Question 1

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Accepted Answer

A) Without prices, it is difficult to be sure how much people really value a good. 
B) Analysts can't be sure that the respondents to surveys are telling the truth. 
C) Analysis must include not only the cost of building the project but also the cost of maintenance, if any. 
D) People value goods differently if they are publicly provided rather than privately provided. 
A) Without prices, it is difficult to be sure how much people really value a good. 
B) Analysts can't be sure that the respondents to surveys are telling the truth. 
C) Analysis must include not only the cost of building the project but also the cost of maintenance, if any. 
D) People value goods differently if they are publicly provided rather than privately provided.

Question 2

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 p.m.The congestion is so bad that people have been complaining to the building's owner.Which of the following methods would be the most efficient way of reducing congestion?

Accepted Answer

A) Charge everyone who uses the stairwell when it is congested a fee based on their income so that richer people will pay more than poorer people. 
B) Encourage people to voluntarily keep off the stairwell during peak times. 
C) Charge everyone who uses the stairwell when it is congested the same fee.People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D) Hold a lottery to determine who wins the right to use the stairwell at peak times. 
A) Charge everyone who uses the stairwell when it is congested a fee based on their income so that richer people will pay more than poorer people. 
B) Encourage people to voluntarily keep off the stairwell during peak times. 
C) Charge everyone who uses the stairwell when it is congested the same fee.People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D) Hold a lottery to determine who wins the right to use the stairwell at peak times.

Question 3

Which of the following is not a reason why government agencies subsidize basic research?

Accepted Answer

A) The private market devotes too few resources to basic research. 
B) The general knowledge developed through basic research can be used without charge. 
C) The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D) The government wants to attract the brightest researchers away from private research firms. 
A) The private market devotes too few resources to basic research. 
B) The general knowledge developed through basic research can be used without charge. 
C) The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D) The government wants to attract the brightest researchers away from private research firms.

Question 4

Private companies will invest in medical research if

Accepted Answer

A) they will produce general knowledge. 
B) they will produce a specific product for which they may receive a patent. 
C) there is no government intervention in the market for medical products. 
D) others will benefit from their discoveries. 
A) they will produce general knowledge. 
B) they will produce a specific product for which they may receive a patent. 
C) there is no government intervention in the market for medical products. 
D) others will benefit from their discoveries.

Question 5

An example of a natural monopoly would be

Accepted Answer

A) a congested public freeway. 
B) an airline flight that has been overbooked. 
C) local cable television service. 
D) public parking. 
A) a congested public freeway. 
B) an airline flight that has been overbooked. 
C) local cable television service. 
D) public parking.

Question 6

Suppose that SmallCity,USA,is considering hiring an additional police officer.The reduction in crime is estimated to be worth $20 for each of SmallCity's 3,000 residents.What should the city do?

Accepted Answer

A) Hire the police officer because additional safety is priceless. 
B) Hire the police officer if the cost of the new officer is less than $60,000. 
C) Do not hire the police officer because the costs exceed the benefits. 
D) Hire the police officer only if the benefit to the residents exceeds $3,000. 
A) Hire the police officer because additional safety is priceless. 
B) Hire the police officer if the cost of the new officer is less than $60,000. 
C) Do not hire the police officer because the costs exceed the benefits. 
D) Hire the police officer only if the benefit to the residents exceeds $3,000.

Question 7

A vacation house in Colorado is

Accepted Answer

A) not rival in consumption and excludable. 
B) rival in consumption and excludable. 
C) not rival in consumption and not excludable. 
D) rival in consumption and not excludable. 
A) not rival in consumption and excludable. 
B) rival in consumption and excludable. 
C) not rival in consumption and not excludable. 
D) rival in consumption and not excludable.

Question 8

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Accepted Answer

A) reduced carbon monoxide pollution 
B) increased use of public transportation 
C) improved taxi service 
D) increased government revenues 
A) reduced carbon monoxide pollution 
B) increased use of public transportation 
C) improved taxi service 
D) increased government revenues

Question 9

Due to the externalities associated with public goods and common resources,

Accepted Answer

A) private markets will lead to an efficient allocation of resources. 
B) government intervention can potentially raise economic well-being. 
C) private markets will correct for the gain or loss to consumer surplus. 
D) the free-rider problem is eliminated. 
A) private markets will lead to an efficient allocation of resources. 
B) government intervention can potentially raise economic well-being. 
C) private markets will correct for the gain or loss to consumer surplus. 
D) the free-rider problem is eliminated.

