Question 1

Use the table below to answer the following questions.
Table 17.2.1
  
-In Table 17.2.1, which one of the proposals will have the greatest support?

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 2

If a good is a public good,

Accepted Answer

A) anyone can be excluded from enjoying its benefits. 
B) no one can be excluded from enjoying its benefits. 
C) consumers must pay a high price to enjoy its benefits. 
D) it is rival and excludable. 
E) economies of scale exist over the entire range of output for which there is a demand. 
A) anyone can be excluded from enjoying its benefits. 
B) no one can be excluded from enjoying its benefits. 
C) consumers must pay a high price to enjoy its benefits. 
D) it is rival and excludable. 
E) economies of scale exist over the entire range of output for which there is a demand.

Question 3

All of the following statements are true except

Accepted Answer

A) the market price of an ITQ equals the marginal social benefit minus the marginal cost. 
B) when an ITQ system is used in a fishing market, boat owners with a low marginal cost are willing and able to pay more for a quota than are boat owners with a higher marginal cost. 
C) individual differences in marginal cost do not prevent an ITQ system from delivering the efficient outcome. 
D) an ITQ is a production limit that is assigned to an individual who is free to transfer the quota to someone else. 
E) Canada does not use ITQs. 
A) the market price of an ITQ equals the marginal social benefit minus the marginal cost. 
B) when an ITQ system is used in a fishing market, boat owners with a low marginal cost are willing and able to pay more for a quota than are boat owners with a higher marginal cost. 
C) individual differences in marginal cost do not prevent an ITQ system from delivering the efficient outcome. 
D) an ITQ is a production limit that is assigned to an individual who is free to transfer the quota to someone else. 
E) Canada does not use ITQs.

Question 4

The absence of incentives to prevent the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably is referred to as

Accepted Answer

A) unsustainable production. 
B) sustainable production. 
C) the tragedy of the commons. 
D) rational ignorance. 
E) irrational production. 
A) unsustainable production. 
B) sustainable production. 
C) the tragedy of the commons. 
D) rational ignorance. 
E) irrational production.

Question 5

Which of the following achieves the efficient use of a common resource?

Accepted Answer

A) property rights, production quotas, and individual transferable quotas 
B) property rights, individual transferable quotas, and subsidies 
C) property rights, production quotas, and subsidies 
D) individual transferable quotas and copyrights 
E) production quotas, individual transferable quotas, and copyrights 
A) property rights, production quotas, and individual transferable quotas 
B) property rights, individual transferable quotas, and subsidies 
C) property rights, production quotas, and subsidies 
D) individual transferable quotas and copyrights 
E) production quotas, individual transferable quotas, and copyrights

Question 6

Private provision of public goods

Accepted Answer

A) fails because the private firm will always go broke. 
B) succeeds because public provision is often more costly. 
C) succeeds if consumers expect to obtain a benefit from the consumption of the public good. 
D) fails because of the free-rider problem. 
E) fails because private firms generally charge higher prices than public firms, and therefore lose customers. 
A) fails because the private firm will always go broke. 
B) succeeds because public provision is often more costly. 
C) succeeds if consumers expect to obtain a benefit from the consumption of the public good. 
D) fails because of the free-rider problem. 
E) fails because private firms generally charge higher prices than public firms, and therefore lose customers.

Question 7

Public goods are provided by government because

Accepted Answer

A) governments are more efficient than private firms at producing public goods. 
B) free-rider problems result in underproduction by private markets. 
C) people value national defence very highly. 
D) private firms will make an economic profit. 
E) private firms do not take into account the impact of external costs. 
A) governments are more efficient than private firms at producing public goods. 
B) free-rider problems result in underproduction by private markets. 
C) people value national defence very highly. 
D) private firms will make an economic profit. 
E) private firms do not take into account the impact of external costs.

Question 8

A common resource is

Accepted Answer

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

Question 9

If the marginal social cost of producing a public good is greater than the marginal social benefit, then

Accepted Answer

A) more than the efficient quantity of the public good is being produced. 
B) less than the efficient quantity of the public good is being produced. 
C) the efficient quantity of the public good is being produced. 
D) the public good is being produced by a private firm. 
E) the public good must be a common resource. 
A) more than the efficient quantity of the public good is being produced. 
B) less than the efficient quantity of the public good is being produced. 
C) the efficient quantity of the public good is being produced. 
D) the public good is being produced by a private firm. 
E) the public good must be a common resource.

Question 10

When a city street is congested, it is

Accepted Answer

A) a common resource. 
B) nonrival and nonexcludable. 
C) nonrival and excludable. 
D) a private good. 
E) a public good. 
A) a common resource. 
B) nonrival and nonexcludable. 
C) nonrival and excludable. 
D) a private good. 
E) a public good.

Question 11

The economy's demand curve for a public good is obtained by summing the individual

Accepted Answer

A) marginal cost curves horizontally. 
B) marginal cost curves vertically. 
C) marginal benefit curves horizontally. 
D) marginal benefit curves vertically. 
E) benefit curves diagonally. 
A) marginal cost curves horizontally. 
B) marginal cost curves vertically. 
C) marginal benefit curves horizontally. 
D) marginal benefit curves vertically. 
E) benefit curves diagonally.

