Question 1

A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 2

Some goods can be classified as either public goods or private goods depending on the circumstances.

Accepted Answer

A) True 
 B)False

Question 3

Public goods are both

Accepted Answer

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

Question 4

Table 11-1
This table describes the defense demands for three groups of people in Happyville. The second, third, and fourth column shows the quantity that a group will demand for a given price (the first column).
  
-Refer to Table 11-1.If the marginal cost of national defense is constant at $12 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A) 6 units 
B) 13 units 
C) 22 units 
D) 33 units 
A) 6 units 
B) 13 units 
C) 22 units 
D) 33 units

Question 5

Advocates of antipoverty programs believe that fighting poverty

Accepted Answer

A) can make everyone better off. 
B) is most successfully accomplished by charities. 
C) is most efficiently accomplished by the market. 
D) reduces the well-being of tax payers. 
A) can make everyone better off. 
B) is most successfully accomplished by charities. 
C) is most efficiently accomplished by the market. 
D) reduces the well-being of tax payers.

Question 6

Ken,Danita,and C.J.all enjoy watching the holiday lights displayed in their neighborhood.The homes association is considering displaying lights around the sign at the entrance to the neighborhood.Ken values the lights at $50,Danita at $40,and C.J.at $20.The lights cost $100.What should the homes association do?

Accepted Answer

A) Install the lights because people like them. 
B) Install the lights because the benefits outweigh the costs. 
C) Do not install the lights because the costs outweigh the benefits. 
D) Do not install the lights in order to prevent the Tragedy of the Commons problem of overuse. 
A) Install the lights because people like them. 
B) Install the lights because the benefits outweigh the costs. 
C) Do not install the lights because the costs outweigh the benefits. 
D) Do not install the lights in order to prevent the Tragedy of the Commons problem of overuse.

Question 7

Market failure with common resources occurs because

Accepted Answer

A) the government imposes a negative externality on everyone's consumption of the resource. 
B) common resources can become public goods through overuse. 
C) consumption can be privately profitable even when it is socially undesirable. 
D) All of the above are correct. 
A) the government imposes a negative externality on everyone's consumption of the resource. 
B) common resources can become public goods through overuse. 
C) consumption can be privately profitable even when it is socially undesirable. 
D) All of the above are correct.

Question 8

Each of the following explains why cost-benefit analysis is difficult except

Accepted Answer

A) there is no price with which to judge the value of a public good. 
B) surveys are often biased and unreliable. 
C) it is difficult to identify all factors that influence costs and benefits of public goods. 
D) government projects rarely have sufficient funding to complete them on time. 
A) there is no price with which to judge the value of a public good. 
B) surveys are often biased and unreliable. 
C) it is difficult to identify all factors that influence costs and benefits of public goods. 
D) government projects rarely have sufficient funding to complete them on time.

Question 9

Market failure associated with the free-rider problem is a result of

Accepted Answer

A) a problem associated with pollution. 
B) benefits that accrue to those who don't pay. 
C) losses that accrue to providers of the product. 
D) a project in which costs exceed benefits. 
A) a problem associated with pollution. 
B) benefits that accrue to those who don't pay. 
C) losses that accrue to providers of the product. 
D) a project in which costs exceed benefits.

Question 10

Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads.Which of the following statements would not be correct,assuming that the debit cards could be sold privately from person to person?

Accepted Answer

A) It would be a very egalitarian policy. 
B) The system would redistribute income from those who drive more to those who drive less. 
C) The system could potentially redistribute income from the rich to the poor if the poor drive less. 
D) The cost to the government of such a program would greatly outweigh the benefit to society. 
A) It would be a very egalitarian policy. 
B) The system would redistribute income from those who drive more to those who drive less. 
C) The system could potentially redistribute income from the rich to the poor if the poor drive less. 
D) The cost to the government of such a program would greatly outweigh the benefit to society.

Question 11

An overcrowded beach is an example of

Accepted Answer

A) a positive externality. 
B) a Tragedy of the Commons. 
C) an environmentally inefficient allocation of resources. 
D) an economically unfair allocation of resources. 
A) a positive externality. 
B) a Tragedy of the Commons. 
C) an environmentally inefficient allocation of resources. 
D) an economically unfair allocation of resources.

Question 12

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Accepted Answer

A) over time, the aquifer is likely to be overused. 
B) each farmer has a sufficient incentive to conserve the water. 
C) state governments have an incentive to insure that their farmers do not overuse the water. 
D) resources would be used more efficiently if the government paid for the pumps farmers use to get the water. 
A) over time, the aquifer is likely to be overused. 
B) each farmer has a sufficient incentive to conserve the water. 
C) state governments have an incentive to insure that their farmers do not overuse the water. 
D) resources would be used more efficiently if the government paid for the pumps farmers use to get the water.

Question 13

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Accepted Answer

A) allow individual shepherds to chose their own flock sizes. 
B) internalize the externality by subsidizing the production of sheep's wool. 
C) auction off a limited number of sheep-grazing permits. 
D) wait until the market corrects the problem. 
A) allow individual shepherds to chose their own flock sizes. 
B) internalize the externality by subsidizing the production of sheep's wool. 
C) auction off a limited number of sheep-grazing permits. 
D) wait until the market corrects the problem.

Question 14

A lighthouse might be considered a private good if

Accepted Answer

A) there is a second lighthouse nearby, thus preventing a monopoly. 
B) the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse. 
C) ships are able to enjoy the benefits of the lighthouse without paying for the benefit. 
D) a nearby port authority is able to avoid paying any fees to the lighthouse owner. 
A) there is a second lighthouse nearby, thus preventing a monopoly. 
B) the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse. 
C) ships are able to enjoy the benefits of the lighthouse without paying for the benefit. 
D) a nearby port authority is able to avoid paying any fees to the lighthouse owner.

Question 15

A lighthouse that primarily benefits a single port owner is more like a

Accepted Answer

A) public good. 
B) natural monopoly. 
C) private good. 
D) common resource. 
A) public good. 
B) natural monopoly. 
C) private good. 
D) common resource.

Question 16

Goods that are excludable include both

Accepted Answer

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

Question 17

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.6 to 1.9 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Accepted Answer

A) $70,000. 
B) $190,000. 
C) $260,000. 
D) $10,000,000. 
A) $70,000. 
B) $190,000. 
C) $260,000. 
D) $10,000,000.

Question 18

The Tragedy of the Commons

Accepted Answer

A) occurs most often with public goods. 
B) is only applicable to shared grazing rights among sheep herders. 
C) is eliminated when property rights are assigned to individuals. 
D) occurs when social incentives are in line with private incentives. 
A) occurs most often with public goods. 
B) is only applicable to shared grazing rights among sheep herders. 
C) is eliminated when property rights are assigned to individuals. 
D) occurs when social incentives are in line with private incentives.

Exam 11: Public Goods and Common Resources

A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.

Some goods can be classified as either public goods or private goods depending on the circumstances.

Public goods are both

Advocates of antipoverty programs believe that fighting poverty

Market failure with common resources occurs because

Each of the following explains why cost-benefit analysis is difficult except

Market failure associated with the free-rider problem is a result of

Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads.Which of the following statements would not be correct,assuming that the debit cards could be sold privately from person to person?

An overcrowded beach is an example of

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

A lighthouse might be considered a private good if

A lighthouse that primarily benefits a single port owner is more like a

Goods that are excludable include both

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.6 to 1.9 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

The Tragedy of the Commons

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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