Question 1

When a good is nonrival and nonexcludable, it is a

Accepted Answer

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

Question 2

Use the figure below to answer the following questions.
   
Figure 17.3.1
-Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource.The equilibrium quantity in an unregulated market is

Accepted Answer

A) 0 kilograms a week. 
B) 4,000 kilograms a week. 
C) 3,000 kilograms a week. 
D) 5,000 kilograms a week. 
E) 1,000 kilograms a week. 
A) 0 kilograms a week. 
B) 4,000 kilograms a week. 
C) 3,000 kilograms a week. 
D) 5,000 kilograms a week. 
E) 1,000 kilograms a week. B

Question 3

Which of the following quotations describes a nonexcludable and nonrival good?

Accepted Answer

A) "Mom, Ashley is looking at me." 
B) "Mom, Morgan won't let me watch the Backyardigans because she is watching Dora the Explorer." 
C) "Mom, Harrison won't let me in his room." 
D) "Mom, Taylor told me on the phone that he is also watching the Backyardigans on TV at his house, but I'm not allowed to go over there." 
E) "Mom said everyone in this house gets to enjoy the flowers in the garden." 
A) "Mom, Ashley is looking at me." 
B) "Mom, Morgan won't let me watch the Backyardigans because she is watching Dora the Explorer." 
C) "Mom, Harrison won't let me in his room." 
D) "Mom, Taylor told me on the phone that he is also watching the Backyardigans on TV at his house, but I'm not allowed to go over there." 
E) "Mom said everyone in this house gets to enjoy the flowers in the garden." E

Question 4

When a good is rival and excludable, it is a

Accepted Answer

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

Question 5

A common resource is

Accepted Answer

A) rival and either excludable or nonexcludable. 
B) excludable and either rival or nonrival. 
C) rival and excludable. 
D) rival and nonexcludable. 
E) nonexcludable and either rival or nonrival. 
A) rival and either excludable or nonexcludable. 
B) excludable and either rival or nonrival. 
C) rival and excludable. 
D) rival and nonexcludable. 
E) nonexcludable and either rival or nonrival.

Question 6

Use the figure below to answer the following question.
   
Figure 17.2.2
-Refer to Figure 17.2.2.The graph shows the marginal social benefit and marginal social cost of a garbage disposal system in a city of 1 million people.If voters are well informed about the costs and benefits of the garbage disposal system, the political equilibrium of garbage is

Accepted Answer

A) 2.0 million tonnes a day. 
B) 1.5 million tonnes a day. 
C) 2.5 million tonnes a day. 
D) 4.0 million tonnes a day. 
E) 0 million tonnes a day. 
A) 2.0 million tonnes a day. 
B) 1.5 million tonnes a day. 
C) 2.5 million tonnes a day. 
D) 4.0 million tonnes a day. 
E) 0 million tonnes a day.

Question 7

Rational ignorance suggests that a voter should stop acquiring more information about an issue when

Accepted Answer

A) the marginal benefit from acquiring the information equals zero. 
B) the total cost of acquiring the information is minimized. 
C) the total benefit from acquiring the information is maximized. 
D) the marginal cost of acquiring the information is equal to the marginal benefit derived from the information. 
E) the marginal cost of acquiring the information is greater than zero. 
A) the marginal benefit from acquiring the information equals zero. 
B) the total cost of acquiring the information is minimized. 
C) the total benefit from acquiring the information is maximized. 
D) the marginal cost of acquiring the information is equal to the marginal benefit derived from the information. 
E) the marginal cost of acquiring the information is greater than zero.

Question 8

A natural monopoly good is

Accepted Answer

A) nonrival. 
B) excludable. 
C) rival. 
D) nonexcludable. 
E) both A and B. 
A) nonrival. 
B) excludable. 
C) rival. 
D) nonexcludable. 
E) both A and B.

