Question 1

In what sense is it meaningful to say that fighting poverty is a public good?

Accepted Answer

The argument that fighting poverty is a

Question 2

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1) not toss cigarette butts onto public streets and sidewalks, and (2) pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a

Accepted Answer

A) private goods problem. 
B) Nash equilibrium. 
C) Tragedy of the Commons. 
D) cost-benefit equilibrium. 
A) private goods problem. 
B) Nash equilibrium. 
C) Tragedy of the Commons. 
D) cost-benefit equilibrium.

Question 3

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Accepted Answer

A) True 
 B)False

Question 4

Under which of the following scenarios would a park be considered a common resource?

Accepted Answer

A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables. 
B) Visitors 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) Visitors 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 5

What can the government do to solve the problem of excessive use of common resources?

Accepted Answer

Government can impose regulati

Question 6

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 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) install 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) install 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 7

Figure 11-1  
-Refer to Figure 11-1. A bottle of soda is an example of the type of good represented by Box

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 8

Which of the following statements is correct?

Accepted Answer

A) Environmental degradation is an example of a free rider problem.. 
B) The division between public goods and common resources is clear-cut. 
C) Some goods, such as lighthouses, may be either private or public goods. 
D) The free-rider problem prevents governments from supplying public goods. 
A) Environmental degradation is an example of a free rider problem.. 
B) The division between public goods and common resources is clear-cut. 
C) Some goods, such as lighthouses, may be either private or public goods. 
D) The free-rider problem prevents governments from supplying public goods.

Question 9

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 10

Knowledge is an example of a

Accepted Answer

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

Question 11

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Accepted Answer

A) rival in consumption and is excludable. 
B) not rival in consumption, but is excludable. 
C) rival in consumption, but is not excludable. 
D) not rival in consumption nor is it excludable. 
A) rival in consumption and is excludable. 
B) not rival in consumption, but is excludable. 
C) rival in consumption, but is not excludable. 
D) not rival in consumption nor is it excludable.

Question 12

A vacation home in Malibu is

Accepted Answer

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

Question 13

The national defense of the United States is not rival because

Accepted Answer

A) my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B) my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C) once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense. 
D) once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense. 
A) my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B) my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C) once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense. 
D) once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense.

Question 14

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Accepted Answer

A) install the light because the expected benefit of $400,000 is greater than the cost. 
B) install the light because the expected benefit of $45,000 is greater than the cost. 
C) not install the light because the expected benefit of $45,000 is only equal to the cost. 
D) not install the light because the expected benefit of $40,000 is less than the cost. 
A) install the light because the expected benefit of $400,000 is greater than the cost. 
B) install the light because the expected benefit of $45,000 is greater than the cost. 
C) not install the light because the expected benefit of $45,000 is only equal to the cost. 
D) not install the light because the expected benefit of $40,000 is less than the cost.

Question 15

Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

Accepted Answer

A) Elephants live in Africa, whereas cows live in the United States. 
B) Elephants are a common resource. 
C) Cows are a common resource. 
D) Cows are a public good. 
A) Elephants live in Africa, whereas cows live in the United States. 
B) Elephants are a common resource. 
C) Cows are a common resource. 
D) Cows are a public good.

Question 16

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
-Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Accepted Answer

Fish in the ocean is the best

Question 18

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Accepted Answer

A) True 
 B)False

Question 19

The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

Accepted Answer

It is possible that everyone can agree t

Question 20

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

Accepted Answer

A) Assign each person in the building a time when they are allowed to use the stairwell. 
B) Encourage people to voluntarily keep off the stairwell during peak times. 
C) Charge everyone who uses the stairwell when it is congested the same fee. People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D) Hold a lottery to determine who wins the right to use the stairwell at peak times. 
A) Assign each person in the building a time when they are allowed to use the stairwell. 
B) Encourage people to voluntarily keep off the stairwell during peak times. 
C) Charge everyone who uses the stairwell when it is congested the same fee. People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D) Hold a lottery to determine who wins the right to use the stairwell at peak times.

Exam 11: Public Goods and Common Resources

In what sense is it meaningful to say that fighting poverty is a public good?

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Under which of the following scenarios would a park be considered a common resource?

What can the government do to solve the problem of excessive use of common resources?

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Figure 11-1 -Refer to Figure 11-1. A bottle of soda is an example of the type of good represented by Box

Which of the following statements is correct?

Excessive fishing occurs because

Knowledge is an example of a

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

A vacation home in Malibu is

The national defense of the United States is not rival because

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

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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