Question 1

Which of the following is not a characteristic of a public good?

Accepted Answer

A) It is not excludable. 
B) It is not diminished or depreciated as additional people consume the good. 
C) Its benefits cannot be withheld from anyone. 
D) Because it is a free good, there is no opportunity cost. 
A) It is not excludable. 
B) It is not diminished or depreciated as additional people consume the good. 
C) Its benefits cannot be withheld from anyone. 
D) Because it is a free good, there is no opportunity cost.

Question 2

Which of the following is not a reason why government agencies subsidize basic research?

Accepted Answer

A) The private market devotes too few resources to basic research. 
B) The general knowledge developed through basic research can be used without charge. 
C) The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D) The government wants to attract the brightest researchers away from private research firms. 
A) The private market devotes too few resources to basic research. 
B) The general knowledge developed through basic research can be used without charge. 
C) The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D) The government wants to attract the brightest researchers away from private research firms.

Question 3

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

Accepted Answer

National defense is

Question 4

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 public good? Briefly explain.

Accepted Answer

The beautiful mural is the bes

Question 5

Why is cable TV reception regarded as a club good?

Accepted Answer

Cable TV reception is excludable, becaus

Question 6

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could

Accepted Answer

A) allow individual shepherds to choose their own flock sizes. 
B) internalize the externality by subsidizing the production of sheep's wool. 
C) auction off a limited number of sheep-grazing permits. 
D) wait until the market corrects the problem. 
A) allow individual shepherds to choose their own flock sizes. 
B) internalize the externality by subsidizing the production of sheep's wool. 
C) auction off a limited number of sheep-grazing permits. 
D) wait until the market corrects the problem.

Question 7

Which of the following goods is the best example of a public good?

Accepted Answer

A) Garbage-collection services that are provided by a municipal government. 
B) Music that is broadcast over the airwaves by a privately-owned FM radio station. 
C) Electricity that is provided to farmhouses by a rural electric cooperative. 
D) Cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates. 
A) Garbage-collection services that are provided by a municipal government. 
B) Music that is broadcast over the airwaves by a privately-owned FM radio station. 
C) Electricity that is provided to farmhouses by a rural electric cooperative. 
D) Cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates.

Question 8

Producers have little incentive to produce a public good because

Accepted Answer

A) the social benefit is less than the private benefit. 
B) the social benefit is less than the social cost. 
C) there is a free-rider problem. 
D) there is a Tragedy of the Commons. 
A) the social benefit is less than the private benefit. 
B) the social benefit is less than the social cost. 
C) there is a free-rider problem. 
D) there is a Tragedy of the Commons.

Question 9

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Accepted Answer

Yes. Both national d

Question 10

Advocates of antipoverty programs claim that fighting poverty is a public good.

Accepted Answer

A) True 
 B)False

Question 11

Free goods are usually efficiently allocated without government intervention.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

Which of the following is an example of the Tragedy of the Commons?

Accepted Answer

A) The number of professional soccer teams increases to the point where the quality of the games decreases, as does television viewership. 
B) A type of duck becomes extinct due to overhunting. 
C) An amusement park becomes so crowded that it institutes a lottery for admissions. 
D) A monkey breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the primates. 
A) The number of professional soccer teams increases to the point where the quality of the games decreases, as does television viewership. 
B) A type of duck becomes extinct due to overhunting. 
C) An amusement park becomes so crowded that it institutes a lottery for admissions. 
D) A monkey breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the primates.

Question 15

Private goods and club goods have in common that they are excludable, but are different in that private goods are rival while club goods are not rival in consumption.

Accepted Answer

A) True 
 B)False

Question 16

One benefit of the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 17

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Accepted Answer

As described, good x is rival

Question 18

The overuse of a common resource relative to its economically efficient use is called

Accepted Answer

A) the free-rider problem. 
B) the Tragedy of the Commons. 
C) a public good. 
D) cost-benefit analysis. 
A) the free-rider problem. 
B) the Tragedy of the Commons. 
C) a public good. 
D) cost-benefit analysis.

Question 19

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Accepted Answer

A) overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B) overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C) understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D) understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
A) overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B) overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C) understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D) understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good.

Question 20

Markets may fail to allocate resources efficiently when property rights are not well established.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

Which of the following is not a characteristic of a public good?

Which of the following is not a reason why government agencies subsidize basic research?

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

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 public good? Briefly explain.

Why is cable TV reception regarded as a club good?

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could

Which of the following goods is the best example of a public good?

Producers have little incentive to produce a public good because

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Advocates of antipoverty programs claim that fighting poverty is a public good.

Free goods are usually efficiently allocated without government intervention.

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.

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

Which of the following is an example of the Tragedy of the Commons?

Private goods and club goods have in common that they are excludable, but are different in that private goods are rival while club goods are not rival in consumption.

One benefit of the patent system is that it encourages the production of technical knowledge.

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

The overuse of a common resource relative to its economically efficient use is called

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Markets may fail to allocate resources efficiently when property rights are not well established.

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 Nations 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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