Question 1

What characteristics do public goods and common resources have in common?

Accepted Answer

A)  both types of good are non-rival 
B)  both types of good are excludable 
C)  both types of good are rival 
D)  both types of good are non-excludable 
A)  both types of good are non-rival 
B)  both types of good are excludable 
C)  both types of good are rival 
D)  both types of good are non-excludable

Question 2

Private goods are:

Accepted Answer

A)  excludable and rival 
B)  non-excludable and rival 
C)  excludable and non-rival 
D)  non-excludable and non-rival 
A)  excludable and rival 
B)  non-excludable and rival 
C)  excludable and non-rival 
D)  non-excludable and non-rival

Question 3

If one thinks that driving privileges should be distributed equally:

Accepted Answer

A)  toll roads could be used as long as each car owner had an equal endowment of money to pay for road tolls 
B)  people with more expensive cars should be charged a higher toll 
C)  there is no solution to the congested road problem 
D)  toll roads would offer no solution to the problem of congested roads 
A)  toll roads could be used as long as each car owner had an equal endowment of money to pay for road tolls 
B)  people with more expensive cars should be charged a higher toll 
C)  there is no solution to the congested road problem 
D)  toll roads would offer no solution to the problem of congested roads

Question 4

Because the benefit each citizen receives from having an educated community is a public good:

Accepted Answer

A)  the free-rider problem causes the private market to undersupply education to the community 
B)  the government can potentially help the market reach a socially optimal level of education 
C)  a tax increase to pay for education could potentially make the community better off 
D)  all of the above are true 
A)  the free-rider problem causes the private market to undersupply education to the community 
B)  the government can potentially help the market reach a socially optimal level of education 
C)  a tax increase to pay for education could potentially make the community better off 
D)  all of the above are true

Question 5

A picnic table is an example of a public good.

Accepted Answer

A) True 
 B)False

Question 6

In the 1950s in Australia, estuarine crocodiles were hunted almost to extinction for their leather. This means the crocodiles were a:

Accepted Answer

A)  private good 
B)  public good 
C)  common resource 
D)  club good 
A)  private good 
B)  public good 
C)  common resource 
D)  club good

Question 7

Economists can get some sense about what value people put on their own lives by:

Accepted Answer

A)  evaluating their total asset portfolio 
B)  studying the risk they are willing to take in their investment decisions 
C)  comparing wages in risky and less risky occupations, controlling for other determinants of wages 
D)  None of the above will lead to sensible results 
A)  evaluating their total asset portfolio 
B)  studying the risk they are willing to take in their investment decisions 
C)  comparing wages in risky and less risky occupations, controlling for other determinants of wages 
D)  None of the above will lead to sensible results

Question 8

For both public goods and common resources, an externality arises because:

Accepted Answer

A)  something of value has no price attached to it 
B)  the goods are undervalued by society 
C)  the social optimum level of output is greater than market equilibrium 
D)  all of the above are true 
A)  something of value has no price attached to it 
B)  the goods are undervalued by society 
C)  the social optimum level of output is greater than market equilibrium 
D)  all of the above are true

Question 9

Why does society tend to produce too little basic research? What can the government do about it?

Accepted Answer

Basic research is a public good - once i

Question 10

Residents of Hang-Zhou, China, like seeing fireworks during their Chinese New Year celebration. Each of the city's one million residents places a value of $1 on the fireworks experience. The cost of providing the fireworks is $250 000. Which of the following statements is most correct?

Accepted Answer

A)  because the collective benefits exceed the cost, the private market will provide an efficient number of fireworks 
B)  an entrepreneur in Hang-Zhou is likely to provide some amount of fireworks for residents of the city and the provision level is likely to be efficient 
C)  fireworks are not excludable so private markets will not produce an efficient outcome 
D)  because China is a communist country, market incentives are irrelevant to how people behave 
A)  because the collective benefits exceed the cost, the private market will provide an efficient number of fireworks 
B)  an entrepreneur in Hang-Zhou is likely to provide some amount of fireworks for residents of the city and the provision level is likely to be efficient 
C)  fireworks are not excludable so private markets will not produce an efficient outcome 
D)  because China is a communist country, market incentives are irrelevant to how people behave

Question 11

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Accepted Answer

A) True 
 B)False

Question 12

Some advocates of anti-poverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. What does this have to do with the need for government intervention?

Accepted Answer

Eliminating poverty is not a good that t

Question 13

More roads do not solve traffic problems because they encourage people to live farther from work and thus use more road space.

Accepted Answer

A) True 
 B)False

Question 14

General scientific knowledge is so valuable, that a private company generating this knowledge would never need a government subsidy to be profitable.

Accepted Answer

A) True 
 B)False

Question 15

One of the most pressing concerns associated with the implementation of road congestion pricing policies can be resolved by:

Accepted Answer

A)  only charging tolls to those users who earn above a certain income 
B)  allowing free access to bicyclists and those who use fuel-efficient cars 
C)  employing barcode and debit card technologies to charge users 
D)  only charging tolls to visitors 
A)  only charging tolls to those users who earn above a certain income 
B)  allowing free access to bicyclists and those who use fuel-efficient cars 
C)  employing barcode and debit card technologies to charge users 
D)  only charging tolls to visitors

Question 16

Which of the following statements best describes the cause of 'overrun and over-trampled' national parks?

Accepted Answer

A)  park administrators do not use the best science available to manage park resources 
B)  national parks are treated as free goods by their visitors 
C)  national parks have never increased park visitation fees 
D)  the price of entrance to national parks has kept pace with other forms of recreation 
A)  park administrators do not use the best science available to manage park resources 
B)  national parks are treated as free goods by their visitors 
C)  national parks have never increased park visitation fees 
D)  the price of entrance to national parks has kept pace with other forms of recreation

Question 17

The market does not provide national defence because:

Accepted Answer

A)  national defence is a public good 
B)  national defence is subject to free-riders 
C)  national defence is a common resource 
D)  the value of national defence is difficult to measure 
A)  national defence is a public good 
B)  national defence is subject to free-riders 
C)  national defence is a common resource 
D)  the value of national defence is difficult to measure

Question 18

The government developed the patent system so that private inventors could make a reasonable profit from otherwise rival goods.

Accepted Answer

A) True 
 B)False

Question 19

A free rider is someone who receives the benefit of a good and pays for it through taxes.

Accepted Answer

A) True 
 B)False

Question 20

Private markets usually fail to provide lighthouses because:

Accepted Answer

A)  lighthouses cost too much to build, relative to their benefits 
B)  government intervention makes it hard for private lighthouse owners to compete in the market 
C)  ship captains have incentives to use lighthouses without paying 
D)  lighthouses are valued very little by ship captains these days 
A)  lighthouses cost too much to build, relative to their benefits 
B)  government intervention makes it hard for private lighthouse owners to compete in the market 
C)  ship captains have incentives to use lighthouses without paying 
D)  lighthouses are valued very little by ship captains these days

Exam 11: Public Goods and Common Resources

What characteristics do public goods and common resources have in common?

Private goods are:

If one thinks that driving privileges should be distributed equally:

Because the benefit each citizen receives from having an educated community is a public good:

A picnic table is an example of a public good.

In the 1950s in Australia, estuarine crocodiles were hunted almost to extinction for their leather. This means the crocodiles were a:

Economists can get some sense about what value people put on their own lives by:

For both public goods and common resources, an externality arises because:

Why does society tend to produce too little basic research? What can the government do about it?

Residents of Hang-Zhou, China, like seeing fireworks during their Chinese New Year celebration. Each of the city's one million residents places a value of $1 on the fireworks experience. The cost of providing the fireworks is $250 000. Which of the following statements is most correct?

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Some advocates of anti-poverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. What does this have to do with the need for government intervention?

More roads do not solve traffic problems because they encourage people to live farther from work and thus use more road space.

General scientific knowledge is so valuable, that a private company generating this knowledge would never need a government subsidy to be profitable.

One of the most pressing concerns associated with the implementation of road congestion pricing policies can be resolved by:

Which of the following statements best describes the cause of 'overrun and over-trampled' national parks?

The market does not provide national defence because:

The government developed the patent system so that private inventors could make a reasonable profit from otherwise rival goods.

A free rider is someone who receives the benefit of a good and pays for it through taxes.

Private markets usually fail to provide lighthouses because:

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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