Question 1

The free-rider problem exists with

Accepted Answer

A) public transportation 
B) knowledge. 
C) online music subscriptions. 
D) All of the above are correct. 
A) public transportation 
B) knowledge. 
C) online music subscriptions. 
D) All of the above are correct.

Question 2

When a good is rival in consumption,

Accepted Answer

A) one person's use of the good diminishes another person's ability to use it. 
B) people can be prevented from using the good. 
C) an unlimited number of people can use the good at the same time. 
D) everyone will be excluded from obtaining the good. 
A) one person's use of the good diminishes another person's ability to use it. 
B) people can be prevented from using the good. 
C) an unlimited number of people can use the good at the same time. 
D) everyone will be excluded from obtaining the good.

Question 3

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.   ​
​
-Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will James receive in total?

Accepted Answer

A) -$20 
B) -$10 
C) $0 
D) $100 
A) -$20 
B) -$10 
C) $0 
D) $100

Question 4

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 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

Which of the following statements is correct?

Accepted Answer

A) The establishment of property rights sometimes gives rise to market failure. 
B) The absence of property rights sometimes gives rise to market failure. 
C) In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights. 
D) Government regulation of private behavior, in response to market failure, can never improve social well-being. 
A) The establishment of property rights sometimes gives rise to market failure. 
B) The absence of property rights sometimes gives rise to market failure. 
C) In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights. 
D) Government regulation of private behavior, in response to market failure, can never improve social well-being.

Question 7

Which of the following goods is rival and excludable?

Accepted Answer

A) an uncongested toll road 
B) an uncongested nontoll road 
C) a congested nontoll road 
D) a congested toll road 
A) an uncongested toll road 
B) an uncongested nontoll road 
C) a congested nontoll road 
D) a congested toll road

Question 8

Mike Miller is the town manager of Medfield, a town with 50,000 residents. At a recent town meeting, several citizens proposed building a large public swimming pool in the center of town for all of the residents to enjoy. A survey of all 50,000 residents revealed that the pool would be worth $50 to each of them. Because the cost to build the swimming pool is only $1,000,000, Manager Miller arranges to have the pool built. Everyone in town enjoys the pool, but when Manager Miller asks for donations to pay for the pool, he only collects $250,000. Manager Miller soon realizes that

Accepted Answer

A) the survey was conducted improperly. 
B) the cost of the pool exceeded the social benefits. 
C) the pool is a club good. 
D) most residents of the town are probably free-riders at the pool. 
A) the survey was conducted improperly. 
B) the cost of the pool exceeded the social benefits. 
C) the pool is a club good. 
D) most residents of the town are probably free-riders at the pool.

Question 9

Advocates of antipoverty programs claim that

Accepted Answer

A) the government has good information about what people are willing to pay to eliminate poverty. 
B) fighting poverty is a public good. 
C) private sector will incur higher costs than the public sector for these programs. 
D) All of the above are correct. 
A) the government has good information about what people are willing to pay to eliminate poverty. 
B) fighting poverty is a public good. 
C) private sector will incur higher costs than the public sector for these programs. 
D) All of the above are correct.

Question 10

Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.

Accepted Answer

A) True 
 B)False

Question 11

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 Sophia receive?

Accepted Answer

A) -$5 
B) -$2 
C) $0 
D) $2 
A) -$5 
B) -$2 
C) $0 
D) $2

Question 12

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 13

Figure 11-1  
-Refer to Figure 11-1. The box labeled D represents

Accepted Answer

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

Question 14

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.   ​
​
-Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will Lydia receive in total?

Accepted Answer

A) -$10 
B) -$5 
C) -$4 
D) $6 
A) -$10 
B) -$5 
C) -$4 
D) $6

Question 15

The idea of requiring motorists to pay to use the busiest streets in a city

Accepted Answer

A) has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. 
B) was tried in New York City in the 1990s, but the result was more - not less - congestion on busy streets, and the experiment was short-lived. 
C) reflects the fact that a congested road is a public good. 
D) reflects the fact that a congested road is a common resource. 
A) has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. 
B) was tried in New York City in the 1990s, but the result was more - not less - congestion on busy streets, and the experiment was short-lived. 
C) reflects the fact that a congested road is a public good. 
D) reflects the fact that a congested road is a common resource.

Question 16

National Public Radio would be considered a club good.

Accepted Answer

A) True 
 B)False

Question 17

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

Accepted Answer

A) drive at times other than rush hour. 
B) use public transit rather than driving. 
C) drive more fuel-efficient cars. 
D) car-pool. 
A) drive at times other than rush hour. 
B) use public transit rather than driving. 
C) drive more fuel-efficient cars. 
D) car-pool.

Question 18

A traffic light at an intersection is

Accepted Answer

A) rival and excludable in consumption. 
B) not rival but excludable in consumption. 
C) rival but not excludable in consumption. 
D) not rival and not excludable in consumption. 
A) rival and excludable in consumption. 
B) not rival but excludable in consumption. 
C) rival but not excludable in consumption. 
D) not rival and not excludable in consumption.

Question 19

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground 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 20

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Accepted Answer

A) to prevent overuse 
B) to decrease taxes 
C) to fight poverty 
D) to increase consumption 
A) to prevent overuse 
B) to decrease taxes 
C) to fight poverty 
D) to increase consumption

Exam 11: Public Goods and Common Resources

The free-rider problem exists with

When a good is rival in consumption,

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

Which of the following statements is correct?

Which of the following goods is rival and excludable?

Advocates of antipoverty programs claim that

Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.

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

Figure 11-1 -Refer to Figure 11-1. The box labeled D represents

The idea of requiring motorists to pay to use the busiest streets in a city

National Public Radio would be considered a club good.

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

A traffic light at an intersection is

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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