Question 9

Suppose Bryan Adams wants to perform a concert in the City Park in Corner Brook Newfoundland.The city officials argue that the only way the concert can be given permission to be performed in the City Park is if it is free of charge.If Bryan Adams agrees to performing free of charge, then the concert is

Accepted Answer

A) excludable. 
B) a private good. 
C) nonexcludable. 
D) rival. 
E) rival and nonexcludable. 
A) excludable. 
B) a private good. 
C) nonexcludable. 
D) rival. 
E) rival and nonexcludable.

Question 10

A Canada Day fireworks display

Accepted Answer

A) does not have a free-rider problem. 
B) has a free-rider problem that cannot be eliminated. 
C) has a free-rider problem that can be eliminated by using taxes paid by area residents to finance the display. 
D) is a private good. 
E) is a natural monopoly good. 
A) does not have a free-rider problem. 
B) has a free-rider problem that cannot be eliminated. 
C) has a free-rider problem that can be eliminated by using taxes paid by area residents to finance the display. 
D) is a private good. 
E) is a natural monopoly good.

Question 11

Common resources are overused because

Accepted Answer

A) the marginal private benefit of operating a boat is the quantity of fish a boat can catch. 
B) the social benefits outweigh the private benefits. 
C) the marginal private benefit will always exceed the marginal social cost. 
D) external costs are not considered. 
E) social costs are controlled by production quotas. 
A) the marginal private benefit of operating a boat is the quantity of fish a boat can catch. 
B) the social benefits outweigh the private benefits. 
C) the marginal private benefit will always exceed the marginal social cost. 
D) external costs are not considered. 
E) social costs are controlled by production quotas.

Question 12

Suppose in a country there are only two persons.Person A is willing to pay $50 to have one unit of a public good produced; person B is willing to pay $60 to have one unit of a public good produced and $50 to have two units produced.A point on the country's marginal social benefit curve for this public good is a price of ________ and quantity demanded of ________.

Accepted Answer

A) $50; 1 unit 
B) $60; 1 unit 
C) $110; 2 units 
D) $110; 1 unit 
E) $55; 1 unit 
A) $50; 1 unit 
B) $60; 1 unit 
C) $110; 2 units 
D) $110; 1 unit 
E) $55; 1 unit

Question 13

Free riding can occur if a good is

Accepted Answer

A) excludable and rival. 
B) excludable and nonrival. 
C) a private good. 
D) nonexcludable and rival. 
E) nonexcludable and nonrival. 
A) excludable and rival. 
B) excludable and nonrival. 
C) a private good. 
D) nonexcludable and rival. 
E) nonexcludable and nonrival.

Question 14

If property rights are assigned to a common resource, then the

Accepted Answer

A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost. 
A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost.

Question 15

The budget of a government department is likely to be efficient if

Accepted Answer

A) voters are well informed. 
B) there is rational voter ignorance combined with special interest lobbying. 
C) the political equilibrium can be described in terms of public choice theory. 
D) bureaucrats are rationally ignorant. 
E) there are negative externalities. 
A) voters are well informed. 
B) there is rational voter ignorance combined with special interest lobbying. 
C) the political equilibrium can be described in terms of public choice theory. 
D) bureaucrats are rationally ignorant. 
E) there are negative externalities.

Question 16

Governments provide public goods such as national defence because

Accepted Answer

A) governments are more efficient than private firms at producing public goods. 
B) of the free-rider problem, which results in underproduction by private firms. 
C) people do not value national defence very highly. 
D) of the potential that private firms will make excess profit. 
E) of external costs. 
A) governments are more efficient than private firms at producing public goods. 
B) of the free-rider problem, which results in underproduction by private firms. 
C) people do not value national defence very highly. 
D) of the potential that private firms will make excess profit. 
E) of external costs.

Question 17

Use the figure below to answer the following questions.
   
Figure 17.3.2
-Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture.A quota that results in the common resource being used efficiently is set at

Accepted Answer

A) 0 goats. 
B) 35 goats. 
C) 50 goats. 
D) 55 goats. 
E) 40 goats. 
A) 0 goats. 
B) 35 goats. 
C) 50 goats. 
D) 55 goats. 
E) 40 goats.

