Question 1

When a highway is congested, giving rise to negative externalities, it is appropriate to view the highway as a common resource.

Accepted Answer

A) True 
 B)False

Question 2

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

Accepted Answer

A) both rival in consumption and excludable. 
B) neither rival in consumption nor excludable. 
C) excludable, but not rival in consumption. 
D) rival in consumption, but not excludable. 
A) both rival in consumption and excludable. 
B) neither rival in consumption nor excludable. 
C) excludable, but not rival in consumption. 
D) rival in consumption, but not excludable.

Question 3

In a cost-benefit analysis, the value of a human life is sometimes calculated on the basis of

Accepted Answer

A) the risks that a person voluntarily exposes herself to in her job and/or recreational choices. 
B) the value of each individual's assets. 
C) the belief that human life is priceless. 
D) the amount of resources required to adequately sustain life. 
A) the risks that a person voluntarily exposes herself to in her job and/or recreational choices. 
B) the value of each individual's assets. 
C) the belief that human life is priceless. 
D) the amount of resources required to adequately sustain life.

Question 4

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 5

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 6

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

Accepted Answer

Other people, besides the pers

Question 7

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

Accepted Answer

A) people can be prevented from using it. 
B) access is limited due to driving distances. 
C) if too many people use it, one person's use diminishes other peoples' use. 
D) anyone can use it without affecting anyone else. 
A) people can be prevented from using it. 
B) access is limited due to driving distances. 
C) if too many people use it, one person's use diminishes other peoples' use. 
D) anyone can use it without affecting anyone else.

Question 8

Why is cable TV reception regarded as a club good?

Accepted Answer

Cable TV reception is excludable, becaus

Question 9

Are whales excludable? Are they rival in consumption? How do we classify whales in terms of the four types of goods?

Accepted Answer

Whales are not excludable, but

Question 10

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.  
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which business owner(s) would be opposed to having any ferry trips?

Accepted Answer

A) only the owner of Store B 
B) only the owners of Stores A and B 
C) only the owners of Stores A and B and Restaurant 2 
D) All 4 business owners would be opposed to paying for any ferry trips. 
A) only the owner of Store B 
B) only the owners of Stores A and B 
C) only the owners of Stores A and B and Restaurant 2 
D) All 4 business owners would be opposed to paying for any ferry trips.

Question 11

Which of the following is not a common resource?

Accepted Answer

A) elephants in the wild 
B) a narrow trail in a park 
C) a neighborhood garden 
D) Neither a nor b is a common resource. 
A) elephants in the wild 
B) a narrow trail in a park 
C) a neighborhood garden 
D) Neither a nor b is a common resource.

Question 12

The U.S. government protects fish, a common resource, by

Accepted Answer

A) subsidizing the fishing industry. 
B) heavily taxing competing industries. 
C) selling fishing licenses and regulating fish lengths. 
D) None of the above is correct. 
A) subsidizing the fishing industry. 
B) heavily taxing competing industries. 
C) selling fishing licenses and regulating fish lengths. 
D) None of the above is correct.

Question 13

An absence of property rights often leads to market failure. When this is the case, how does society usually solve the problem?

Accepted Answer

The solution to the problem us

Question 14

A toll on a congested road is in essence

Accepted Answer

A) an interstate highway tax. 
B) a Department of Motor Vehicles tax. 
C) a gasoline tax. 
D) a corrective tax. 
A) an interstate highway tax. 
B) a Department of Motor Vehicles tax. 
C) a gasoline tax. 
D) a corrective tax.

Question 15

Because elephants roam freely in many countries in Africa, each individual African elephant poacher has

Accepted Answer

A) a strong incentive to kill as many elephants as he can find. 
B) a strong incentive to protect the elephants. 
C) the ability to save the elephants. 
D) None of the above is correct. 
A) a strong incentive to kill as many elephants as he can find. 
B) a strong incentive to protect the elephants. 
C) the ability to save the elephants. 
D) None of the above is correct.

Question 16

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 17

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Accepted Answer

A) 3.5 percentage points. 
B) 5.5 percentage points. 
C) 6.1 percentage points. 
D) 9.0 percentage points. 
A) 3.5 percentage points. 
B) 5.5 percentage points. 
C) 6.1 percentage points. 
D) 9.0 percentage points.

Question 18

Private decisions about consumption of common resources and production of public goods usually lead to an

Accepted Answer

A) efficient allocation of resources and external effects. 
B) efficient allocation of resources and no external effects. 
C) inefficient allocation of resources and external effects. 
D) inefficient allocation of resources and no external effects. 
A) efficient allocation of resources and external effects. 
B) efficient allocation of resources and no external effects. 
C) inefficient allocation of resources and external effects. 
D) inefficient allocation of resources and no external effects.

Question 19

When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts.

Accepted Answer

The answer of When a good does not have a...

Question 20

A common theme among examples of market failure is

Accepted Answer

A) the good being provided harms society in some systematic way. 
B) some item of value does not have an owner with the legal authority to control it. 
C) cost-benefit analysis will show that private markets should provide the goods and services. 
D) government intervention decreases the social benefits. 
A) the good being provided harms society in some systematic way. 
B) some item of value does not have an owner with the legal authority to control it. 
C) cost-benefit analysis will show that private markets should provide the goods and services. 
D) government intervention decreases the social benefits.

Exam 11: Public Goods and Common Resources

When a highway is congested, giving rise to negative externalities, it is appropriate to view the highway as a common resource.

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

In a cost-benefit analysis, the value of a human life is sometimes calculated on the basis of

If everyone benefits from helping the poor,

The pollution market failure is an example of the free rider problem.

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

Why is cable TV reception regarded as a club good?

Are whales excludable? Are they rival in consumption? How do we classify whales in terms of the four types of goods?

Which of the following is not a common resource?

The U.S. government protects fish, a common resource, by

An absence of property rights often leads to market failure. When this is the case, how does society usually solve the problem?

A toll on a congested road is in essence

Because elephants roam freely in many countries in Africa, each individual African elephant poacher has

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

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Private decisions about consumption of common resources and production of public goods usually lead to an

When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts.

A common theme among examples of market failure is

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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