Question 1

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 2

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Accepted Answer

A) taxing the use of the common resource 
B) turning the common resource into a club good 
C) turning the common resource into a private good 
D) regulating the use of the common resource 
A) taxing the use of the common resource 
B) turning the common resource into a club good 
C) turning the common resource into a private good 
D) regulating the use of the common resource

Question 3

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Accepted Answer

Basic research is ne

Question 4

Table 11-3
This table describes the police protection demands for three equal sized groups of people in Safetyville. The second, third, and fourth columns show the number of person-hours of police protection per day that a group will demand for a given price (the first column).  
-Refer to Table 11-3. What is the value of the 39th unit of police protection in Safetyville?

Accepted Answer

A) $24 
B) $42 
C) $54 
D) $72 
A) $24 
B) $42 
C) $54 
D) $72

Question 5

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Accepted Answer

A) True 
 B)False

Question 6

The Occupational Safety and Health Administration (OSHA) has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks. The cost of imposing a regulation that would ban the chemical is $10 million. OSHA has calculated that each person saved by this regulation has a value equal to $10 million. If the benefits are exactly equal to the costs, what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

Accepted Answer

A) 0.001 
B) 0.01 
C) 0.1 
D) 1.0 
A) 0.001 
B) 0.01 
C) 0.1 
D) 1.0

Question 7

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 8

People cannot be prevented from using a good if the good is

Accepted Answer

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

Question 9

Variable tolls on roads

Accepted Answer

A) are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly. 
B) rise when traffic volume increases to ensure the speed on the road is kept high. 
C) are an effective way of correcting the common resource problem on roads. 
D) All of the above are correct. 
A) are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly. 
B) rise when traffic volume increases to ensure the speed on the road is kept high. 
C) are an effective way of correcting the common resource problem on roads. 
D) All of the above are correct.

Question 10

When goods do not have a price, which of the following primarily ensures that the good is produced?

Accepted Answer

A) buyers 
B) sellers 
C) government 
D) the market 
A) buyers 
B) sellers 
C) government 
D) the market

Question 11

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

Accepted Answer

Private go

Question 12

Which two types of goods are rival in consumption?

Accepted Answer

Private goods and co

Question 13

Elephants are endangered, but cows are not because

Accepted Answer

A) cows are not as valuable as elephants. 
B) elephants are a common resource, while cows are private goods. 
C) cows are a common resource, while elephants are private goods. 
D) it is legal to kill cows but not elephants. 
A) cows are not as valuable as elephants. 
B) elephants are a common resource, while cows are private goods. 
C) cows are a common resource, while elephants are private goods. 
D) it is legal to kill cows but not elephants.

Question 14

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Accepted Answer

A) The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot. 
B) The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year. 
C) The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce. 
D) Both a and b are possible solutions to this example of the Tragedy of the Commons 
A) The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot. 
B) The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year. 
C) The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce. 
D) Both a and b are possible solutions to this example of the Tragedy of the Commons

Question 15

Property rights are well established for

Accepted Answer

A) private goods. 
B) public goods. 
C) common resources. 
D) both (b) and (c). 
A) private goods. 
B) public goods. 
C) common resources. 
D) both (b) and (c).

Question 16

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Accepted Answer

A) True 
 B)False

Question 17

Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?

Accepted Answer

A) Install the park benches because people like places to sit. 
B) Install the park benches because the benefits outweigh the costs. 
C) Do not install the park benches because the costs outweigh the benefits. 
D) Do not install the park benches to prevent the Tragedy of the Commons problem of overuse. 
A) Install the park benches because people like places to sit. 
B) Install the park benches because the benefits outweigh the costs. 
C) Do not install the park benches because the costs outweigh the benefits. 
D) Do not install the park benches to prevent the Tragedy of the Commons problem of overuse.

Question 18

Free goods are usually efficiently allocated without government intervention.

Accepted Answer

A) True 
 B)False

Question 19

Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?

Accepted Answer

A) Use of the beach by the nine new beachgoers will yield a negative externality. 
B) The town can reduce the congestion externality by raising the fee to access the beach. 
C) An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion. 
D) Each of the nine friends would have been better off staying at home. 
A) Use of the beach by the nine new beachgoers will yield a negative externality. 
B) The town can reduce the congestion externality by raising the fee to access the beach. 
C) An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion. 
D) Each of the nine friends would have been better off staying at home.

Question 20

A tax on gasoline often reduces road congestion because gasoline

Accepted Answer

A) and driving are complements. 
B) and driving are substitutes. 
C) is a normal good, while driving is an inferior good. 
D) is an inferior good, while driving is a normal good. 
A) and driving are complements. 
B) and driving are substitutes. 
C) is a normal good, while driving is an inferior good. 
D) is an inferior good, while driving is a normal good.

Exam 11: Public Goods and Common Resources

A tornado siren is a

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

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

People cannot be prevented from using a good if the good is

Variable tolls on roads

When goods do not have a price, which of the following primarily ensures that the good is produced?

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

Which two types of goods are rival in consumption?

Elephants are endangered, but cows are not because

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Property rights are well established for

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Free goods are usually efficiently allocated without government intervention.

A tax on gasoline often reduces road congestion because gasoline

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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