Question 1

National defence and basic research have in common:

Accepted Answer

A)  that they are both common resources 
B)  that they are both difficult to value 
C)  that they are both lucrative for the companies that provide them 
D)  that they are both natural monopolies 
A)  that they are both common resources 
B)  that they are both difficult to value 
C)  that they are both lucrative for the companies that provide them 
D)  that they are both natural monopolies

Question 2

Which of the following would be considered a common resource good?

Accepted Answer

A)  cable television 
B)  bottled natural mineral water 
C)  a congested public park 
D)  electricity consumption by a household 
A)  cable television 
B)  bottled natural mineral water 
C)  a congested public park 
D)  electricity consumption by a household

Question 3

Why might Ellen decide not to put on a fireworks show she knows many people will enjoy?

Accepted Answer

A)  Fireworks are dangerous and thus they cause externalities 
B)  Fireworks are a common resource and she is worried they will be overused 
C)  Fireworks are a public good and she doesn't want any free-riders 
D)  Fireworks are a club good and she hasn't assigned any property rights 
A)  Fireworks are dangerous and thus they cause externalities 
B)  Fireworks are a common resource and she is worried they will be overused 
C)  Fireworks are a public good and she doesn't want any free-riders 
D)  Fireworks are a club good and she hasn't assigned any property rights

Question 4

If all citizens in a certain city were given identical debit cards to pay for their use of toll roads, which of the following statements would be true if the debit cards could be sold privately from person to person?

Accepted Answer

A)  this would be a very egalitarian policy 
B)  this system would end up being a redistribution of income from those that drive more to those that drive less 
C)  this system could potentially be a redistribution of income from the rich to the poor if the poor drive less 
D)  all of the above are true 
A)  this would be a very egalitarian policy 
B)  this system would end up being a redistribution of income from those that drive more to those that drive less 
C)  this system could potentially be a redistribution of income from the rich to the poor if the poor drive less 
D)  all of the above are true

Question 5

In Australia, crocodiles are farmed for their leather and meat. Australian crocodile numbers have been increasing. In India, native crocodile species are protected and can't be harvested but populations have been falling. Explain why harvest in Australia has led to more crocodiles and contrast with India.

Accepted Answer

Differences in property-rights mean diff

Question 6

Once it becomes obvious that a common resource is being overused:

Accepted Answer

A)  market forces cause the use of the resource to shift to a sustainable level 
B)  society voluntarily limits its use of the good 
C)  it continues to be overused because individuals have no incentive to reduce their use 
D)  the good becomes a natural monopoly 
A)  market forces cause the use of the resource to shift to a sustainable level 
B)  society voluntarily limits its use of the good 
C)  it continues to be overused because individuals have no incentive to reduce their use 
D)  the good becomes a natural monopoly

Question 7

When one person uses a common resource, she diminishes other people's enjoyment of it. This is an example of:

Accepted Answer

A)  a market force 
B)  a negative externality 
C)  the 'invisible hand 
D)  excludability 
A)  a market force 
B)  a negative externality 
C)  the 'invisible hand 
D)  excludability

Question 8

What are two of the major difficulties of cost-benefit analysis?

Accepted Answer

People may not represent their preferenc

Question 9

Markets may allocate natural resources wastefully if:

Accepted Answer

A)  people get too greedy 
B)  property rights are neither well defined nor enforced 
C)  catching poachers is very easy 
D)  All of the above are possible 
A)  people get too greedy 
B)  property rights are neither well defined nor enforced 
C)  catching poachers is very easy 
D)  All of the above are possible

Question 10

Free-to-air television is an example of a club good.

Accepted Answer

A) True 
 B)False

Question 11

When private costs differ from social costs, which of the following must be present?

Accepted Answer

A)  excludable resources 
B)  a negative externality 
C)  a natural monopoly 
D)  poor profit incentive to capitalise on the resource 
A)  excludable resources 
B)  a negative externality 
C)  a natural monopoly 
D)  poor profit incentive to capitalise on the resource

Question 12

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Accepted Answer

A) True 
 B)False

Question 13

Government intervention becomes increasingly necessary to solve the problem of common resources as the population grows larger.

Accepted Answer

A) True 
 B)False

Question 14

Private ownership of a common resource works well when the resource is scarce.

Accepted Answer

A) True 
 B)False

Question 15

Pollution of water and air resources:

Accepted Answer

A)  can be solved by addressing the positive externalities 
B)  can be viewed as an example of a common resource problem 
C)  are viewed as a bastion of efficient market processes 
D)  can be solved by taxes on swine, called Pigovian taxes 
A)  can be solved by addressing the positive externalities 
B)  can be viewed as an example of a common resource problem 
C)  are viewed as a bastion of efficient market processes 
D)  can be solved by taxes on swine, called Pigovian taxes

Question 16

Why do governments tend to run programs that help the poor?

Accepted Answer

Advocates of social welfare argue that f

Question 17

The ocean remains one of the largest unregulated resources because:

Accepted Answer

A)  many countries have access to the ocean 
B)  it is difficult to get international cooperation among countries that hold different values 
C)  the oceans are so vast that enforcing any agreements would be difficult 
D)  all of the above are true 
A)  many countries have access to the ocean 
B)  it is difficult to get international cooperation among countries that hold different values 
C)  the oceans are so vast that enforcing any agreements would be difficult 
D)  all of the above are true

Question 18

If tuna fish are an oceanic common resource then:

Accepted Answer

A)  preventing over-harvest won't need international cooperation 
B)  fishers will try to limit their catches without government regulations 
C)  enforcing agreements to limit fishing will be difficult 
D)  all of the above 
A)  preventing over-harvest won't need international cooperation 
B)  fishers will try to limit their catches without government regulations 
C)  enforcing agreements to limit fishing will be difficult 
D)  all of the above

Question 19

When one person enjoys the benefit of the legal system, he reduces its benefit to others.

Accepted Answer

A) True 
 B)False

Question 20

Provision of electricity is a natural monopoly, but after a certain point it becomes a private good.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

National defence and basic research have in common:

Which of the following would be considered a common resource good?

Why might Ellen decide not to put on a fireworks show she knows many people will enjoy?

If all citizens in a certain city were given identical debit cards to pay for their use of toll roads, which of the following statements would be true if the debit cards could be sold privately from person to person?

Once it becomes obvious that a common resource is being overused:

When one person uses a common resource, she diminishes other people's enjoyment of it. This is an example of:

What are two of the major difficulties of cost-benefit analysis?

Markets may allocate natural resources wastefully if:

Free-to-air television is an example of a club good.

When private costs differ from social costs, which of the following must be present?

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Government intervention becomes increasingly necessary to solve the problem of common resources as the population grows larger.

Private ownership of a common resource works well when the resource is scarce.

Pollution of water and air resources:

Why do governments tend to run programs that help the poor?

The ocean remains one of the largest unregulated resources because:

If tuna fish are an oceanic common resource then:

When one person enjoys the benefit of the legal system, he reduces its benefit to others.

Provision of electricity is a natural monopoly, but after a certain point it becomes a private good.

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

Application: 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 and Business Strategy

Competition Policy

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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