Question 18

Your city council is contemplating upgrading its traffic control system and the council believes that the bigger the computer it installs, the better job it can do.Elected officials want to install the scale of the system that will win the most votes.The city bureaucrats want to maximize the budget.Suppose that you are an economist and your job is to calculate the scale of the system that uses resources efficiently.Public choice theory predicts that the quantity chosen will result in ________.As an informed voter, you can attempt to influence the choice of the correct system by encouraging other voters to ________.

Accepted Answer

A) overprovision that maximizes the budget of the bureaucrats; vote only for officials that will provide the smaller efficient quantity 
B) overprovision that maximizes the budget of the bureaucrats; increase their income elasticity of demand for the new traffic control system 
C) the efficient quantity; decrease their income elasticity of demand for the new traffic control system 
D) the efficient quantity; increase their income elasticity of demand for the new traffic control system 
E) overprovision that minimizes the income elasticity of demand of bureaucrats; decrease their elasticity of demand for the new traffic control system 
A) overprovision that maximizes the budget of the bureaucrats; vote only for officials that will provide the smaller efficient quantity 
B) overprovision that maximizes the budget of the bureaucrats; increase their income elasticity of demand for the new traffic control system 
C) the efficient quantity; decrease their income elasticity of demand for the new traffic control system 
D) the efficient quantity; increase their income elasticity of demand for the new traffic control system 
E) overprovision that minimizes the income elasticity of demand of bureaucrats; decrease their elasticity of demand for the new traffic control system

Question 19

Use the table below to answer the following questions.
Table 17.2.1
  
-In Table 17.2.1, which of the proposals would be supported by political parties according to the principle of minimum differentiation?

Accepted Answer

A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C 
A) Current income distribution 
B) Proposal A 
C) Proposal B 
D) Proposal C 
E) Proposal A or C

Question 20

One way to alleviate the tragedy of the commons is to

Accepted Answer

A) eliminate production quotas for using the common resource. 
B) make the resource private property. 
C) allow all individuals to use the common resource free of charge. 
D) distribute common resources among those individuals who really need the resource free of charge. 
E) set a price of $1 per unit of the common resource because it is an affordable price. 
A) eliminate production quotas for using the common resource. 
B) make the resource private property. 
C) allow all individuals to use the common resource free of charge. 
D) distribute common resources among those individuals who really need the resource free of charge. 
E) set a price of $1 per unit of the common resource because it is an affordable price.

When a good is nonrival and nonexcludable, it is a

Use the figure below to answer the following questions. Figure 17.3.1 -Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource.The equilibrium quantity in an unregulated market is

Which of the following quotations describes a nonexcludable and nonrival good?

When a good is rival and excludable, it is a

A common resource is

Rational ignorance suggests that a voter should stop acquiring more information about an issue when

A natural monopoly good is

A Canada Day fireworks display

Common resources are overused because

Free riding can occur if a good is

If property rights are assigned to a common resource, then the

The budget of a government department is likely to be efficient if

Governments provide public goods such as national defence because

Use the figure below to answer the following questions. Figure 17.3.2 -Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture.A quota that results in the common resource being used efficiently is set at

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1, which of the proposals would be supported by political parties according to the principle of minimum differentiation?

One way to alleviate the tragedy of the commons is to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Markets for Factors of Production

Filters

Exam 17: Public Goods and Common Resources

When a good is nonrival and nonexcludable, it is a

Use the figure below to answer the following questions. Figure 17.3.1 -Figure 17.3.1 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource.The equilibrium quantity in an unregulated market is

Which of the following quotations describes a nonexcludable and nonrival good?

When a good is rival and excludable, it is a

A common resource is

Rational ignorance suggests that a voter should stop acquiring more information about an issue when

A natural monopoly good is

A Canada Day fireworks display

Common resources are overused because

Free riding can occur if a good is

If property rights are assigned to a common resource, then the

The budget of a government department is likely to be efficient if

Governments provide public goods such as national defence because

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1, which of the proposals would be supported by political parties according to the principle of minimum differentiation?

One way to alleviate the tragedy of the commons is to

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Markets for Factors of Production

Filters