Question 1

A government ban on a good that suffers from overconsumption may be ineffective if the:

Accepted Answer

A) likelihood of being caught breaking the ban is high. 
B) likelihood of being caught breaking the ban is very low. 
C) punishment for breaking the ban is severe. 
D) public did not participate in setting the punishment for breaking the ban. 
A) likelihood of being caught breaking the ban is high. 
B) likelihood of being caught breaking the ban is very low. 
C) punishment for breaking the ban is severe. 
D) public did not participate in setting the punishment for breaking the ban.

Question 2

An artificially scarce good is:

Accepted Answer

A) rival in consumption and excludable. 
B) excludable, but not rival in consumption. 
C) rival in consumption, but not excludable. 
D) neither rival in consumption nor excludable. 
A) rival in consumption and excludable. 
B) excludable, but not rival in consumption. 
C) rival in consumption, but not excludable. 
D) neither rival in consumption nor excludable.

Question 3

Which type of good is neither rival in consumption nor excludable?

Accepted Answer

A) Common resource 
B) Private 
C) Public 
D) Artificially scarce 
A) Common resource 
B) Private 
C) Public 
D) Artificially scarce

Question 4

Which of the following goods is likely to cause a market failure and be undersupplied?

Accepted Answer

A) Research 
B) Orange juice 
C) River water 
D) Grazing pasture 
A) Research 
B) Orange juice 
C) River water 
D) Grazing pasture

Question 5

Which of the following is a good that is rival in consumption?

Accepted Answer

A) A sweater 
B) Bottled water 
C) Tap water 
D) All of these are goods that are rival in consumption. 
A) A sweater 
B) Bottled water 
C) Tap water 
D) All of these are goods that are rival in consumption.

Question 6

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the tragedy of the commons if:

Accepted Answer

A) the community agrees to aid in enforcement. 
B) the country has the resources to enforce them. 
C) the community participates in setting the punishments for breaking them. 
D) None of these are true. 
A) the community agrees to aid in enforcement. 
B) the country has the resources to enforce them. 
C) the community participates in setting the punishments for breaking them. 
D) None of these are true.

Question 7

Which of the following is a public good?

Accepted Answer

A) National Defense 
B) A library 
C) Timber 
D) Natural gas 
A) National Defense 
B) A library 
C) Timber 
D) Natural gas

Question 8

Which of the following is not a public good that the government can make excludable?

Accepted Answer

A) Toll roads 
B) City buses 
C) State colleges 
D) National Defense 
A) Toll roads 
B) City buses 
C) State colleges 
D) National Defense

Question 9

When what people pay for a good does not necessarily reflect the real value they place on it, it is likely that the good:

Accepted Answer

A) is nonrivalrous. 
B) will be undersupplied. 
C) is easily excludable. 
D) is not socially desirable. 
A) is nonrivalrous. 
B) will be undersupplied. 
C) is easily excludable. 
D) is not socially desirable.

Question 10

Government intervention can be productive and efficiency enhancing:

Accepted Answer

A) whenever the marginal social benefit is positive. 
B) in markets for common resources. 
C) because the government always acts with altruistic motives. 
D) in all markets except those for public goods. 
A) whenever the marginal social benefit is positive. 
B) in markets for common resources. 
C) because the government always acts with altruistic motives. 
D) in all markets except those for public goods.

Question 11

The free rider problem arises when a good is _______ and the tragedy of the commons arises when a good is ________________.

Accepted Answer

A) nonexcludable; both rival and nonexcludable 
B) rival; both rival and nonexcludable 
C) both rival and nonexcludable; rival 
D) both rival and nonexcludable; excludable 
A) nonexcludable; both rival and nonexcludable 
B) rival; both rival and nonexcludable 
C) both rival and nonexcludable; rival 
D) both rival and nonexcludable; excludable

Question 12

Tradable allowances may be a better solution to common-resource problems than quotas because tradable allowances:

Accepted Answer

A) allocate the good without government intervention. 
B) ensure that the resource is allocated to those with the highest willingness to pay, while quotas do not. 
C) are more equitable than quotas. 
D) allow the government to set a specific amount of the good to be consumed, while quotas do not. 
A) allocate the good without government intervention. 
B) ensure that the resource is allocated to those with the highest willingness to pay, while quotas do not. 
C) are more equitable than quotas. 
D) allow the government to set a specific amount of the good to be consumed, while quotas do not.

Question 13

When a good is not easily excludable, what people pay for it will:

Accepted Answer

A) reflect the real value they place on it. 
B) exactly equal the social benefit of the good. 
C) not necessarily reflect the real value they place on it. 
D) be greater than the social benefit of the good. 
A) reflect the real value they place on it. 
B) exactly equal the social benefit of the good. 
C) not necessarily reflect the real value they place on it. 
D) be greater than the social benefit of the good.

