Question 1

What is a good that is rival in consumption but not excludable

Accepted Answer

A) a public good 
B) a private good 
C) a club good 
D) a common resource 
A) a public good 
B) a private good 
C) a club good 
D) a common resource

Question 2

Why is simply asking people how much they value a highway not a reliable way of measuring the benefits and costs

Accepted Answer

A) Those who stand to gain have an incentive to tell the truth. 
B) Those who stand to lose have an incentive to exaggerate their true costs. 
C) Answers to the survey questions relating to cost will always be downwardly biased. 
D) Not everyone asked will be using the highway. 
A) Those who stand to gain have an incentive to tell the truth. 
B) Those who stand to lose have an incentive to exaggerate their true costs. 
C) Answers to the survey questions relating to cost will always be downwardly biased. 
D) Not everyone asked will be using the highway.

Question 3

When something of value has no price attached to it,such as a public good,what will likely happen

Accepted Answer

A) Externalities will be present. 
B) The good will be completely used up. 
C) Only those who are better off have to pay. 
D) Private companies will eventually produce the product and the good will no longer be free. 
A) Externalities will be present. 
B) The good will be completely used up. 
C) Only those who are better off have to pay. 
D) Private companies will eventually produce the product and the good will no longer be free.

Question 4

Apparently,human life does have an implicit dollar value,due to the observable fact that people take voluntary risks every day.

Accepted Answer

A) True 
 B)False

Question 5

When is a good excludable

Accepted Answer

A) when one person's use of the good diminishes another person's enjoyment of it 
B) when one person's use of the good increases another person's enjoyment of it 
C) when the government can regulate its availability 
D) when people can be prevented from using it 
A) when one person's use of the good diminishes another person's enjoyment of it 
B) when one person's use of the good increases another person's enjoyment of it 
C) when the government can regulate its availability 
D) when people can be prevented from using it

Question 6

To increase safety at a bad intersection,you must decide whether to install a traffic light in your home town at a cost of $20,000.If the traffic light reduces the risk of fatality by 0.5 percent and the value of a human life is about $10 million,what should you do

Accepted Answer

A) You should install the light because the expected benefit of $50,000 is greater than the cost. 
B) You should install the light because the expected benefit of $30,000 is greater than the cost. 
C) You should not install the light because the expected benefit of $20,000 is only equal to the cost. 
D) You should not install the light because the expected benefit of $5000 is less than the cost. 
A) You should install the light because the expected benefit of $50,000 is greater than the cost. 
B) You should install the light because the expected benefit of $30,000 is greater than the cost. 
C) You should not install the light because the expected benefit of $20,000 is only equal to the cost. 
D) You should not install the light because the expected benefit of $5000 is less than the cost.

Question 7

The Tragedy of the Commons will be evident when a growing number of hikers using the trails which leads to destruction of the ecosystem.How can this problem be corrected

Accepted Answer

A) The government could allow individual hikers to take responsibility for maintaining the trails. 
B) The externality could be internalized by subsidizing back country camp sites. 
C) The government could auction off a limited number of hiking permits. 
D) The government could provide more hiking trails. 
A) The government could allow individual hikers to take responsibility for maintaining the trails. 
B) The externality could be internalized by subsidizing back country camp sites. 
C) The government could auction off a limited number of hiking permits. 
D) The government could provide more hiking trails.

Question 8

Why are most lighthouses operated by the government

Accepted Answer

A) because of the free-rider problem 
B) because lighthouses are no longer valued by society 
C) because most lighthouses are only tourist attractions in provincial and national parks 
D) because shipping companies would not be able to afford lighthouse upkeep 
A) because of the free-rider problem 
B) because lighthouses are no longer valued by society 
C) because most lighthouses are only tourist attractions in provincial and national parks 
D) because shipping companies would not be able to afford lighthouse upkeep

Question 9

How is the appropriate level of government support for expanding general knowledge determined

Accepted Answer

A) It is determined by demand and supply. 
B) It is accurately determined by government. 
C) It can be easily measured by determining the amount where benefits equal cost. 
D) It is difficult to determine, since benefits are hard to measure. 
A) It is determined by demand and supply. 
B) It is accurately determined by government. 
C) It can be easily measured by determining the amount where benefits equal cost. 
D) It is difficult to determine, since benefits are hard to measure.

