Question 1

What causes market failure associated with the free-rider problem

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 2

In 2014,what were per-person expenditures on national defence in Canada

Accepted Answer

A) $340 
B) $460 
C) $605 
D) $2150 
A) $340 
B) $460 
C) $605 
D) $2150

Question 3

Consider the following problems: overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems all have in common

Accepted Answer

A) Private markets could easily solve them if governments let the markets function on their own. 
B) They would all go away if an intensive public-information campaign was made. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the necessary result of market economies. 
A) Private markets could easily solve them if governments let the markets function on their own. 
B) They would all go away if an intensive public-information campaign was made. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the necessary result of market economies.

Question 4

What are common resources

Accepted Answer

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

Question 5

What does it mean when a good is excludable

Accepted Answer

A) One person's use of the good diminishes another person's ability to use it. 
B) People can be prevented from using the good. 
C) No more than one person can use the good at a time. 
D) Everyone will be excluded from obtaining the good. 
A) One person's use of the good diminishes another person's ability to use it. 
B) People can be prevented from using the good. 
C) No more than one person can use the good at a time. 
D) Everyone will be excluded from obtaining the good.

Question 6

Why do elephants face the threat of extinction while cows do not

Accepted Answer

A) Cattle are a valuable source of income for many people and elephants have no market value. 
B) There is a high demand for products that come only from cows. 
C) There are still lots of cattle that roam free while most elephants are in zoos. 
D) Cattle are owned by ranchers, while elephants are owned by no one. 
A) Cattle are a valuable source of income for many people and elephants have no market value. 
B) There is a high demand for products that come only from cows. 
C) There are still lots of cattle that roam free while most elephants are in zoos. 
D) Cattle are owned by ranchers, while elephants are owned by no one.

Question 7

Why is national defence provided by the government

Accepted Answer

A) It is impossible for private markets to produce public goods. 
B) Products provided by the government can be produced more efficiently. 
C) Free riders make it difficult for private markets to supply the socially optimal quantity. 
D) If the good were produced in private markets, most likely too much of the good would be produced. 
A) It is impossible for private markets to produce public goods. 
B) Products provided by the government can be produced more efficiently. 
C) Free riders make it difficult for private markets to supply the socially optimal quantity. 
D) If the good were produced in private markets, most likely too much of the good would be produced.

Question 8

Goods that are not excludable are usually which of the following

Accepted Answer

A) higher priced than excludable goods 
B) higher priced than rival in consumption goods 
C) in short supply 
D) free of charge 
A) higher priced than excludable goods 
B) higher priced than rival in consumption goods 
C) in short supply 
D) free of charge

Question 9

Why is a cost-benefit analysis of a highway difficult to conduct

Accepted Answer

A) Analysts cannot estimate the explicit cost of a project that has not been completed. 
B) Analysts are unlikely to have access to costs on similar projects. 
C) Analysts are not able to consider the opportunity cost of resources. 
D) Analysts do not have a price with which to judge the value of the highway. 
A) Analysts cannot estimate the explicit cost of a project that has not been completed. 
B) Analysts are unlikely to have access to costs on similar projects. 
C) Analysts are not able to consider the opportunity cost of resources. 
D) Analysts do not have a price with which to judge the value of the highway.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in their income-earning potential),what is the most reasonable conclusion to draw

Accepted Answer

A) It is possible for a retired or disabled person to have no value to society. 
B) Construction workers in high-rise buildings are more valuable than average office workers. 
C) Retired people who volunteer in their communities are more valuable than physicians. 
D) All workers have equal value. 
A) It is possible for a retired or disabled person to have no value to society. 
B) Construction workers in high-rise buildings are more valuable than average office workers. 
C) Retired people who volunteer in their communities are more valuable than physicians. 
D) All workers have equal value.

Question 12

Why are the public goods not excludable

Accepted Answer

A) They may be socially desirable but not privately profitable. 
B) They may be socially desirable and therefore will be provided by both the government and as a private good. 
C) They may be socially desirable and have a lower price so more consumers will be able to afford them. 
D) They may be socially desirable but are still generally taxed by the government. 
A) They may be socially desirable but not privately profitable. 
B) They may be socially desirable and therefore will be provided by both the government and as a private good. 
C) They may be socially desirable and have a lower price so more consumers will be able to afford them. 
D) They may be socially desirable but are still generally taxed by the government.