Question 12

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.The efficient quantity is

Accepted Answer

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

Question 13

Private goods are

Accepted Answer

A) nonrival and excludable. 
B) nonrival and nonexcludable. 
C) always produced in a non-regulated market. 
D) rival and excludable. 
E) rival and nonexcludable. 
A) nonrival and excludable. 
B) nonrival and nonexcludable. 
C) always produced in a non-regulated market. 
D) rival and excludable. 
E) rival and nonexcludable.

Question 14

For a private good, the economy's marginal social benefit curve is the ________ sum of the individual marginal benefit curves and for a public good, the economy's marginal social benefit curve is the ________ sum of the individual marginal benefit curves.

Accepted Answer

A) vertical; vertical 
B) vertical; horizontal 
C) horizontal; vertical 
D) horizontal; horizontal 
E) horizontal and vertical; vertical and horizontal 
A) vertical; vertical 
B) vertical; horizontal 
C) horizontal; vertical 
D) horizontal; horizontal 
E) horizontal and vertical; vertical and horizontal

Question 15

An example of a public good is

Accepted Answer

A) national defence. 
B) a Ford truck. 
C) a loaf of bread. 
D) a home computer. 
E) a television. 
A) national defence. 
B) a Ford truck. 
C) a loaf of bread. 
D) a home computer. 
E) a television.

Question 16

Public choice theory assumes those involved in the political process are motivated by

Accepted Answer

A) self-interest. 
B) the desire to achieve efficiency. 
C) dishonesty. 
D) public spirit. 
E) the desire for maximum profit. 
A) self-interest. 
B) the desire to achieve efficiency. 
C) dishonesty. 
D) public spirit. 
E) the desire for maximum profit.

Question 17

The "tragedy of the commons" refers to

Accepted Answer

A) the inability of lower income groups to achieve a higher level of education. 
B) the absence of incentives to prevent the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably. 
C) the acceptance of deplorable working conditions by those who lack the human capital to obtain a better job. 
D) the tendency for bureaucrats to maximize their budget. 
E) farmers who allow their livestock to overgraze their fields. 
A) the inability of lower income groups to achieve a higher level of education. 
B) the absence of incentives to prevent the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably. 
C) the acceptance of deplorable working conditions by those who lack the human capital to obtain a better job. 
D) the tendency for bureaucrats to maximize their budget. 
E) farmers who allow their livestock to overgraze their fields.

Question 18

When a city street is not congested, it is

Accepted Answer

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

Question 19

Growing voter income can lead to the growth of the government sector because

Accepted Answer

A) public goods are income elastic. 
B) public goods are income inelastic. 
C) richer voters are more likely to be rationally ignorant. 
D) richer voters do not care about overprovision of government goods. 
E) as income increases, more public goods become private goods. 
A) public goods are income elastic. 
B) public goods are income inelastic. 
C) richer voters are more likely to be rationally ignorant. 
D) richer voters do not care about overprovision of government goods. 
E) as income increases, more public goods become private goods.

Question 20

Which of the following applies to the tragedy of the commons? I. In the absence of government action, there is an absence of incentives to prevent the overuse of the common resource.
II. When consumers take account of the marginal social benefit and marginal social cost, overuse of the resource occurs.
III. Even with government action, it is impossible for an efficient level of output to be achieved.

Accepted Answer

A) I only 
B) I and II 
C) II and III 
D) I, II, and III 
E) None of the above 
A) I only 
B) I and II 
C) II and III 
D) I, II, and III 
E) None of the above

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1, which one of the proposals will have the greatest support?

If a good is a public good,

All of the following statements are true except

The absence of incentives to prevent the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably is referred to as

Which of the following achieves the efficient use of a common resource?

Private provision of public goods

Public goods are provided by government because

A common resource is

If the marginal social cost of producing a public good is greater than the marginal social benefit, then

When a city street is congested, it is

The economy's demand curve for a public good is obtained by summing the individual

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.The efficient quantity is

Private goods are

For a private good, the economy's marginal social benefit curve is the sum of the individual marginal benefit curves and for a public good, the economy's marginal social benefit curve is the sum of the individual marginal benefit curves.

An example of a public good is

Public choice theory assumes those involved in the political process are motivated by

The "tragedy of the commons" refers to

When a city street is not congested, it is

Growing voter income can lead to the growth of the government sector because

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

Use the table below to answer the following questions. Table 17.2.1 -In Table 17.2.1, which one of the proposals will have the greatest support?

If a good is a public good,

All of the following statements are true except

The absence of incentives to prevent the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably is referred to as

Which of the following achieves the efficient use of a common resource?

Private provision of public goods

Public goods are provided by government because

A common resource is

If the marginal social cost of producing a public good is greater than the marginal social benefit, then

When a city street is congested, it is

The economy's demand curve for a public good is obtained by summing the individual

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.The efficient quantity is

Private goods are

For a private good, the economy's marginal social benefit curve is the ________ sum of the individual marginal benefit curves and for a public good, the economy's marginal social benefit curve is the ________ sum of the individual marginal benefit curves.

An example of a public good is

Public choice theory assumes those involved in the political process are motivated by

The "tragedy of the commons" refers to

When a city street is not congested, it is

Growing voter income can lead to the growth of the government sector because

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

For a private good, the economy's marginal social benefit curve is the sum of the individual marginal benefit curves and for a public good, the economy's marginal social benefit curve is the sum of the individual marginal benefit curves.