Question 10

Which of the following would be considered a public good

Accepted Answer

A) lobsters 
B) congested roads 
C) national defence 
D) open grazing land 
A) lobsters 
B) congested roads 
C) national defence 
D) open grazing land

Question 11

Which method could Banff National Park use to correct for overcrowding

Accepted Answer

A) Increase entrance fees and ensure that they keep pace with inflation each year. 
B) When the park gets too crowded, no more visitors are allowed. 
C) The park takes full advantage of the free market to correct for overcrowding. 
D) If Banff received additional support from the federal government, the overuse problem would be eliminated. 
A) Increase entrance fees and ensure that they keep pace with inflation each year. 
B) When the park gets too crowded, no more visitors are allowed. 
C) The park takes full advantage of the free market to correct for overcrowding. 
D) If Banff received additional support from the federal government, the overuse problem would be eliminated.

Question 12

Most goods in our economy are allocated in markets where buyers pay for what they receive and sellers are paid for what they provide.

Accepted Answer

A) True 
 B)False

Question 13

Some goods can be either common resources or public goods,depending on which of the following

Accepted Answer

A) whether the good is rival in consumption 
B) how policymakers deal with the good 
C) the marginal cost of the good 
D) whether the good is excludable 
A) whether the good is rival in consumption 
B) how policymakers deal with the good 
C) the marginal cost of the good 
D) whether the good is excludable

Question 14

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the government correct for this apparent market failure

Accepted Answer

Specific,technological knowled

Question 15

Given the table,place each of the following in the correct location in the table.   
a. congested toll roads
b. knowledge
c. fish in the ocean
d. national defence
e. congested nontoll roads
f. Internet service
g. the environment
h. fire protection
i. ice cream cones
j. uncongested toll roads
k. clothing
l. uncongested nontoll roads

Accepted Answer

The answer of Given the table,place each of the following...

Question 16

What characteristics do public goods and common resources have in common

Accepted Answer

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

Question 17

How is a cherry cheesecake classified

Accepted Answer

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

Question 18

Which of the following would be considered a common resource good

Accepted Answer

A) Internet service 
B) bottled natural mineral water 
C) uncongested toll roads 
D) fish in the ocean 
A) Internet service 
B) bottled natural mineral water 
C) uncongested toll roads 
D) fish in the ocean

Question 19

When do markets fail to allocate resources efficiently

Accepted Answer

A) when prices fluctuate 
B) when those with the property rights abuse their privileges 
C) when property rights are not well established 
D) when the government refuses to intervene in private markets 
A) when prices fluctuate 
B) when those with the property rights abuse their privileges 
C) when property rights are not well established 
D) when the government refuses to intervene in private markets

Question 20

A stairwell in a certain office building is always congested at noon and 5:00 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, with richer people paying 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, with richer people paying 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.

Exam 11: Public Goods and Common Resources

What is a good that is rival in consumption but not excludable

Why is simply asking people how much they value a highway not a reliable way of measuring the benefits and costs

When something of value has no price attached to it,such as a public good,what will likely happen

Apparently,human life does have an implicit dollar value,due to the observable fact that people take voluntary risks every day.

When is a good excludable

To increase safety at a bad intersection,you must decide whether to install a traffic light in your home town at a cost of $20,000.If the traffic light reduces the risk of fatality by 0.5 percent and the value of a human life is about $10 million,what should you do

The Tragedy of the Commons will be evident when a growing number of hikers using the trails which leads to destruction of the ecosystem.How can this problem be corrected

Why are most lighthouses operated by the government

How is the appropriate level of government support for expanding general knowledge determined

Which of the following would be considered a public good

Which method could Banff National Park use to correct for overcrowding

Most goods in our economy are allocated in markets where buyers pay for what they receive and sellers are paid for what they provide.

Some goods can be either common resources or public goods,depending on which of the following

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the government correct for this apparent market failure

What characteristics do public goods and common resources have in common

How is a cherry cheesecake classified

Which of the following would be considered a common resource good

When do markets fail to allocate resources efficiently

A stairwell in a certain office building is always congested at noon and 5:00 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

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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