Question 13

Why has a lighthouse long been considered an example of a public good

Accepted Answer

A) The owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. 
B) There is rarely another lighthouse nearby to provide competition. 
C) A nearby port authority cannot avoid paying fees to the lighthouse owner. 
D) All passing ships are able to enjoy the benefits of the lighthouse without paying. 
A) The owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. 
B) There is rarely another lighthouse nearby to provide competition. 
C) A nearby port authority cannot avoid paying fees to the lighthouse owner. 
D) All passing ships are able to enjoy the benefits of the lighthouse without paying.

Question 14

Why do private markets usually fail to provide lighthouses

Accepted Answer

A) Lighthouses cost too much to build relative to their benefits. 
B) Government intervention makes it hard for private lighthouse owners to compete in the market. 
C) Ship captains have incentives to use lighthouses without paying. 
D) Lighthouses are valued very little by ship captains these days. 
A) Lighthouses cost too much to build relative to their benefits. 
B) Government intervention makes it hard for private lighthouse owners to compete in the market. 
C) Ship captains have incentives to use lighthouses without paying. 
D) Lighthouses are valued very little by ship captains these days.

Question 15

Why are too few resources devoted to the creation of knowledge

Accepted Answer

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

Question 16

Which claim do advocates of antipoverty programs make

Accepted Answer

A) They are most successfully done by charities. 
B) They are a public good. 
C) They can be done efficiently by the market system. 
D) They should not be done with tax dollars. 
A) They are most successfully done by charities. 
B) They are a public good. 
C) They can be done efficiently by the market system. 
D) They should not be done with tax dollars.

Question 17

Advocates of antipoverty programs claim that fighting poverty is a public good.

Accepted Answer

A) True 
 B)False

Question 18

Four friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Banff,Alberta.Unfortunately,the condominium does not come with maid service.Everyone values clean dishes,but the fact that unwashed dishes pile up in the sink would best be explained by an economist who understands that clean dishes in the cupboard reflect which of the following

Accepted Answer

A) a common resource problem 
B) a problem similar to cost-benefit analysis for public projects 
C) household behaviour of the invisible hand 
D) a negative externality for whoever does the dishes 
A) a common resource problem 
B) a problem similar to cost-benefit analysis for public projects 
C) household behaviour of the invisible hand 
D) a negative externality for whoever does the dishes

Question 19

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.How can policymakers evaluate the costs and benefits of this proposal

Accepted Answer

A) The costs cannot be measured in the same units as the benefits. 
B) Policymakers need to calculate the flow of the traffic. 
C) Quantification of the benefit received from saving a human life is a straightforward process. 
D) Policymakers must put a dollar value on human life. 
A) The costs cannot be measured in the same units as the benefits. 
B) Policymakers need to calculate the flow of the traffic. 
C) Quantification of the benefit received from saving a human life is a straightforward process. 
D) Policymakers must put a dollar value on human life.

Question 20

When are externalities present in a market

Accepted Answer

A) whenever a shortage exists 
B) whenever the price is higher than equilibrium price 
C) whenever private costs differ from social costs 
D) whenever the seller is not making a profit 
A) whenever a shortage exists 
B) whenever the price is higher than equilibrium price 
C) whenever private costs differ from social costs 
D) whenever the seller is not making a profit

Exam 11: Public Goods and Common Resources

What causes market failure associated with the free-rider problem

In 2014,what were per-person expenditures on national defence in Canada

Consider the following problems: overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems all have in common

What are common resources

What does it mean when a good is excludable

Why do elephants face the threat of extinction while cows do not

Why is national defence provided by the government

Goods that are not excludable are usually which of the following

Why is a cost-benefit analysis of a highway difficult to conduct

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

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in their income-earning potential),what is the most reasonable conclusion to draw

Why are the public goods not excludable

Why has a lighthouse long been considered an example of a public good

Why do private markets usually fail to provide lighthouses

Why are too few resources devoted to the creation of knowledge

Which claim do advocates of antipoverty programs make

Advocates of antipoverty programs claim that fighting poverty is a public good.

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.How can policymakers evaluate the costs and benefits of this proposal

When are externalities present in a market

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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