Question 1

If the consumption of a good or service by one person does not decrease the quantity available for another person, the good or service is

Accepted Answer

A)  pure. 
B)  nonrival. 
C)  nonexcludable. 
D)  free. 
A)  pure. 
B)  nonrival. 
C)  nonexcludable. 
D)  free.

Question 2

Which of the following is true about public goods?

Accepted Answer

A)  Unregulated private markets produce less than the efficient quantity of a public good 
B)  Efficient provision occurs at the level of output at which total benefit is equal to total cost 
C)  Consumption is rival and nonexcludable 
D)  Consumption is nonrival and excludable 
A)  Unregulated private markets produce less than the efficient quantity of a public good 
B)  Efficient provision occurs at the level of output at which total benefit is equal to total cost 
C)  Consumption is rival and nonexcludable 
D)  Consumption is nonrival and excludable

Question 3

-Vaccinations provide both private benefits and external benefits. The table above gives information on the marginal private benefit and marginal external benefit associated with vaccination against varicella (chicken pox). If the marginal cost of a varicella vaccination is $10, to achieve an efficient quantity of vaccinations the government could provide a subsidy of

Accepted Answer

A)  $4 per vaccination. 
B)  $3 per vaccination. 
C)  $1 per vaccination. 
D)  $2 per vaccination 
A)  $4 per vaccination. 
B)  $3 per vaccination. 
C)  $1 per vaccination. 
D)  $2 per vaccination

Question 4

-The table above shows the marginal costs and marginal benefits of university education. The marginal private benefit of university education at the efficient level of enrolment is

Accepted Answer

A)  $14,000 per year. 
B)  $12,000 per year. 
C)  $16,000 per year. 
D)  $20,000 per year. 
A)  $14,000 per year. 
B)  $12,000 per year. 
C)  $16,000 per year. 
D)  $20,000 per year.

Question 5

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

Accepted Answer

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

Question 6

The principle of minimum differentiation reflects the

Accepted Answer

A)  attempt to minimise the free- rider problem. 
B)  tendency for firms to produce at minimum marginal cost in order to compete with one another. 
C)  concept of minimising the difference between total benefit and total cost to produce efficiently. 
D)  tendency for political parties to make themselves identical to appeal to the median voter. 
A)  attempt to minimise the free- rider problem. 
B)  tendency for firms to produce at minimum marginal cost in order to compete with one another. 
C)  concept of minimising the difference between total benefit and total cost to produce efficiently. 
D)  tendency for political parties to make themselves identical to appeal to the median voter.

Question 7

An externality occurs when

Accepted Answer

A)  some of the costs of producing a good are paid by someone other than the producer. 
B)  the costs of producing a good are paid entirely by the producer. 
C)  the marginal social cost of an activity increases as that activity is increased. 
D)  Both answers A and C are correct. 
A)  some of the costs of producing a good are paid by someone other than the producer. 
B)  the costs of producing a good are paid entirely by the producer. 
C)  the marginal social cost of an activity increases as that activity is increased. 
D)  Both answers A and C are correct.

Question 8

A free- rider problem is created by

Accepted Answer

A)  common resources. 
B)  private goods. 
C)  natural monopolies. 
D)  public goods. 
A)  common resources. 
B)  private goods. 
C)  natural monopolies. 
D)  public goods.

Question 9

A good or service or a resource is rival if

Accepted Answer

A)  it is possible to prevent someone from enjoying its benefits. 
B)  its use by one person does not decrease the quantity available for someone else. 
C)  it is not possible to prevent someone from enjoying its benefits. 
D)  its use by one person decreases the quantity available for someone else. 
A)  it is possible to prevent someone from enjoying its benefits. 
B)  its use by one person does not decrease the quantity available for someone else. 
C)  it is not possible to prevent someone from enjoying its benefits. 
D)  its use by one person decreases the quantity available for someone else.

Question 10

-The table above provides information about the marginal private benefit of 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 market for education is competitive and unregulated, the equilibrium quantity of education will be _______ and the tuition will be _______.

Accepted Answer

A)  20,000 student- years; $20,000 
B)  60,000 student- years; $12,000 
C)  80,000 student- years; $8,000 
D)  40,000 student- years; $16,000 
A)  20,000 student- years; $20,000 
B)  60,000 student- years; $12,000 
C)  80,000 student- years; $8,000 
D)  40,000 student- years; $16,000

Question 11

Which of the following illustrates the concept of external benefit?

Accepted Answer

A)  A gardener enjoys his flowers. 
B)  Neighbours enjoy a gardener's flowers. 
C)  Good weather increases the size of the wheat crop. 
D)  A new pesticide increases the size of the wheat crop. 
A)  A gardener enjoys his flowers. 
B)  Neighbours enjoy a gardener's flowers. 
C)  Good weather increases the size of the wheat crop. 
D)  A new pesticide increases the size of the wheat crop.