Question 10

Which of the following goods is rival and not 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 11

When Susie uses a common resource and diminishes other people's enjoyment of it,she creates

Accepted Answer

A) a market force. 
B) an externality. 
C) an invisible hand. 
D) excludability. 
A) a market force. 
B) an externality. 
C) an invisible hand. 
D) excludability.

Question 12

The Tragedy of the Commons occurs because

Accepted Answer

A) government property is most heavily used by the wealthy. 
B) everyone deserves an equal share of government property. 
C) social and private incentives differ. 
D) established property rights create competition. 
A) government property is most heavily used by the wealthy. 
B) everyone deserves an equal share of government property. 
C) social and private incentives differ. 
D) established property rights create competition.

Question 13

The Tragedy of the Commons results when a good is

Accepted Answer

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

Question 14

The government provides public goods because

Accepted Answer

A) private markets would not produce any of the goods. 
B) private markets would not produce the efficient quantity of the goods. 
C) private markets would charge too high a price for the goods. 
D) the government produces public goods more efficiently than private markets can. 
A) private markets would not produce any of the goods. 
B) private markets would not produce the efficient quantity of the goods. 
C) private markets would charge too high a price for the goods. 
D) the government produces public goods more efficiently than private markets can.

Question 15

When something of value has no price attached to it,

Accepted Answer

A) externalities will be present. 
B) the product cannot be produced at any price. 
C) a natural monopoly will eventually produce the product, and the good will no longer be free. 
D) private companies will eventually produce the product, and the good will no longer be free. 
A) externalities will be present. 
B) the product cannot be produced at any price. 
C) a natural monopoly will eventually produce the product, and the good will no longer be free. 
D) private companies will eventually produce the product, and the good will no longer be free.

Question 16

If everyone benefits from helping the poor,

Accepted Answer

A) government intervention cannot improve social well-being. 
B) eliminating taxes aimed at redistributing income will make rich people better off. 
C) taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D) private markets can adequately provide charity programs to help the poor, despite free-rider problems. 
A) government intervention cannot improve social well-being. 
B) eliminating taxes aimed at redistributing income will make rich people better off. 
C) taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D) private markets can adequately provide charity programs to help the poor, despite free-rider problems.

Question 17

When one person uses a common resource,which of the following does not occur?

Accepted Answer

A) An externality will occur. 
B) Other people are worse off. 
C) It is difficult to charge the person for the use of the resource. 
D) No one else will be able to use the resource. 
A) An externality will occur. 
B) Other people are worse off. 
C) It is difficult to charge the person for the use of the resource. 
D) No one else will be able to use the resource.

Question 18

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 19

A free-rider problem exists for any good that is not

Accepted Answer

A) rival in consumption. 
B) a private good. 
C) free. 
D) excludable. 
A) rival in consumption. 
B) a private good. 
C) free. 
D) excludable.

Question 20

Which of the following is an example of a public good?

Accepted Answer

A) a candy bar 
B) a painting by Monet 
C) a beautiful sunset 
D) a crowded beach 
A) a candy bar 
B) a painting by Monet 
C) a beautiful sunset 
D) a crowded beach

Exam 11: Public Goods and Common Resources

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 p.m.The congestion is so bad that people have been complaining to the building's owner.Which of the following methods would be the most efficient way of reducing congestion?

Which of the following is not a reason why government agencies subsidize basic research?

Private companies will invest in medical research if

An example of a natural monopoly would be

Suppose that SmallCity,USA,is considering hiring an additional police officer.The reduction in crime is estimated to be worth $20 for each of SmallCity's 3,000 residents.What should the city do?

A vacation house in Colorado is

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Due to the externalities associated with public goods and common resources,

Which of the following goods is rival and not excludable?

When Susie uses a common resource and diminishes other people's enjoyment of it,she creates

The Tragedy of the Commons occurs because

The Tragedy of the Commons results when a good is

The government provides public goods because

When something of value has no price attached to it,

If everyone benefits from helping the poor,

When one person uses a common resource,which of the following does not occur?

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

A free-rider problem exists for any good that is not

Which of the following is an example of a public good?

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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