Question 1

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Accepted Answer

A) undervalue knowledge in their pursuit of revenues. 
B) overuse their patents. 
C) tend to free-ride on the knowledge that others have developed. 
D) tend to rely on existing employee knowledge. 
A) undervalue knowledge in their pursuit of revenues. 
B) overuse their patents. 
C) tend to free-ride on the knowledge that others have developed. 
D) tend to rely on existing employee knowledge.

Question 2

Which of the following is not an advantage of road tolls as a way to reduce traffic?

Accepted Answer

A) They charge people based on consumption. 
B) They can help bring usage closer to its optimal level. 
C) Rates can differ according to the time of day. 
D) The administrative costs of collecting the tolls are almost zero, especially for local roads. 
A) They charge people based on consumption. 
B) They can help bring usage closer to its optimal level. 
C) Rates can differ according to the time of day. 
D) The administrative costs of collecting the tolls are almost zero, especially for local roads.

Question 3

Bill owns 3 acres of beautiful wooded land.He has created a short walking trail through the woods.Because the terrain is hilly,the only safe entrance to the trail is at the front of Bill's property.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.Because the trail is short,only about 50 people can comfortably enjoy it.This state park is an example of a good that is

Accepted Answer

A) both rival in consumption and excludable. 
B) neither rival in consumption nor excludable. 
C) nonrival in consumption and excludable. 
D) rival in consumption and nonexcludable. 
A) both rival in consumption and excludable. 
B) neither rival in consumption nor excludable. 
C) nonrival in consumption and excludable. 
D) rival in consumption and nonexcludable.

Question 4

Which of the following is not considered a public good?

Accepted Answer

A) national defense 
B) basic research 
C) fire protection 
D) fighting poverty 
A) national defense 
B) basic research 
C) fire protection 
D) fighting poverty

Question 5

The government often intervenes when private markets fail to provide an optimal level of certain goods and services.For example,the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another.Why might the private market not reach the socially optimal level of traffic without the help of government?

Accepted Answer

It is possible that everyone can agree t

Question 6

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Accepted Answer

Eliminating poverty is not a good that t

Question 7

Goods that are rival in consumption 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 8

When goods are not excludable

Accepted Answer

A) the goods will be produced as private goods but not as public goods. 
B) the goods will not be produced since no one values them. 
C) the free-rider problem prevents the private market from supplying them. 
D) the private market will produce the goods but will charge less for them than if they are produced as public goods. 
A) the goods will be produced as private goods but not as public goods. 
B) the goods will not be produced since no one values them. 
C) the free-rider problem prevents the private market from supplying them. 
D) the private market will produce the goods but will charge less for them than if they are produced as public goods.

Question 9

Roads can be considered either public goods or common resources,depending on how congested they are.

Accepted Answer

A) True 
 B)False

Question 10

It is commonly argued that national defense is a public good.Nevertheless,the weapons used by the U.S.military are produced by private firms.We can conclude that

Accepted Answer

A) resources would be used more efficiently if the government produced the weapons. 
B) resources would be used more efficiently if private firms provided national defense. 
C) weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable. 
D) national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable. 
A) resources would be used more efficiently if the government produced the weapons. 
B) resources would be used more efficiently if private firms provided national defense. 
C) weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable. 
D) national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable.

Question 11

Highway engineers have proposed improving a dangerous stretch of highway at a cost of $2 million.They expect that it will reduce the risk of someone dying in an accident over the life of the highway from 22.1 percent to 5.7 percent.The project would be worth doing as long as a human life is worth at least

Accepted Answer

A) $114,000. 
B) $328,000. 
C) $442,000. 
D) $10 million. 
A) $114,000. 
B) $328,000. 
C) $442,000. 
D) $10 million.

Question 12

The free-rider problem

Accepted Answer

A) forces the supply of a public good to exceed its demand. 
B) allows more people to pay for the public good than if it were a private good. 
C) explains why many local governments supply public goods. 
D) is reflected in the above-market price of a public good in comparison to a private good. 
A) forces the supply of a public good to exceed its demand. 
B) allows more people to pay for the public good than if it were a private good. 
C) explains why many local governments supply public goods. 
D) is reflected in the above-market price of a public good in comparison to a private good.

Question 13

The U.S.government protects fish,a common resource,by

Accepted Answer

A) subsidizing the fishing industry. 
B) heavily taxing competing industries. 
C) selling fishing licenses and regulating fish lengths. 
D) None of the above is correct. 
A) subsidizing the fishing industry. 
B) heavily taxing competing industries. 
C) selling fishing licenses and regulating fish lengths. 
D) None of the above is correct.

Question 14

Which of the following goods is rival and excludable?

Accepted Answer

A) an uncongested toll road 
B) an uncongested nontoll road 
C) a congested nontoll road 
D) a congested toll road 
A) an uncongested toll road 
B) an uncongested nontoll road 
C) a congested nontoll road 
D) a congested toll road

Question 15

Which of the following goods is rival in consumption and excludable?

Accepted Answer

A) a tornado siren 
B) an uncongested toll road 
C) a home 
D) the environment 
A) a tornado siren 
B) an uncongested toll road 
C) a home 
D) the environment

Question 16

Which of the following would be considered a private good?

Accepted Answer

A) national defense 
B) a public beach 
C) local cable television service 
D) a bottle of natural mineral water 
A) national defense 
B) a public beach 
C) local cable television service 
D) a bottle of natural mineral water

Question 17

A free rider is a person who

Accepted Answer

A) will only purchase a product on sale. 
B) receives the benefit of a good but avoids paying for it. 
C) can produce a good at no cost. 
D) takes advantage of tax loop-holes to lower his taxes. 
A) will only purchase a product on sale. 
B) receives the benefit of a good but avoids paying for it. 
C) can produce a good at no cost. 
D) takes advantage of tax loop-holes to lower his taxes.

Question 18

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 19

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Accepted Answer

A) Cows reproduce at a high rate and have adapted well to their environment. 
B) Public policies protect cows from predators and diseases. 
C) Cows are privately owned, whereas many endangered species are owned by no one. 
D) There is a natural ecological balance between the birth rate of cows and human consumption. 
A) Cows reproduce at a high rate and have adapted well to their environment. 
B) Public policies protect cows from predators and diseases. 
C) Cows are privately owned, whereas many endangered species are owned by no one. 
D) There is a natural ecological balance between the birth rate of cows and human consumption.

Question 20

Which of the following goods is not rival in consumption and not excludable?

Accepted Answer

A) a hiking trail 
B) a street light 
C) a bicycle 
D) a boat 
A) a hiking trail 
B) a street light 
C) a bicycle 
D) a boat

Exam 11: Public Goods and Common Resources

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Which of the following is not an advantage of road tolls as a way to reduce traffic?

Which of the following is not considered a public good?

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Goods that are rival in consumption include both

When goods are not excludable

Roads can be considered either public goods or common resources,depending on how congested they are.

It is commonly argued that national defense is a public good.Nevertheless,the weapons used by the U.S.military are produced by private firms.We can conclude that

The free-rider problem

The U.S.government protects fish,a common resource,by

Which of the following goods is rival and excludable?

Which of the following goods is rival in consumption and excludable?

Which of the following would be considered a private good?

A free rider is a person who

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Which of the following goods is not rival in consumption and not excludable?

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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