Question 1

Public universities, by charging tuition fees _______ the marginal cost of education, _______ the number of students.

Accepted Answer

A)  below; decrease 
B)  above; decrease 
C)  below; increase 
D)  above; increase 
A)  below; decrease 
B)  above; decrease 
C)  below; increase 
D)  above; increase

Question 2

Government failure, when government actions lead to inefficiency, can result in

Accepted Answer

A)  underprovision. 
B)  overprovision. 
C)  both A and B 
D)  neither A nor B 
A)  underprovision. 
B)  overprovision. 
C)  both A and B 
D)  neither A nor B

Question 3

Suppose your neighbour has a beautiful garden. The benefit that she enjoys from her garden is called _______ and the benefit the rest of the neighbourhood enjoys is called _______.

Accepted Answer

A)  marginal external benefit; marginal social benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal private benefit; marginal external benefit 
A)  marginal external benefit; marginal social benefit 
B)  private cost; external cost 
C)  marginal social benefit; marginal external benefit 
D)  marginal private benefit; marginal external benefit

Question 4

If the marginal social benefit of a city's sewage system is less than the marginal social cost, then the city will achieve an efficient use of resources if it

Accepted Answer

A)  increases the sewage charge that the residents pay. 
B)  increases the capacity of the sewage system. 
C)  does not change the capacity of the sewage system. 
D)  decreases the capacity of the sewage system. 
A)  increases the sewage charge that the residents pay. 
B)  increases the capacity of the sewage system. 
C)  does not change the capacity of the sewage system. 
D)  decreases the capacity of the sewage system.

Question 5

Public goods create a free- rider problem because the quantity of the good that a person consumes
For that good.

Accepted Answer

A)  increases as that person pays less 
B)  increases as that person pays more 
C)  decreases as that person pays more 
D)  does not depend on the amount that the person pays 
A)  increases as that person pays less 
B)  increases as that person pays more 
C)  decreases as that person pays more 
D)  does not depend on the amount that the person pays

Question 6

The economy's marginal social benefit curve for a public good is equal to the

Accepted Answer

A)  horizontal sum of the individual marginal benefit curves. 
B)  vertical sum of the individual supply curves. 
C)  horizontal sum of the individual demand curves. 
D)  vertical sum of the individual marginal benefit curves. 
A)  horizontal sum of the individual marginal benefit curves. 
B)  vertical sum of the individual supply curves. 
C)  horizontal sum of the individual demand curves. 
D)  vertical sum of the individual marginal benefit curves.

Question 7

Which of the following scenarios would most likely contain an externality?

Accepted Answer

A)  You cannot afford to buy groceries. 
B)  You eat all the vegetables you grow yourself. 
C)  You decide to grow your own vegetables in your backyard where no one else can see them. 
D)  You decide to grow flowers in your front yard where everyone else can see them. 
A)  You cannot afford to buy groceries. 
B)  You eat all the vegetables you grow yourself. 
C)  You decide to grow your own vegetables in your backyard where no one else can see them. 
D)  You decide to grow flowers in your front yard where everyone else can see them.

Question 8

Private goods are those for which consumption is

Accepted Answer

A)  nonrival and excludable. 
B)  nonrival and nonexcludable. 
C)  rival and excludable. 
D)  rival and nonexcludable. 
A)  nonrival and excludable. 
B)  nonrival and nonexcludable. 
C)  rival and excludable. 
D)  rival and nonexcludable.

Question 9

An example of a public good is

Accepted Answer

A)  a loaf of bread. 
B)  national defence services. 
C)  a home computer. 
D)  a Ford truck. 
A)  a loaf of bread. 
B)  national defence services. 
C)  a home computer. 
D)  a Ford truck.

Question 10

A museum is NOT a public good if

Accepted Answer

A)  there can be no congestion. 
B)  an entry fee is charged and people are denied entry if they do not pay. 
C)  the museum receives donations from members of the public. 
D)  the general public typically does not go to the museum. 
A)  there can be no congestion. 
B)  an entry fee is charged and people are denied entry if they do not pay. 
C)  the museum receives donations from members of the public. 
D)  the general public typically does not go to the museum.

Question 11

Which of the following is the BEST example of a private good?

Accepted Answer

A)  National defence 
B)  Fish in the ocean 
C)  Cable television 
D)  A can of Mountain Dew 
A)  National defence 
B)  Fish in the ocean 
C)  Cable television 
D)  A can of Mountain Dew

Question 12

-Broomfield City Council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The marginal benefit for all of Broomfield from hiring the 4th police officer is

Accepted Answer

A)  $8,000. 
B)  $5.60. 
C)  $6.00. 
D)  $56,000. 
A)  $8,000. 
B)  $5.60. 
C)  $6.00. 
D)  $56,000.

Question 13

When the consumption of a good creates an external benefit,

Accepted Answer

A)  the quantity produced in an unregulated, competitive market is greater than the efficient quantity. 
B)  the marginal social benefit curve lies above the marginal private benefit curve. 
C)  the marginal social cost curve lies below the marginal private cost curve. 
D)  None of the above answers is correct. 
A)  the quantity produced in an unregulated, competitive market is greater than the efficient quantity. 
B)  the marginal social benefit curve lies above the marginal private benefit curve. 
C)  the marginal social cost curve lies below the marginal private cost curve. 
D)  None of the above answers is correct.