Question 12

A good or service or a resource is nonrival if

Accepted Answer

A)  it is possible to prevent someone from enjoying its benefits. 
B)  its use by one person decreases the quantity available for someone else. 
C)  it is not possible to prevent someone from enjoying its benefits. 
D)  its use by one person does not decrease the quantity available for someone else. 
A)  it is possible to prevent someone from enjoying its benefits. 
B)  its use by one person decreases the quantity available for someone else. 
C)  it is not possible to prevent someone from enjoying its benefits. 
D)  its use by one person does not decrease the quantity available for someone else.

Question 13

An example of an activity that generates an external cost is

Accepted Answer

A)  national defence services. 
B)  planting flowers along an interstate highway. 
C)  eating an apple. 
D)  dumping soapsuds into a trout stream. 
A)  national defence services. 
B)  planting flowers along an interstate highway. 
C)  eating an apple. 
D)  dumping soapsuds into a trout stream.

Question 14

Rational ignorance says that voters will

Accepted Answer

A)  not vote on issues that they do not understand. 
B)  gather information on issues that are not important. 
C)  understand the technology before voting on defence. 
D)  vote on issues without having complete information. 
A)  not vote on issues that they do not understand. 
B)  gather information on issues that are not important. 
C)  understand the technology before voting on defence. 
D)  vote on issues without having complete information.

Question 15

Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per tonne of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

Accepted Answer

A)  subsidy of $2.00 per tonne of rubber. 
B)  tax of more than $2.00 per tonne of rubber. 
C)  tax of $2.00 per tonne of rubber. 
D)  subsidy of more than $2.00 per tonne of rubber. 
A)  subsidy of $2.00 per tonne of rubber. 
B)  tax of more than $2.00 per tonne of rubber. 
C)  tax of $2.00 per tonne of rubber. 
D)  subsidy of more than $2.00 per tonne of rubber.

Question 16

Why will a private market be unable to produce the efficient quantity of public goods?

Accepted Answer

A)  Because the good is nonexcludable, so there is the free- rider problem. 
B)  Because the good's marginal cost is too low. 
C)  Because the good is rival, so no one will want to pay the producer for it. 
D)  All of the above answers are correct. 
A)  Because the good is nonexcludable, so there is the free- rider problem. 
B)  Because the good's marginal cost is too low. 
C)  Because the good is rival, so no one will want to pay the producer for it. 
D)  All of the above answers are correct.

Question 17

Which of the following is the BEST example of a common resource?

Accepted Answer

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

Question 18

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient level of university education, tuition is

Accepted Answer

A)  $16,000 per year. 
B)  $12,000 per year. 
C)  $10,000 per year. 
D)  $14,000 per year. 
A)  $16,000 per year. 
B)  $12,000 per year. 
C)  $10,000 per year. 
D)  $14,000 per year.

Question 19

Which of the following is the BEST example of a good that is nonrival and excludable?

Accepted Answer

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

Question 20

-The above figure shows the marginal benefit and marginal cost curves for a public good. The efficient quantity is

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  zero units supplied. 
A)  A. 
B)  B. 
C)  C. 
D)  zero units supplied.

If the consumption of a good or service by one person does not decrease the quantity available for another person, the good or service is

Which of the following is true about public goods?

-The table above shows the marginal costs and marginal benefits of university education. The marginal private benefit of university education at the efficient level of enrolment is

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

The principle of minimum differentiation reflects the

An externality occurs when

A free- rider problem is created by

A good or service or a resource is rival if

Which of the following illustrates the concept of external benefit?

A good or service or a resource is nonrival if

An example of an activity that generates an external cost is

Rational ignorance says that voters will

Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per tonne of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

Why will a private market be unable to produce the efficient quantity of public goods?

Which of the following is the BEST example of a common resource?

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient level of university education, tuition is

Which of the following is the BEST example of a good that is nonrival and excludable?

-The above figure shows the marginal benefit and marginal cost curves for a public good. The efficient quantity 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

If the consumption of a good or service by one person does not decrease the quantity available for another person, the good or service is

Which of the following is true about public goods?

-The table above shows the marginal costs and marginal benefits of university education. The marginal private benefit of university education at the efficient level of enrolment is

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

The principle of minimum differentiation reflects the

An externality occurs when

A free- rider problem is created by

A good or service or a resource is rival if

Which of the following illustrates the concept of external benefit?

A good or service or a resource is nonrival if

An example of an activity that generates an external cost is

Rational ignorance says that voters will

Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per tonne of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

Why will a private market be unable to produce the efficient quantity of public goods?

Which of the following is the BEST example of a common resource?

-The table above shows the marginal costs and marginal benefits of university education. With public provision of the efficient level of university education, tuition is

Which of the following is the BEST example of a good that is nonrival and excludable?

-The above figure shows the marginal benefit and marginal cost curves for a public good. The efficient quantity 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