Question 1

There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses,

Accepted Answer

A)  the marginal social benefit of the fourth lighthouse equals its marginal social cost. 
B)  marginal social benefit minus marginal social cost is at a maximum. 
C)  total social benefit is zero. 
D)  Both answers A and C are correct. 
A)  the marginal social benefit of the fourth lighthouse equals its marginal social cost. 
B)  marginal social benefit minus marginal social cost is at a maximum. 
C)  total social benefit is zero. 
D)  Both answers A and C are correct.

Question 2

The decision not to acquire information because the cost of acquiring the information exceeds the expected benefit from the information is known as

Accepted Answer

A)  public choice theory. 
B)  the principle of minimum differentiation. 
C)  inefficient provision. 
D)  rational ignorance. 
A)  public choice theory. 
B)  the principle of minimum differentiation. 
C)  inefficient provision. 
D)  rational ignorance.

Question 3

-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 wants to provide the efficient level of education, it must set tuition fees at _______ per year to ensure that _______ Million students are enrolled.

Accepted Answer

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

Question 4

When government action leads to inefficiency it is known as

Accepted Answer

A)  government failure. 
B)  politics. 
C)  government as usual. 
D)  lack of government trust. 
A)  government failure. 
B)  politics. 
C)  government as usual. 
D)  lack of government trust.

Question 5

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. If the marginal social cost of a satellite is $36, the efficient quantity of satellites is

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
A)  1. 
B)  2. 
C)  3. 
D)  4.

Question 6

To find the economy's marginal benefit curve for a public good, you would

Accepted Answer

A)  average the individual marginal benefit curves horizontally. 
B)  sum the individual marginal benefit curves horizontally. 
C)  sum the individual marginal benefit curves vertically. 
D)  average the individual marginal benefit curves vertically. 
A)  average the individual marginal benefit curves horizontally. 
B)  sum the individual marginal benefit curves horizontally. 
C)  sum the individual marginal benefit curves vertically. 
D)  average the individual marginal benefit curves vertically.

Question 7

The economy's marginal benefit curve for a public good is found by _______ for all individuals.

Accepted Answer

A)  vertically summing the marginal benefit curves 
B)  horizontally summing the total benefit curves 
C)  vertically summing the total benefit curves 
D)  horizontally summing the marginal benefit curves 
A)  vertically summing the marginal benefit curves 
B)  horizontally summing the total benefit curves 
C)  vertically summing the total benefit curves 
D)  horizontally summing the marginal benefit curves

Question 8

Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then

Accepted Answer

A)  the number of free riders is at its efficient amount. 
B)  less of the product should be produced because its provision exceeds the efficient level. 
C)  more of the product should be produced because its provision is less than the efficient level. 
D)  the principle of minimum differentiation means that production should be decreased. 
A)  the number of free riders is at its efficient amount. 
B)  less of the product should be produced because its provision exceeds the efficient level. 
C)  more of the product should be produced because its provision is less than the efficient level. 
D)  the principle of minimum differentiation means that production should be decreased.

Question 9

-In the above figure, in order to promote an efficient allocation of resources, the government could grant a subsidy equal to

Accepted Answer

A)  zero. 
B)  $10 per unit. 
C)  $5 per unit. 
D)  $15 per unit. 
A)  zero. 
B)  $10 per unit. 
C)  $5 per unit. 
D)  $15 per unit.

Question 10

The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to

Accepted Answer

A)  marginal external benefit. 
B)  marginal external cost. 
C)  external benefit. 
D)  external cost. 
A)  marginal external benefit. 
B)  marginal external cost. 
C)  external benefit. 
D)  external cost.

Question 11

-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 provides a voucher per student equal to the marginal external benefit of university education, then _______ million students will attend university, and universities will collect _______ per student from the voucher.

Accepted Answer

A)  0.8; $5,000 
B)  0.6; $1,000 
C)  0.6; $3,000 
D)  0.8; $2,000 
A)  0.8; $5,000 
B)  0.6; $1,000 
C)  0.6; $3,000 
D)  0.8; $2,000

Question 12

-In the above figure, to achieve efficiency the government could offer a subsidy to producers of _______  Per vaccination so that consumers would pay _______ per vaccination.

Accepted Answer

A)  $30; $40 
B)  $30; $10 
C)  $20; $20 
D)  $20; $10 
A)  $30; $40 
B)  $30; $10 
C)  $20; $20 
D)  $20; $10

Question 13

Bureaucratic overprovision of a public good could occur because

Accepted Answer

A)  bureaucrats attempt to maximise efficiency. 
B)  of a failure of minimum differentiation. 
C)  of rational ignorance among voters. 
D)  voters want more of the good than do bureaucrats. 
A)  bureaucrats attempt to maximise efficiency. 
B)  of a failure of minimum differentiation. 
C)  of rational ignorance among voters. 
D)  voters want more of the good than do bureaucrats.