Question 14

School vouchers can be used to arrive at the efficient market equilibrium because vouchers

Accepted Answer

A)  decrease the cost of schooling. 
B)  increase supply of schooling. 
C)  increase demand for schooling. 
D)  decrease supply of schooling. 
A)  decrease the cost of schooling. 
B)  increase supply of schooling. 
C)  increase demand for schooling. 
D)  decrease supply of schooling.

Question 15

-The figure above shows the marginal social costs (MSC), marginal private benefits (MB), and marginal social benefits (MSB) of university education in Inland. If Inland's government does not intervene, and the universities are competitive, _______ million students are enrolled, and the tuition is _______ per year.

Accepted Answer

A)  0.6; $6,000 
B)  0.8; $5,000 
C)  0.6; $9,000 
D)  0.8; $7,000 
A)  0.6; $6,000 
B)  0.8; $5,000 
C)  0.6; $9,000 
D)  0.8; $7,000

Question 16

Governments can use subsidies

Accepted Answer

A)  as a means of increasing government spending. 
B)  to achieve an efficient outcome if there are external benefits. 
C)  to achieve an efficient outcome if there are external costs. 
D)  when they want to increase taxes. 
A)  as a means of increasing government spending. 
B)  to achieve an efficient outcome if there are external benefits. 
C)  to achieve an efficient outcome if there are external costs. 
D)  when they want to increase taxes.

Question 17

A free- rider problem occurs when the

Accepted Answer

A)  good is rival. 
B)  good is nonexcludable. 
C)  good is excludable. 
D)  good is offered at no charge. 
A)  good is rival. 
B)  good is nonexcludable. 
C)  good is excludable. 
D)  good is offered at no charge.

Question 18

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient amount of university education, the cost paid by taxpayers is

Accepted Answer

A)  zero. 
B)  $8,000 per student. 
C)  $12,000 per student. 
D)  $4,000 per student. 
A)  zero. 
B)  $8,000 per student. 
C)  $12,000 per student. 
D)  $4,000 per student.

Question 19

An example of an externality occurs when a chemical factory

Accepted Answer

A)  overworks its employees. 
B)  produces fertilisers that kill plants rather than feed them. 
C)  produces fertilisers that do not help plants grow. 
D)  is producing ethanol and dumps waste in a river upstream from a popular fishing spot. 
A)  overworks its employees. 
B)  produces fertilisers that kill plants rather than feed them. 
C)  produces fertilisers that do not help plants grow. 
D)  is producing ethanol and dumps waste in a river upstream from a popular fishing spot.

Question 20

In which of the following markets are external benefits most likely to exist?

Accepted Answer

A)  In the market for cigarettes 
B)  In the market for flu shots 
C)  In the market for ball pens 
D)  In the market for gasoline 
A)  In the market for cigarettes 
B)  In the market for flu shots 
C)  In the market for ball pens 
D)  In the market for gasoline

Public universities, by charging tuition fees _ the marginal cost of education, _ the number of students.

Government failure, when government actions lead to inefficiency, can result in

Suppose your neighbour has a beautiful garden. The benefit that she enjoys from her garden is called _ and the benefit the rest of the neighbourhood enjoys is called _.

If the marginal social benefit of a city's sewage system is less than the marginal social cost, then the city will achieve an efficient use of resources if it

Public goods create a free- rider problem because the quantity of the good that a person consumes For that good.

The economy's marginal social benefit curve for a public good is equal to the

Which of the following scenarios would most likely contain an externality?

Private goods are those for which consumption is

An example of a public good is

A museum is NOT a public good if

Which of the following is the BEST example of a private good?

When the consumption of a good creates an external benefit,

School vouchers can be used to arrive at the efficient market equilibrium because vouchers

Governments can use subsidies

A free- rider problem occurs when the

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient amount of university education, the cost paid by taxpayers is

An example of an externality occurs when a chemical factory

In which of the following markets are external benefits most likely to exist?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters

Exam 8: Public Choices and Public Goods

Public universities, by charging tuition fees _______ the marginal cost of education, _______ the number of students.

Government failure, when government actions lead to inefficiency, can result in

Suppose your neighbour has a beautiful garden. The benefit that she enjoys from her garden is called _______ and the benefit the rest of the neighbourhood enjoys is called _______.

If the marginal social benefit of a city's sewage system is less than the marginal social cost, then the city will achieve an efficient use of resources if it

Public goods create a free- rider problem because the quantity of the good that a person consumes For that good.

The economy's marginal social benefit curve for a public good is equal to the

Which of the following scenarios would most likely contain an externality?

Private goods are those for which consumption is

An example of a public good is

A museum is NOT a public good if

Which of the following is the BEST example of a private good?

When the consumption of a good creates an external benefit,

School vouchers can be used to arrive at the efficient market equilibrium because vouchers

Governments can use subsidies

A free- rider problem occurs when the

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient amount of university education, the cost paid by taxpayers is

An example of an externality occurs when a chemical factory

In which of the following markets are external benefits most likely to exist?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Economics of the Environment

Monopoly and Its Regulation

Economic Inequality

Consumer Choices and Constraints

Producer Choices and Constraints

Perfect Competition

Monopolistic Competition

Oligopoly Games and Strategy

Decisions in Factor Markets

Filters

Public universities, by charging tuition fees _ the marginal cost of education, _ the number of students.

Suppose your neighbour has a beautiful garden. The benefit that she enjoys from her garden is called _ and the benefit the rest of the neighbourhood enjoys is called _.