Question 1

Natural monopoly goods are _______ and _______.

Accepted Answer

A)  rival; nonexcludable 
B)  rival; excludable 
C)  nonrival; nonexcludable 
D)  nonrival; excludable 
A)  rival; nonexcludable 
B)  rival; excludable 
C)  nonrival; nonexcludable 
D)  nonrival; excludable

Question 2

Rational ignorance suggests that voters will

Accepted Answer

A)  pursue information on all issues before voting. 
B)  be ignorant about issues that are of no special interest to them. 
C)  be ignorant about all issues. 
D)  avoid voting if they have no information. 
A)  pursue information on all issues before voting. 
B)  be ignorant about issues that are of no special interest to them. 
C)  be ignorant about all issues. 
D)  avoid voting if they have no information.

Question 3

National defence is an example of a

Accepted Answer

A)  private good. 
B)  natural monopoly good. 
C)  public good. 
D)  common resource. 
A)  private good. 
B)  natural monopoly good. 
C)  public good. 
D)  common resource.

Question 4

Rational ignorance about the efficient quantity of a public good can result in

Accepted Answer

A)  excludable goods. 
B)  the vertical summation of individual's marginal benefit curves. 
C)  the principle of minimum differentiation. 
D)  bureaucratic overprovision of a good. 
A)  excludable goods. 
B)  the vertical summation of individual's marginal benefit curves. 
C)  the principle of minimum differentiation. 
D)  bureaucratic overprovision of a good.

Question 5

When people determine the quantity of education they will undertake, they _______ the external benefits. As a result, if education were left to an unregulated market, people would undertake too _______ Education.

Accepted Answer

A)  overvalue; little 
B)  ignore; much 
C)  ignore; little 
D)  overvalue; much 
A)  overvalue; little 
B)  ignore; much 
C)  ignore; little 
D)  overvalue; much

Question 6

The free- rider problem arises when consumption of a good is

Accepted Answer

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

Question 7

-The above figure shows the marginal private benefit and marginal social cost of a university education. A $10,000 subsidy to universities results in a university charging tuition fees of

Accepted Answer

A)  $0. 
B)  $20,000. 
C)  $30,000. 
D)  $10,000. 
A)  $0. 
B)  $20,000. 
C)  $30,000. 
D)  $10,000.

Question 8

A school of tuna swimming in the ocean is

Accepted Answer

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

Question 9

If a public good was left to be provided by the private sector,

Accepted Answer

A)  less than the efficient quantity would be produced. 
B)  the good would be provided at a very low price. 
C)  more than the efficient quantity would be produced. 
D)  the efficient quantity would be produced. 
A)  less than the efficient quantity would be produced. 
B)  the good would be provided at a very low price. 
C)  more than the efficient quantity would be produced. 
D)  the efficient quantity would be produced.

Question 10

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then producers will receive a total amount (price plus subsidy) equal to

Accepted Answer

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

Question 11

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

Accepted Answer

A)  Air traffic control 
B)  A house 
C)  A bridge during rush hour 
D)  Fish in the ocean 
A)  Air traffic control 
B)  A house 
C)  A bridge during rush hour 
D)  Fish in the ocean

Question 12

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. What is the efficient amount of education?

Accepted Answer

A)  100,000 student- years 
B)  60,000 student- years 
C)  80,000 student- years 
D)  40,000 student- years 
A)  100,000 student- years 
B)  60,000 student- years 
C)  80,000 student- years 
D)  40,000 student- years

Question 13

-The table above shows the marginal private benefit, marginal social benefit and marginal cost of education at the University of Epsilon. What is the efficient number of students at the university?

Accepted Answer

A)  4,000 
B)  1,000 
C)  5,000 
D)  3,000 
A)  4,000 
B)  1,000 
C)  5,000 
D)  3,000

Question 14

The principle of minimum differentiation suggests that competitors

Accepted Answer

A)  try to decrease costs by minimising the differences in the types of resources used. 
B)  try to gain the largest market share by differentiating a popular product. 
C)  try to distinguish themselves by offering highly different products. 
D)  tend to make similar goods in order to appeal to the largest number of consumers. 
A)  try to decrease costs by minimising the differences in the types of resources used. 
B)  try to gain the largest market share by differentiating a popular product. 
C)  try to distinguish themselves by offering highly different products. 
D)  tend to make similar goods in order to appeal to the largest number of consumers.

Question 15

-The table above provides information about the marginal private benefit for education. The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. If the government undertakes public provision of the efficient amount of education, how much will the government charge for tuition?

