Question 1

One way in which entrepreneurs have found to profit from the private production of public goods is through:

Accepted Answer

A)  advertising. 
B)  taxation. 
C)  forced riders. 
D)  exclusion. 
A)  advertising. 
B)  taxation. 
C)  forced riders. 
D)  exclusion.

Question 2

Does equal sharing in farm output lead to free riders? Explain.

Accepted Answer

If the farming is organized such that ea

Question 3

Tragedy of the commons problems have been solved through tradable allowances.

Accepted Answer

A) True 
 B)False

Question 4

Public roads sometimes get congested, suggesting that public roads are:

Accepted Answer

A)  public goods. 
B)  rival. 
C)  private goods. 
D)  experiencing a free rider problem. 
A)  public goods. 
B)  rival. 
C)  private goods. 
D)  experiencing a free rider problem.

Question 5

The need to produce public goods provides a strong argument for:

Accepted Answer

A)  regulation and subsidy. 
B)  regulation and government provision. 
C)  taxation and subsidy. 
D)  taxation and government provision. 
A)  regulation and subsidy. 
B)  regulation and government provision. 
C)  taxation and subsidy. 
D)  taxation and government provision.

Question 6

Which of the following statements is TRUE?
I. In order for society to have a sufficient level of national defense, the government must tax the public to raise funds for a standing army.
II. For every 100 people that use a public good, approximately 500 people are prevented from using it.
III. People do not have an incentive to voluntarily pay for nonexcludable goods.

Accepted Answer

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

Question 7

National defense is an example of a public good that is nonrival.

Accepted Answer

A) True 
 B)False

Question 8

Why do large class sizes limit the classification of college courses as nonrival private goods?

Accepted Answer

If classes are very large, it means that

Question 9

Which of the following is an example of a forced rider?

Accepted Answer

A)  a Canadian-American who pays taxes that help maintain the U.S. army in case of a Canadian invasion 
B)  someone without children who recently had to start paying a community fee for the maintenance of a new playground 
C)  a city resident who pays a city tax for a weekly trash removal service 
D)  someone who dislikes the noise coming from a privately owned park and pays taxes to maintain public parks 
A)  a Canadian-American who pays taxes that help maintain the U.S. army in case of a Canadian invasion 
B)  someone without children who recently had to start paying a community fee for the maintenance of a new playground 
C)  a city resident who pays a city tax for a weekly trash removal service 
D)  someone who dislikes the noise coming from a privately owned park and pays taxes to maintain public parks

Question 10

The tragedy of the commons refers to the:

Accepted Answer

A)  underproduction of public goods in economic markets. 
B)  underproduction of a common good. 
C)  overuse of a nonrival and nonexcludable good. 
D)  overuse of a rival but nonexcludable good. 
A)  underproduction of public goods in economic markets. 
B)  underproduction of a common good. 
C)  overuse of a nonrival and nonexcludable good. 
D)  overuse of a rival but nonexcludable good.

Question 11

Which of the following is the explanation for why wild animals are often hunted to the point of extinction?

Accepted Answer

A)  cost-benefit analysis 
B)  public goods 
C)  tragedy of the commons 
D)  There is no known explanation. 
A)  cost-benefit analysis 
B)  public goods 
C)  tragedy of the commons 
D)  There is no known explanation.

Question 12

Nonexcludability cannot exist at the same time as market efficiency in quantity.

Accepted Answer

A) True 
 B)False

Question 13

Tragedy of the commons problems have been solved through command and control policies.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following goods is nonexcludable?

Accepted Answer

A)  a can of Coke 
B)  a concert at Radio City Music Hall 
C)  national defense 
D)  an apartment building 
A)  a can of Coke 
B)  a concert at Radio City Music Hall 
C)  national defense 
D)  an apartment building

Question 15

Although the provision of nonrival private goods is ________, we typically consider it ________.

Accepted Answer

A)  efficient; an inefficient allocation due to its nonrival nature 
B)  inefficient; not that big a deal because we value diversity and creativity 
C)  inefficient; a big deal because it leads to many forced riders 
D)  efficient; a big deal because it leads to other types of market inefficiencies 
A)  efficient; an inefficient allocation due to its nonrival nature 
B)  inefficient; not that big a deal because we value diversity and creativity 
C)  inefficient; a big deal because it leads to many forced riders 
D)  efficient; a big deal because it leads to other types of market inefficiencies

Question 16

A solution to the tragedy of the commons is to convert common resources to public goods.

Accepted Answer

A) True 
 B)False

Question 17

A good cannot be private at the same time that it is nonexcludable.

Accepted Answer

A) True 
 B)False

Question 18

Why have systems similar to New Zealand's "individual transfer quota" system NOT been able to protect all animal life that is in danger of being overexploited?

Accepted Answer

A)  At present the tuna fish is not the only fish in danger of being overfished. 
B)  Other countries do not have the backing of their governments the way that New Zealand does, 
C)  Property rights are difficult to establish in animals that migrate over borders. 
D)  None of these answers is correct. 
A)  At present the tuna fish is not the only fish in danger of being overfished. 
B)  Other countries do not have the backing of their governments the way that New Zealand does, 
C)  Property rights are difficult to establish in animals that migrate over borders. 
D)  None of these answers is correct.

Question 19

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of the following statements is TRUE?

Accepted Answer

A)  If a consumer spends more money on Good 1, she gets more Good 1. 
B)  If a consumer spends more money on Good 2, she gets more Good 2. 
C)  If a consumer spends less money on Good 1, she gets less Good 2. 
D)  If a consumer spends less money on Good 2, she gets less Good 1. 
A)  If a consumer spends more money on Good 1, she gets more Good 1. 
B)  If a consumer spends more money on Good 2, she gets more Good 2. 
C)  If a consumer spends less money on Good 1, she gets less Good 2. 
D)  If a consumer spends less money on Good 2, she gets less Good 1.

Question 20

A good is nonrival if:

Accepted Answer

A)  the good does not cause rivalry between the people using the good. 
B)  the good potentially creates rivalry between the people using the good. 
C)  one person's use of the good reduces the ability of another person to use the same good. 
D)  one person's use of the good does not reduce the ability of another person to use the same good. 
A)  the good does not cause rivalry between the people using the good. 
B)  the good potentially creates rivalry between the people using the good. 
C)  one person's use of the good reduces the ability of another person to use the same good. 
D)  one person's use of the good does not reduce the ability of another person to use the same good.

Exam 19: Public Goods and the Tragedy of the Commons

One way in which entrepreneurs have found to profit from the private production of public goods is through:

Does equal sharing in farm output lead to free riders? Explain.

Tragedy of the commons problems have been solved through tradable allowances.

Public roads sometimes get congested, suggesting that public roads are:

The need to produce public goods provides a strong argument for:

National defense is an example of a public good that is nonrival.

Why do large class sizes limit the classification of college courses as nonrival private goods?

Which of the following is an example of a forced rider?

The tragedy of the commons refers to the:

Which of the following is the explanation for why wild animals are often hunted to the point of extinction?

Nonexcludability cannot exist at the same time as market efficiency in quantity.

Tragedy of the commons problems have been solved through command and control policies.

Which of the following goods is nonexcludable?

Although the provision of nonrival private goods is ________, we typically consider it ________.

A solution to the tragedy of the commons is to convert common resources to public goods.

A good cannot be private at the same time that it is nonexcludable.

Why have systems similar to New Zealand's "individual transfer quota" system NOT been able to protect all animal life that is in danger of being overexploited?

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of the following statements is TRUE?

A good is nonrival if:

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

Although the provision of nonrival private goods is , we typically consider it .