Question 14

The economy's marginal social benefit curve for a public good is calculated by adding the

Accepted Answer

A)  marginal benefits of all the individuals at each quantity. 
B)  marginal cost of all the suppliers at each quantity. 
C)  quantities supplied by all the suppliers at each price. 
D)  quantities demanded by all the individuals at each price. 
A)  marginal benefits of all the individuals at each quantity. 
B)  marginal cost of all the suppliers at each quantity. 
C)  quantities supplied by all the suppliers at each price. 
D)  quantities demanded by all the individuals at each price.

Question 15

A free rider is someone who

Accepted Answer

A)  consumes only the goods he or she pays for. 
B)  is irrational. 
C)  creates an external benefit. 
D)  enjoys the benefits of a good without paying for it. 
A)  consumes only the goods he or she pays for. 
B)  is irrational. 
C)  creates an external benefit. 
D)  enjoys the benefits of a good without paying for it.

Question 16

Goods that are nonrival and nonexcludable are called

Accepted Answer

A)  private goods. 
B)  free goods. 
C)  public goods. 
D)  external goods. 
A)  private goods. 
B)  free goods. 
C)  public goods. 
D)  external goods.

Question 17

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

Accepted Answer

A)  $10 per unit. 
B)  $20 per unit. 
C)  $15 per unit. 
D)  $5 per unit. 
A)  $10 per unit. 
B)  $20 per unit. 
C)  $15 per unit. 
D)  $5 per unit.

Question 18

The quantity of a public good supplied by a private market is

Accepted Answer

A)  smaller than the efficient quantity. 
B)  equal to the efficient quantity. 
C)  the quantity that maximises total public benefit. 
D)  larger than the efficient quantity. 
A)  smaller than the efficient quantity. 
B)  equal to the efficient quantity. 
C)  the quantity that maximises total public benefit. 
D)  larger than the efficient quantity.

Question 19

-The marginal cost of educating a student is $30,000, and this cost is independent of the number of students. The figure above shows the marginal private benefit that a student receives from education. An independent government agency determines that the efficient number of students is 40,000. What subsidy per student must be given to universities to make the efficient number of students undertake education?

Accepted Answer

A)  It depends on the demand. 
B)  $10,000 
C)  $30,000 
D)  $20,000 
A)  It depends on the demand. 
B)  $10,000 
C)  $30,000 
D)  $20,000

Question 20

-Mike, Joe and Sam are roommates. They need lamps for their common living room. Lamps in their living room are a public good for these roommates. The marginal benefit that each individual receives from varying numbers of lamps in the living room is given in the table above. The marginal benefit for the second lamp to this group of roommates taken as a whole is

Accepted Answer

A)  17. 
B)  10. 
C)  9. 
D)  13. 
A)  17. 
B)  10. 
C)  9. 
D)  13.

There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses,

The decision not to acquire information because the cost of acquiring the information exceeds the expected benefit from the information is known as

When government action leads to inefficiency it is known as

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. If the marginal social cost of a satellite is $36, the efficient quantity of satellites is

To find the economy's marginal benefit curve for a public good, you would

The economy's marginal benefit curve for a public good is found by _______ for all individuals.

Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then

-In the above figure, in order to promote an efficient allocation of resources, the government could grant a subsidy equal to

The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to

-In the above figure, to achieve efficiency the government could offer a subsidy to producers of _ Per vaccination so that consumers would pay _ per vaccination.

Bureaucratic overprovision of a public good could occur because

The economy's marginal social benefit curve for a public good is calculated by adding the

A free rider is someone who

Goods that are nonrival and nonexcludable are called

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

The quantity of a public good supplied by a private market is

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

There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses,

The decision not to acquire information because the cost of acquiring the information exceeds the expected benefit from the information is known as

When government action leads to inefficiency it is known as

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. If the marginal social cost of a satellite is $36, the efficient quantity of satellites is

To find the economy's marginal benefit curve for a public good, you would

The economy's marginal benefit curve for a public good is found by _______ for all individuals.

Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then

-In the above figure, in order to promote an efficient allocation of resources, the government could grant a subsidy equal to

The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to

-In the above figure, to achieve efficiency the government could offer a subsidy to producers of _______ Per vaccination so that consumers would pay _______ per vaccination.

Bureaucratic overprovision of a public good could occur because

The economy's marginal social benefit curve for a public good is calculated by adding the

A free rider is someone who

Goods that are nonrival and nonexcludable are called

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then consumers will pay a price of

The quantity of a public good supplied by a private market is

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

-In the above figure, to achieve efficiency the government could offer a subsidy to producers of _ Per vaccination so that consumers would pay _ per vaccination.