Question 1

Figure 11-1  
-Refer to Figure 11-1. For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Accepted Answer

A) Box A and Box B 
B) Box A and Box C 
C) Box B and Box D 
D) Box C and Box D 
A) Box A and Box B 
B) Box A and Box C 
C) Box B and Box D 
D) Box C and Box D

Question 2

Goods that are not rival in consumption include both

Accepted Answer

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

Question 3

A good that is excludable but not rival is known as a club good.

Accepted Answer

A) True 
 B)False

Question 4

What particular characteristic do private goods and common resources have in common?

Accepted Answer

Private goods and co

Question 5

Which of the following goods is both excludable and rival in consumption?

Accepted Answer

A) a wristwatch 
B) fire protection in a small town 
C) fish in the ocean 
D) efforts to fight poverty 
A) a wristwatch 
B) fire protection in a small town 
C) fish in the ocean 
D) efforts to fight poverty

Question 6

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.  
-Refer to Table 11-2. Suppose the cost to install each streetlight is $900 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Black's like the town to install?

Accepted Answer

A) 0 streetlights 
B) 1 streetlight 
C) 2 streetlights 
D) 3 streetlights 
A) 0 streetlights 
B) 1 streetlight 
C) 2 streetlights 
D) 3 streetlights

Question 10

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 11

The goal of requiring licenses for hunting and fishing is

Accepted Answer

A) to reduce the use of a common resource. 
B) to ensure that the people hunting and fishing are qualified. 
C) to generate revenue for the government. 
D) to monitor compliance with federal gun laws. 
A) to reduce the use of a common resource. 
B) to ensure that the people hunting and fishing are qualified. 
C) to generate revenue for the government. 
D) to monitor compliance with federal gun laws.

Question 12

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

Accepted Answer

A) True 
 B)False

Question 13

A good that is rival in consumption and not excludable is called a

Accepted Answer

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

Question 14

An example of a private good would be

Accepted Answer

A) a library book. 
B) a rose garden. 
C) an internet radio subscription. 
D) a sleeping bag. 
A) a library book. 
B) a rose garden. 
C) an internet radio subscription. 
D) a sleeping bag.

Question 15

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A) subsidizing basic research 
B) building lighthouses 
C) toll charges on congested roads 
D) cost-benefit analysis 
A) subsidizing basic research 
B) building lighthouses 
C) toll charges on congested roads 
D) cost-benefit analysis

Question 16

The Tragedy of the Commons occurs because

Accepted Answer

A) government property is most heavily used by the wealthy. 
B) everyone deserves an equal share of government property. 
C) social and private incentives differ. 
D) established property rights create competition. 
A) government property is most heavily used by the wealthy. 
B) everyone deserves an equal share of government property. 
C) social and private incentives differ. 
D) established property rights create competition.

Question 17

What particular characteristic do public goods and common resources have in common?

Accepted Answer

Public goods and common resour

Question 18

In which of the following examples are property rights not well established?

Accepted Answer

A) Carmen smokes a cigarette outside the door to her office building. 
B) Carlita stocks shelves in a grocery store. 
C) Cameron watches a movie in his home theater room. 
D) Cathy docks her boat at her lake house. 
A) Carmen smokes a cigarette outside the door to her office building. 
B) Carlita stocks shelves in a grocery store. 
C) Cameron watches a movie in his home theater room. 
D) Cathy docks her boat at her lake house.

Question 19

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
-Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

Accepted Answer

A firefighter's helmet is the

Question 20

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.

Exam 11: Public Goods and Common Resources

Figure 11-1 -Refer to Figure 11-1. For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Goods that are not rival in consumption include both

A good that is excludable but not rival is known as a club good.

What particular characteristic do private goods and common resources have in common?

Which of the following goods is both excludable and rival in consumption?

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Both private goods and club goods are

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

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

The goal of requiring licenses for hunting and fishing is

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

A good that is rival in consumption and not excludable is called a

An example of a private good would be

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

The Tragedy of the Commons occurs because

What particular characteristic do public goods and common resources have in common?

In which of the following examples are property rights not well established?

Scenario 11-2 Consider the following goods: • fire-protection services provided by a fire department • a beautiful mural on the outside wall of a fire station • a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

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

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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