Accepted Answer

A)  $16,000 
B)  $4,000 
C)  $8,000 
D)  $12,000 
A)  $16,000 
B)  $4,000 
C)  $8,000 
D)  $12,000

Question 16

If production of a good produces an external benefit, in order for the marginal social cost to equal the marginal social benefit,

Accepted Answer

A)  the good could be subsidised. 
B)  the good should be taxed. 
C)  permits should be required to purchase the good. 
D)  the government needs to take no action. 
A)  the good could be subsidised. 
B)  the good should be taxed. 
C)  permits should be required to purchase the good. 
D)  the government needs to take no action.

Question 17

-In the above figure, what amount of subsidy per student would government have to provide to universities if its desired objective was to achieve an efficient level of education, 50 million students per year?

Accepted Answer

A)  $18,000 per year 
B)  $27,000 per year 
C)  $12,000 per year 
D)  $6,000 per year 
A)  $18,000 per year 
B)  $27,000 per year 
C)  $12,000 per year 
D)  $6,000 per year

Question 18

The efficient quantity of a public good is provided when the economy's

Accepted Answer

A)  marginal social benefit from the good is greater than its marginal social cost. 
B)  total benefit from the good equals its total cost. 
C)  total benefit from the good is less than its total cost. 
D)  marginal social benefit from the good equals its marginal social cost. 
A)  marginal social benefit from the good is greater than its marginal social cost. 
B)  total benefit from the good equals its total cost. 
C)  total benefit from the good is less than its total cost. 
D)  marginal social benefit from the good equals its marginal social cost.

Question 19

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. What is the marginal benefit to society from the third satellite?

Accepted Answer

A)  $30 
B)  $6 
C)  $54 
D)  $27 
A)  $30 
B)  $6 
C)  $54 
D)  $27

Question 20

-The above figure shows the marginal benefits and marginal costs of a university education. What is the amount of the external benefit in the figure?

Accepted Answer

A)  $15,000 
B)  $0 
C)  $5,000 
D)  $10,000 
A)  $15,000 
B)  $0 
C)  $5,000 
D)  $10,000

Natural monopoly goods are _ and _.

Rational ignorance suggests that voters will

National defence is an example of a

Rational ignorance about the efficient quantity of a public good can result in

When people determine the quantity of education they will undertake, they _ the external benefits. As a result, if education were left to an unregulated market, people would undertake too _ Education.

The free- rider problem arises when consumption of a good is

-The above figure shows the marginal private benefit and marginal social cost of a university education. A $10,000 subsidy to universities results in a university charging tuition fees of

A school of tuna swimming in the ocean is

If a public good was left to be provided by the private sector,

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then producers will receive a total amount (price plus subsidy) equal to

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

-The table above shows the marginal private benefit, marginal social benefit and marginal cost of education at the University of Epsilon. What is the efficient number of students at the university?

The principle of minimum differentiation suggests that competitors

If production of a good produces an external benefit, in order for the marginal social cost to equal the marginal social benefit,

-In the above figure, what amount of subsidy per student would government have to provide to universities if its desired objective was to achieve an efficient level of education, 50 million students per year?

The efficient quantity of a public good is provided when the economy's

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. What is the marginal benefit to society from the third satellite?

-The above figure shows the marginal benefits and marginal costs of a university education. What is the amount of the external benefit in the figure?

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

Natural monopoly goods are _______ and _______.

Rational ignorance suggests that voters will

National defence is an example of a

Rational ignorance about the efficient quantity of a public good can result in

When people determine the quantity of education they will undertake, they _______ the external benefits. As a result, if education were left to an unregulated market, people would undertake too _______ Education.

The free- rider problem arises when consumption of a good is

-The above figure shows the marginal private benefit and marginal social cost of a university education. A $10,000 subsidy to universities results in a university charging tuition fees of

A school of tuna swimming in the ocean is

If a public good was left to be provided by the private sector,

-In the above figure, if a subsidy is granted to producers that generates an efficient allocation of resources, then producers will receive a total amount (price plus subsidy) equal to

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

-The table above shows the marginal private benefit, marginal social benefit and marginal cost of education at the University of Epsilon. What is the efficient number of students at the university?

The principle of minimum differentiation suggests that competitors

If production of a good produces an external benefit, in order for the marginal social cost to equal the marginal social benefit,

-In the above figure, what amount of subsidy per student would government have to provide to universities if its desired objective was to achieve an efficient level of education, 50 million students per year?

The efficient quantity of a public good is provided when the economy's

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defence satellites, a public good. What is the marginal benefit to society from the third satellite?

-The above figure shows the marginal benefits and marginal costs of a university education. What is the amount of the external benefit in the figure?

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

Natural monopoly goods are _ and _.

When people determine the quantity of education they will undertake, they _ the external benefits. As a result, if education were left to an unregulated market, people would undertake too _ Education.