Question 1

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Accepted Answer

A) True 
 B)False

Question 2

A tornado siren is a

Accepted Answer

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

Question 3

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.  
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Amber receive?

Accepted Answer

A) $0 
B) $26 
C) $32 
D) $56 
A) $0 
B) $26 
C) $32 
D) $56

Question 4

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following goods is excludable but not rival in consumption?

Accepted Answer

A) a congested toll road 
B) fire protection in a small town 
C) a tornado siren 
D) whales in the ocean 
A) a congested toll road 
B) fire protection in a small town 
C) a tornado siren 
D) whales in the ocean

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

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 8

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

Accepted Answer

A) Private markets could easily solve them if governments left the markets alone. 
B) They would all go away if the government sponsored an intensive public-information campaign. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the result of a failure of corrective taxes. 
A) Private markets could easily solve them if governments left the markets alone. 
B) They would all go away if the government sponsored an intensive public-information campaign. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the result of a failure of corrective taxes.

Question 9

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

Accepted Answer

A) install the walkway because the estimated benefit is twice the cost. 
B) be indifferent between installing and not installing the walkway because the estimated benefit equals the cost. 
C) not install the walkway, since the cost is twice the estimated benefit. 
D) install the walkway, since the cost of even a single life is too great not to take action. 
A) install the walkway because the estimated benefit is twice the cost. 
B) be indifferent between installing and not installing the walkway because the estimated benefit equals the cost. 
C) not install the walkway, since the cost is twice the estimated benefit. 
D) install the walkway, since the cost of even a single life is too great not to take action.

Question 10

If everyone benefits from helping the poor,

Accepted Answer

A) government intervention cannot improve social well-being. 
B) eliminating taxes aimed at redistributing income will make rich people better off. 
C) taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D) private markets can adequately provide charity programs to help the poor, despite free-rider problems. 
A) government intervention cannot improve social well-being. 
B) eliminating taxes aimed at redistributing income will make rich people better off. 
C) taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D) private markets can adequately provide charity programs to help the poor, despite free-rider problems.

Question 11

Which of the following statements is not correct?

Accepted Answer

A) Common resources are rival in consumption but are not excludable. 
B) Uncongested toll roads are examples of club goods. 
C) When African elephants were privatized, the survival of the species deteriorated. 
D) National defense is not rival in consumption, nor is it excludable. 
A) Common resources are rival in consumption but are not excludable. 
B) Uncongested toll roads are examples of club goods. 
C) When African elephants were privatized, the survival of the species deteriorated. 
D) National defense is not rival in consumption, nor is it excludable.

Question 12

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 13

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Accepted Answer

A) True 
 B)False

Question 14

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Accepted Answer

A) True 
 B)False

Question 15

The provision of public goods gives rise to

Accepted Answer

A) no externalities. 
B) positive externalities. 
C) negative externalities. 
D) rivalries in consumption. 
A) no externalities. 
B) positive externalities. 
C) negative externalities. 
D) rivalries in consumption.

Question 16

Both private goods and club goods are

Accepted Answer

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

Question 17

Excessive fishing occurs because

Accepted Answer

A) each individual fisherman has little incentive to maintain the species for the next year. 
B) fishermen rely on government managers to worry about fish populations. 
C) fishermen are unionized, so they are not concerned with externalities. 
D) fishermen have other marketable skills and do not fear exploitation of fish reserves. 
A) each individual fisherman has little incentive to maintain the species for the next year. 
B) fishermen rely on government managers to worry about fish populations. 
C) fishermen are unionized, so they are not concerned with externalities. 
D) fishermen have other marketable skills and do not fear exploitation of fish reserves.

Question 18

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

Accepted Answer

A) True 
 B)False

Question 19

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 20

An overcrowded beach is an example of

Accepted Answer

A) a positive externality. 
B) a Tragedy of the Commons. 
C) an environmentally inefficient allocation of resources. 
D) an economically unfair allocation of resources. 
A) a positive externality. 
B) a Tragedy of the Commons. 
C) an environmentally inefficient allocation of resources. 
D) an economically unfair allocation of resources.

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

A tornado siren is a

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Which of the following goods is excludable but not rival in consumption?

One way to eliminate the Tragedy of the Commons is to

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

If everyone benefits from helping the poor,

Which of the following statements is not correct?

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

The provision of public goods gives rise to

Both private goods and club goods are

Excessive fishing occurs because

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

An overcrowded beach is an example of

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 11: Public Goods and Common Resources

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

A tornado siren is a

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Which of the following goods is excludable but not rival in consumption?

One way to eliminate the Tragedy of the Commons is to

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

If everyone benefits from helping the poor,

Which of the following statements is not correct?

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

The provision of public goods gives rise to

Both private goods and club goods are

Excessive fishing occurs because

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

An overcrowded beach is an example of

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters