Question 1

Which of the following goods best fits the characteristics of a private good?

Accepted Answer

A) national defense 
B) clean water 
C) a pizza 
D) police protection 
A) national defense 
B) clean water 
C) a pizza 
D) police protection

Question 2

No individual is willing to pay to provide the efficient level of a public good, since the:

Accepted Answer

A) marginal cost of production is zero. 
B) good will be nonrival and thus underconsumed. 
C) individual's marginal benefit is less than the marginal social benefit. 
D) marginal benefit of allowing one more individual to consume the good is zero. 
A) marginal cost of production is zero. 
B) good will be nonrival and thus underconsumed. 
C) individual's marginal benefit is less than the marginal social benefit. 
D) marginal benefit of allowing one more individual to consume the good is zero.

Question 3

If the market produces an efficient level of a good, then we know that the good must be ________ and in consumption.

Accepted Answer

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

Question 4

Common resources tend to be through private markets.

Accepted Answer

A) associated with prices that are too high 
B) be efficiently priced 
C) overconsumed 
D) underconsumed 
A) associated with prices that are too high 
B) be efficiently priced 
C) overconsumed 
D) underconsumed

Question 5

In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120.The congestion fee is:

Accepted Answer

A) an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets. 
B) an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area. 
C) the wrong policy tool for solving the problem of congestion; instead, motorists should be allowed to make deals to determine when and where individuals are permitted to drive. 
D) an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets and an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area. 
A) an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets. 
B) an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area. 
C) the wrong policy tool for solving the problem of congestion; instead, motorists should be allowed to make deals to determine when and where individuals are permitted to drive. 
D) an example of a Pigouvian tax aimed at regulating the use of the common resource of city streets and an attempt to internalize the costs due to traffic delays and congestion that are created by drivers in the specified area.

Question 6

Scenario: Ben and Nick Two individuals, Ben and Nick, are the only members of a hypothetical community.They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known.In addition, the marginal social cost (MSC) of the public good is known and is constant.
(Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben and Nick.At
Q₂, the marginal social benefit from the last unit of the public good:

Accepted Answer

A) is equal to the marginal social cost. 
B) is equal to the sum of P₄ + P₃. 
C) is the optimal level of public good provision. 
D) does not benefit Nick very much. 
A) is equal to the marginal social cost. 
B) is equal to the sum of P₄ + P₃. 
C) is the optimal level of public good provision. 
D) does not benefit Nick very much.

Question 7

A good is excludable if nonpayers can be prevented from consuming it.
False

Accepted Answer

A) True 
 B)False

Question 8

A Pigouvian tax can lead to the efficient level of production and consumption of:

Accepted Answer

A) a public good. 
B) a common resource. 
C) an artificially scarce good. 
D) no goods, since all taxes create inefficiency. 
A) a public good. 
B) a common resource. 
C) an artificially scarce good. 
D) no goods, since all taxes create inefficiency.

Question 9

A good is most likely to be artificially scarce if:

Accepted Answer

A) it is nonexcludable and nonrival. 
B) the seller is a monopolist. 
C) it is nonexcludable but rival. 
D) it is excludable but nonrival. 
A) it is nonexcludable and nonrival. 
B) the seller is a monopolist. 
C) it is nonexcludable but rival. 
D) it is excludable but nonrival.

Question 10

The North Woods is a public area that supports such a large moose population that the government sees no reason to regulate or limit the harvest of the moose.a) From an economic point of view, how is this situation going to lead to market failure?
b) You are appointed by the governor to regulate the harvest of moose from the North Woods.How could you use the three tools described in the text to maintain the efficient level of moose
harvest?

Accepted Answer

a) If hunters can freely harvest the moo

Question 11

No individual is willing to pay for the efficient quantity of a public good because the marginal benefit to an individual the marginal social benefit.

Accepted Answer

A) equals 
B) exceeds 
C) is less than 
D) may be equal to or greater than 
A) equals 
B) exceeds 
C) is less than 
D) may be equal to or greater than

Question 12

A private good is:

Accepted Answer

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

Question 13

Which of the following is the best example of a good whose consumption is not excludable?

Accepted Answer

A) clothing 
B) ice cream 
C) a taco 
D) national defense 
A) clothing 
B) ice cream 
C) a taco 
D) national defense

Question 14

The source of the inefficient use of artificially scarce goods is similar to the source of inefficiencies created by:

Accepted Answer

A) externalities.an 
B) oligopoly. 
C) price discrimination. 
D) a natural monopoly. 
A) externalities.an 
B) oligopoly. 
C) price discrimination. 
D) a natural monopoly.

Question 15

Many cities have placed toll booths on busy highways as a way to reduce congestion.In order to drive on this toll road, the driver must pay a price at the booth before proceeding.From an economist's point of view, why would a toll road be part of the solution for the problem of traffic congestion?

Accepted Answer

A highway without tolls is a common reso

Question 16

Traffic congestion causes higher costs and discomfort to residents of a city.An outcome like this arises for common resources because:

Accepted Answer

A) the marginal social cost of any one individual's use of the roads is less than the individual marginal cost. 
B) the marginal social cost of any one individual's use of the roads is greater than the individual marginal cost. 
C) the marginal social cost of any one individual's use of the roads equals the individual marginal cost. 
D) it is impossible to compare the marginal social cost of any one individual's use of the roads with the individual marginal cost. 
A) the marginal social cost of any one individual's use of the roads is less than the individual marginal cost. 
B) the marginal social cost of any one individual's use of the roads is greater than the individual marginal cost. 
C) the marginal social cost of any one individual's use of the roads equals the individual marginal cost. 
D) it is impossible to compare the marginal social cost of any one individual's use of the roads with the individual marginal cost.

Question 17

Figure: Demand and Marginal Revenue     (Figure: Demand and Marginal Revenue) The figure Demand and Marginal Revenue refers to a software upgrade.The producer incurred fixed costs of $10 million to produce the upgrade; the marginal cost of allowing consumers to download the upgrade is zero.What is the deadweight loss associated with the profit-maximizing price and quantity of the upgrade?

Accepted Answer

A) $0 
B) $1.25 million 
C) $3.125 million 
D) $6.25 million 
A) $0 
B) $1.25 million 
C) $3.125 million 
D) $6.25 million

Question 18

A common resource is a good that is:

Accepted Answer

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

Question 19

Any road without a toll can be thought of as a common resource, since it is nonexcludable and rival in consumption.False

Accepted Answer

A) True 
 B)False

Question 20

A low voter turnout in an election can be explained by noting that political action is a public good and people who don't vote get a free ride.False

Accepted Answer

A) True 
 B)False

Which of the following goods best fits the characteristics of a private good?

No individual is willing to pay to provide the efficient level of a public good, since the:

If the market produces an efficient level of a good, then we know that the good must be ________ and in consumption.

Common resources tend to be through private markets.

In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120.The congestion fee is:

A good is excludable if nonpayers can be prevented from consuming it. False

A Pigouvian tax can lead to the efficient level of production and consumption of:

A good is most likely to be artificially scarce if:

No individual is willing to pay for the efficient quantity of a public good because the marginal benefit to an individual the marginal social benefit.

A private good is:

Which of the following is the best example of a good whose consumption is not excludable?

The source of the inefficient use of artificially scarce goods is similar to the source of inefficiencies created by:

Many cities have placed toll booths on busy highways as a way to reduce congestion.In order to drive on this toll road, the driver must pay a price at the booth before proceeding.From an economist's point of view, why would a toll road be part of the solution for the problem of traffic congestion?

Traffic congestion causes higher costs and discomfort to residents of a city.An outcome like this arises for common resources because:

A common resource is a good that is:

Any road without a toll can be thought of as a common resource, since it is nonexcludable and rival in consumption.False

A low voter turnout in an election can be explained by noting that political action is a public good and people who don't vote get a free ride.False

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 17: Public Goods and Common Resources

Which of the following goods best fits the characteristics of a private good?

No individual is willing to pay to provide the efficient level of a public good, since the:

If the market produces an efficient level of a good, then we know that the good must be ________ and in consumption.

Common resources tend to be through private markets.

In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120.The congestion fee is:

A good is excludable if nonpayers can be prevented from consuming it. False

A Pigouvian tax can lead to the efficient level of production and consumption of:

A good is most likely to be artificially scarce if:

No individual is willing to pay for the efficient quantity of a public good because the marginal benefit to an individual the marginal social benefit.

A private good is:

Which of the following is the best example of a good whose consumption is not excludable?

The source of the inefficient use of artificially scarce goods is similar to the source of inefficiencies created by:

Many cities have placed toll booths on busy highways as a way to reduce congestion.In order to drive on this toll road, the driver must pay a price at the booth before proceeding.From an economist's point of view, why would a toll road be part of the solution for the problem of traffic congestion?

Traffic congestion causes higher costs and discomfort to residents of a city.An outcome like this arises for common resources because:

A common resource is a good that is:

Any road without a toll can be thought of as a common resource, since it is nonexcludable and rival in consumption.False

A low voter turnout in an election can be explained by noting that political action is a public good and people who don't vote get a free ride.False

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters