 
D)  neither rival in consumption nor excludable. 
A)  rival in consumption and not excludable. 
B)  excludable and not rival in consumption. 
C)  both rival in consumption and excludable. 
D)  neither rival in consumption nor excludable.

Question 19

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Accepted Answer

A)  allow individual shepherds to chose their own flock sizes. 
B)  internalize the externality by subsidizing the production of sheep's wool. 
C)  auction off a limited number of sheep-grazing permits. 
D)  wait until the market corrects the problem. 
A)  allow individual shepherds to chose their own flock sizes. 
B)  internalize the externality by subsidizing the production of sheep's wool. 
C)  auction off a limited number of sheep-grazing permits. 
D)  wait until the market corrects the problem.

Question 20

Elephants are endangered,but cows are not because

Accepted Answer

A)  cows are not as valuable as elephants. 
B)  elephants are a common resource,while cows are private goods. 
C)  cows are a common resource,while elephants are private goods. 
D)  it is legal to kill cows but not elephants. 
A)  cows are not as valuable as elephants. 
B)  elephants are a common resource,while cows are private goods. 
C)  cows are a common resource,while elephants are private goods. 
D)  it is legal to kill cows but not elephants.

Exam 11: Public Goods and Common Resources

A pair of jeans is rival but non-excludable.

The free-rider problem exists with

The value and cost of goods are easiest to determine when the goods are

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Goods that are rival in consumption include both

One benefit of the patent system is that it encourages the production of technical knowledge.

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

One of the least regulated common resources today is

When Rick uses a common resource and diminishes other people's enjoyment of it,he creates

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

A city street is

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Under which of the following scenarios would a park be considered a public good?

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

The Tragedy of the Commons results when a good is

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Elephants are endangered,but cows are not 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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