Question 1

A free rider is a person who:

Accepted Answer

A)  avoids paying taxes by using tax code loopholes. 
B)  produces goods at no cost. 
C)  receives the benefits of a good but avoids paying for it. 
D)  will purchase products only when on sale. 
A)  avoids paying taxes by using tax code loopholes. 
B)  produces goods at no cost. 
C)  receives the benefits of a good but avoids paying for it. 
D)  will purchase products only when on sale.

Question 2

In a subdivision, all but one of the homeowners decided to pay for the services of a private security firm. The homeowner who didn't pay is a:

Accepted Answer

A)  private rider. 
B)  free rider. 
C)  forced rider. 
D)  public divider. 
A)  private rider. 
B)  free rider. 
C)  forced rider. 
D)  public divider.

Question 3

To use a ______ good without paying is typically legal. To use a ______ good without paying is typically illegal.

Accepted Answer

A)  private; public 
B)  public; private 
C)  public; inexpensive 
D)  inexpensive; private 
A)  private; public 
B)  public; private 
C)  public; inexpensive 
D)  inexpensive; private

Question 4

Small tribes may be able to solve the tragedy of the commons by:

Accepted Answer

A)  subsidizing the activity that creates the tragedy. 
B)  using social norms to punish and ostracize those that overuse a common resource. 
C)  setting price controls below the equilibrium price to clear the market. 
D)  All of the answers are correct. 
A)  subsidizing the activity that creates the tragedy. 
B)  using social norms to punish and ostracize those that overuse a common resource. 
C)  setting price controls below the equilibrium price to clear the market. 
D)  All of the answers are correct.

Question 5

The problem of free riders is most apparent for:

Accepted Answer

A)  private goods. 
B)  nonrival private goods. 
C)  public goods. 
D)  textbooks. 
A)  private goods. 
B)  nonrival private goods. 
C)  public goods. 
D)  textbooks.

Question 6

African elephant populations have declined by more than 50% over the past 20 years due mostly to the slaughter of these beautiful animals for their ivory tusks. Neither government bans on the hunting of these elephants nor a worldwide ban on the sale of ivory has been able to help increase elephant populations. A handful of African countries, however, established systems of private property rights over elephants-essentially assigning ownership of the elephants to individuals. Will this new system help to increase elephant populations? Explain why or why not. Will this new system eliminate elephant hunting?

Accepted Answer

You would expect that elephant populatio

Question 7

Advertising is a way for club goods to be given away free.

Accepted Answer

A) True 
 B)False

Question 8

Individual transferable quotas (ITQs) are like a ________, allowing ________.

Accepted Answer

A)  subsidy; the internal benefit of fishing to be externalized 
B)  corrective tax; fishermen a tax write-off for capital purchases 
C)  permit; fishermen the right to catch a limited number of fish 
D)  cartel; fisherman to raise market prices by limiting competition 
A)  subsidy; the internal benefit of fishing to be externalized 
B)  corrective tax; fishermen a tax write-off for capital purchases 
C)  permit; fishermen the right to catch a limited number of fish 
D)  cartel; fisherman to raise market prices by limiting competition

Question 9

Since everyone can be made better off by taxation to provide a public good, thus, everyone benefits.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following countries implements individual transferable quotas (ITQs) in which owners have the right to catch a certain tonnage of fish?

Accepted Answer

A)  Australia 
B)  Canada 
C)  Japan 
D)  New Zealand 
A)  Australia 
B)  Canada 
C)  Japan 
D)  New Zealand

Question 11

Radio is a:

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good. 
A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good.

Question 12

Solving a tragedy of the commons problem could be done through:
I. societal expectations.
II. tradable allowances.
III. government command and control methods.

Accepted Answer

A)  II only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III 
A)  II only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III

Question 13

Which of the following is an example of a nonrival private good?

Accepted Answer

A)  a radio station 
B)  a new episode of a cable TV show 
C)  interstate roadways 
D)  national defense 
A)  a radio station 
B)  a new episode of a cable TV show 
C)  interstate roadways 
D)  national defense

Question 14

A free rider enjoys the benefits of a private good without paying a share of the costs.

Accepted Answer

A) True 
 B)False

Question 15

People have little incentive to produce a public good because:

Accepted Answer

A)  fixed costs are usually too high. 
B)  production is impossible. 
C)  of the free rider problem. 
D)  social benefits are typically less than total costs. 
A)  fixed costs are usually too high. 
B)  production is impossible. 
C)  of the free rider problem. 
D)  social benefits are typically less than total costs.

Question 16

When a good is excludable:

Accepted Answer

A)  one person's use of the good prevents another's ability to use it. 
B)  everyone is excluded from using the good. 
C)  people can be prevented from using the good. 
D)  no more than one person can use the good at one time. 
A)  one person's use of the good prevents another's ability to use it. 
B)  everyone is excluded from using the good. 
C)  people can be prevented from using the good. 
D)  no more than one person can use the good at one time.

Question 17

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

Accepted Answer

A)  Most people will find it in their self-interest to pay the firm to protect the earth. 
B)  Asteroid protection is a private good, so the firm will make a lot of profit. 
C)  In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense. 
D)  Most people will not pay a firm for asteroid defense. 
A)  Most people will find it in their self-interest to pay the firm to protect the earth. 
B)  Asteroid protection is a private good, so the firm will make a lot of profit. 
C)  In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense. 
D)  Most people will not pay a firm for asteroid defense.

Question 18

Which of the following is rival and NOT excludable?

Accepted Answer

A)  cable TV 
B)  lobsters in the ocean 
C)  national defense 
D)  clothing 
A)  cable TV 
B)  lobsters in the ocean 
C)  national defense 
D)  clothing

Question 19

Advertising is an efficient solution to the problem of nonexcludability and nonrivalry.

Accepted Answer

A) True 
 B)False

Question 20

A major difference between a private good and a public good is that private goods:

Accepted Answer

A)  are excludable, public goods are not. 
B)  can be produced in efficient quantities while public goods generally are not. 
C)  are rival in consumption, public goods are not. 
D)  All of the answers are correct. 
A)  are excludable, public goods are not. 
B)  can be produced in efficient quantities while public goods generally are not. 
C)  are rival in consumption, public goods are not. 
D)  All of the answers are correct.

Exam 19: Public Goods and the Tragedy of the Commons

A free rider is a person who:

In a subdivision, all but one of the homeowners decided to pay for the services of a private security firm. The homeowner who didn't pay is a:

To use a ______ good without paying is typically legal. To use a ______ good without paying is typically illegal.

Small tribes may be able to solve the tragedy of the commons by:

The problem of free riders is most apparent for:

Advertising is a way for club goods to be given away free.

Individual transferable quotas (ITQs) are like a ________, allowing ________.

Since everyone can be made better off by taxation to provide a public good, thus, everyone benefits.

Which of the following countries implements individual transferable quotas (ITQs) in which owners have the right to catch a certain tonnage of fish?

Radio is a:

Solving a tragedy of the commons problem could be done through: I. societal expectations. II. tradable allowances. III. government command and control methods.

Which of the following is an example of a nonrival private good?

A free rider enjoys the benefits of a private good without paying a share of the costs.

People have little incentive to produce a public good because:

When a good is excludable:

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

Which of the following is rival and NOT excludable?

Advertising is an efficient solution to the problem of nonexcludability and nonrivalry.

A major difference between a private good and a public good is that private goods:

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

To use a good without paying is typically legal. To use a good without paying is typically illegal.

Individual transferable quotas (ITQs) are like a , allowing .