Question 14

Which of the following is a way the government can enhance efficiency through the management of a common resource?

Accepted Answer

A) Ban the good 
B) Set quotas for the good 
C) Government ownership of the good 
D) All of these can be effective and efficiency-enhancing solutions. 
A) Ban the good 
B) Set quotas for the good 
C) Government ownership of the good 
D) All of these can be effective and efficiency-enhancing solutions.

Question 15

What result can we expect to see when goods are nonexcludable?

Accepted Answer

A) Consumers demand a higher quantity than they would if they had to pay for what they consumed. 
B) Consumers demand a lower quantity than they would if they had to pay for what they consumed. 
C) Firms supply a lower quantity than they would if they incurred the full costs of the provision of the good. 
D) Firms supply a higher quantity than they would if they had to pay for what they supplied. 
A) Consumers demand a higher quantity than they would if they had to pay for what they consumed. 
B) Consumers demand a lower quantity than they would if they had to pay for what they consumed. 
C) Firms supply a lower quantity than they would if they incurred the full costs of the provision of the good. 
D) Firms supply a higher quantity than they would if they had to pay for what they supplied.

Question 16

In many areas, local governments have placed limits on how many fish an individual can catch in a single day. This regulation is likely in place because without it: the free rider problem would exist. fish are a nonexcludable good. fish are a rival good.

Accepted Answer

A) II only 
B) I and II only 
C) II and III only 
D) I, II, and III 
A) II only 
B) I and II only 
C) II and III only 
D) I, II, and III

Question 17

All solutions to market failures in markets for public goods:

Accepted Answer

A) try to force the correction of externalities. 
B) must be provided by the government. 
C) are not perfect, and total surplus cannot be maximized in these markets. 
D) need to be accepted by the affected parties to be effective. 
A) try to force the correction of externalities. 
B) must be provided by the government. 
C) are not perfect, and total surplus cannot be maximized in these markets. 
D) need to be accepted by the affected parties to be effective.

Question 18

If the punishment associated with breaking a government ban is not severe enough, it may:

Accepted Answer

A) not alter the trade-offs enough to change the consumption patterns of the banned good. 
B) increase consumption of the good, exaggerating the problem. 
C) still decrease consumption of the good if the price of the good changes. 
D) still be effective if it gains enough media attention. 
A) not alter the trade-offs enough to change the consumption patterns of the banned good. 
B) increase consumption of the good, exaggerating the problem. 
C) still decrease consumption of the good if the price of the good changes. 
D) still be effective if it gains enough media attention.

Question 19

Which of the following is not a solution to the market failure that occurs with public goods?

Accepted Answer

A) Changing social norms 
B) Government regulation of the market 
C) Privatization of the good 
D) Setting a very specific quota on consumption 
A) Changing social norms 
B) Government regulation of the market 
C) Privatization of the good 
D) Setting a very specific quota on consumption

Question 20

Tradable permits are useful in allocating common resources because:

Accepted Answer

A) the depletion of common resources imposes a negative externality. 
B) the problem of overconsumption can be addressed. 
C) the socially optimal quantity is not the same as the individual consumer's optimal quantity. 
D) All of these are true. 
A) the depletion of common resources imposes a negative externality. 
B) the problem of overconsumption can be addressed. 
C) the socially optimal quantity is not the same as the individual consumer's optimal quantity. 
D) All of these are true.

Exam 19: Public Goods and Common Resources

A government ban on a good that suffers from overconsumption may be ineffective if the:

An artificially scarce good is:

Which type of good is neither rival in consumption nor excludable?

Which of the following goods is likely to cause a market failure and be undersupplied?

Which of the following is a good that is rival in consumption?

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the tragedy of the commons if:

Which of the following is a public good?

Which of the following is not a public good that the government can make excludable?

When what people pay for a good does not necessarily reflect the real value they place on it, it is likely that the good:

Government intervention can be productive and efficiency enhancing:

The free rider problem arises when a good is _______ and the tragedy of the commons arises when a good is ________________.

Tradable allowances may be a better solution to common-resource problems than quotas because tradable allowances:

When a good is not easily excludable, what people pay for it will:

Which of the following is a way the government can enhance efficiency through the management of a common resource?

What result can we expect to see when goods are nonexcludable?

In many areas, local governments have placed limits on how many fish an individual can catch in a single day. This regulation is likely in place because without it: the free rider problem would exist. fish are a nonexcludable good. fish are a rival good.

All solutions to market failures in markets for public goods:

If the punishment associated with breaking a government ban is not severe enough, it may:

Which of the following is not a solution to the market failure that occurs with public goods?

Tradable permits are useful in allocating common resources because:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Game Theory and Strategic Thinking

Information

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

The free rider problem arises when a good is _ and the tragedy of the commons arises when a good is __________.