Question 1

A common resource is used efficiently if

Accepted Answer

A) the output is maximized. 
B) marginal social benefit equals marginal social cost. 
C) marginal private benefit equals marginal cost. 
D) marginal social benefit is maximized. 
E) only the excess of the resource is utilized. 
A) the output is maximized. 
B) marginal social benefit equals marginal social cost. 
C) marginal private benefit equals marginal cost. 
D) marginal social benefit is maximized. 
E) only the excess of the resource is utilized.

Question 2

A public good is ________ and ________.

Accepted Answer

A) rival; excludable 
B) rival; nonexcludable 
C) nonrival; excludable 
D) nonrival; nonexcludable 
E) cheap; available 
A) rival; excludable 
B) rival; nonexcludable 
C) nonrival; excludable 
D) nonrival; nonexcludable 
E) cheap; available

Question 3

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Determine the marginal benefit to society of the fourth missile gunboat.

Accepted Answer

A) $8 million 
B) $4 million 
C) $2 million 
D) $1 million 
E) $40 million 
A) $8 million 
B) $4 million 
C) $2 million 
D) $1 million 
E) $40 million

Question 4

For a common resource, the equilibrium with no government intervention is such that ________ equals ________.

Accepted Answer

A) marginal private benefit; marginal social cost 
B) marginal social benefit; marginal private cost 
C) marginal social cost; marginal social benefit 
D) marginal external benefit; marginal external cost 
E) marginal social benefit; marginal external cost 
A) marginal private benefit; marginal social cost 
B) marginal social benefit; marginal private cost 
C) marginal social cost; marginal social benefit 
D) marginal external benefit; marginal external cost 
E) marginal social benefit; marginal external cost

Question 5

The efficient quantity of a public good is the quantity at which marginal benefit is

Accepted Answer

A) greater than marginal cost by any amount. 
B) less than marginal cost. 
C) equal to marginal cost. 
D) zero. 
E) greater than marginal cost by the maximum amount. 
A) greater than marginal cost by any amount. 
B) less than marginal cost. 
C) equal to marginal cost. 
D) zero. 
E) greater than marginal cost by the maximum amount.

Question 6

Which of the following is necessary for competition in the political marketplace to result in the production of the efficient amount of a public good?

Accepted Answer

A) bureaucrats practice self-interest 
B) well informed voters and political parties 
C) rational ignorance 
D) maximum differentiation of political competitors 
E) Answers A, B and D are correct. 
A) bureaucrats practice self-interest 
B) well informed voters and political parties 
C) rational ignorance 
D) maximum differentiation of political competitors 
E) Answers A, B and D are correct.

Question 7

"The problem with a common resource is that no one gets to use the resource." Comment on the preceding assertion.

Accepted Answer

The assertion is totally false; the prob

Question 8

Some resources are private and others are common.Define a common resource, explain the definition, and provide an example of a private resource and a common resource.

Accepted Answer

A common resource is rival and nonexclud

Question 9

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma.Police protection is a public good.If the city of Hugo hires 5 officers, marginal

Accepted Answer

A) cost exceeds marginal benefit, so therefore fewer officers should be hired. 
B) benefit exceeds marginal cost, so therefore more officers should be hired. 
C) benefit equals marginal cost. 
D) benefit exceeds marginal cost, so therefore no more officers should be hired. 
E) benefit exceeds marginal cost but not by as much as possible, so 5 officers is not the efficient number to be hired. 
A) cost exceeds marginal benefit, so therefore fewer officers should be hired. 
B) benefit exceeds marginal cost, so therefore more officers should be hired. 
C) benefit equals marginal cost. 
D) benefit exceeds marginal cost, so therefore no more officers should be hired. 
E) benefit exceeds marginal cost but not by as much as possible, so 5 officers is not the efficient number to be hired.

Question 10

The free-rider problem is associated with

Accepted Answer

A) public goods. 
B) private goods. 
C) common resources. 
D) any type of good. 
E) natural monopolies. 
A) public goods. 
B) private goods. 
C) common resources. 
D) any type of good. 
E) natural monopolies.

Question 11

-The table above shows the marginal social benefit of fishing in Mediterranean Sea.The marginal private cost of operating a fishing boat is the same for all producers , $300 per hour.The marginal social cost is twice the marginal private cost.If the government sets a production quota, to have the efficient quantity of fish caught, the quote should equal ________ tons of fish.

Accepted Answer

A) 100 
B) 200 
C) 300 
D) 400 
E) 500 
A) 100 
B) 200 
C) 300 
D) 400 
E) 500

Question 12

One reason the size of the government is large is because

Accepted Answer

A) people's demand for private goods grows faster than their demand for public goods. 
B) politicians do not support spending on things such as education and public health. 
C) voters' incomes grow, thereby causing an increased demand for private goods. 
D) budget maximization by bureaucrats and rational ignorance by voters lead to overproduction. 
E) rational ignorance by politicians who follow the principle of minimum differentiation. 
A) people's demand for private goods grows faster than their demand for public goods. 
B) politicians do not support spending on things such as education and public health. 
C) voters' incomes grow, thereby causing an increased demand for private goods. 
D) budget maximization by bureaucrats and rational ignorance by voters lead to overproduction. 
E) rational ignorance by politicians who follow the principle of minimum differentiation.

Question 13

The fact that technology prevents Sam in Nevada from using the email account of Samantha in Virginia means that email is an example of

Accepted Answer

A) a good that is nonexcludable. 
B) a good that is excludable. 
C) a public good. 
D) the free-rider problem. 
E) the tragedy of the commons. 
A) a good that is nonexcludable. 
B) a good that is excludable. 
C) a public good. 
D) the free-rider problem. 
E) the tragedy of the commons.

Question 14

To determine the efficient quantity of a public good to supply,

Accepted Answer

A) the private firms that will produce the good each produce the exact same quantity. 
B) marginal benefit and marginal cost are equated, the same as is done to determine the efficient quantity of a private good. 
C) total benefit is equated to total cost, the same as is done to determine the efficient quantity of a private good. 
D) politicians use the principle of maximum differentiation. 
E) marginal benefit must exceed marginal cost by as much as possible. 
A) the private firms that will produce the good each produce the exact same quantity. 
B) marginal benefit and marginal cost are equated, the same as is done to determine the efficient quantity of a private good. 
C) total benefit is equated to total cost, the same as is done to determine the efficient quantity of a private good. 
D) politicians use the principle of maximum differentiation. 
E) marginal benefit must exceed marginal cost by as much as possible.

Question 15

When use of a good decreases the quantity available for someone else, the good is

Accepted Answer

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

Question 16

If the government assigns private property rights to a common resource, then the

Accepted Answer

A) resource is under-utilized. 
B) marginal private cost becomes equal to the marginal social cost. 
C) government needs to set a quota to achieve efficiency. 
D) resource becomes subject to the free riding problem. 
E) resource cannot be utilized. 
A) resource is under-utilized. 
B) marginal private cost becomes equal to the marginal social cost. 
C) government needs to set a quota to achieve efficiency. 
D) resource becomes subject to the free riding problem. 
E) resource cannot be utilized.

Question 17

To achieve the efficient level of national defense,

Accepted Answer

A) the government could provide national defense because it is a public good. 
B) private firms can provide national defense because it is a private good. 
C) the government can provide national defense because it is a private good. 
D) the government can provide national defense because it is a common resource. 
E) None of the above answers is correct. 
A) the government could provide national defense because it is a public good. 
B) private firms can provide national defense because it is a private good. 
C) the government can provide national defense because it is a private good. 
D) the government can provide national defense because it is a common resource. 
E) None of the above answers is correct.

Question 18

A private, competitive market

Accepted Answer

A) provides the efficient quantity of a public good. 
B) allocates too few resources for a public good. 
C) allocates too many resources for a public good. 
D) can be relied upon to allocate resources efficiently both for private and public goods. 
E) will allocate too many resources for a public good only if free riding occurs. 
A) provides the efficient quantity of a public good. 
B) allocates too few resources for a public good. 
C) allocates too many resources for a public good. 
D) can be relied upon to allocate resources efficiently both for private and public goods. 
E) will allocate too many resources for a public good only if free riding occurs.

Question 19

-The table above shows the marginal social benefit of fishing in Mediterranean Sea.The marginal private cost of operating a fishing boat is the same for all producers , $300 per hour.The marginal social cost is twice the marginal private cost.If the government uses individual transferrable quotas to achieve the efficient outcome, what is the total quantity of fish caught?

Accepted Answer

A) 0 tons 
B) 100 tons 
C) 200 tons 
D) 300 tons 
E) 500 tons 
A) 0 tons 
B) 100 tons 
C) 200 tons 
D) 300 tons 
E) 500 tons

Question 20

The tragedy of the commons is the absence of incentives to

Accepted Answer

A) correctly measure the marginal benefit. 
B) prevent under use of the common resource. 
C) prevent overuse and depletion of the common resource. 
D) discover the resource. 
E) prevent the free-rider problem. 
A) correctly measure the marginal benefit. 
B) prevent under use of the common resource. 
C) prevent overuse and depletion of the common resource. 
D) discover the resource. 
E) prevent the free-rider problem.

A common resource is used efficiently if

A public good is and .

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Determine the marginal benefit to society of the fourth missile gunboat.

For a common resource, the equilibrium with no government intervention is such that equals .

The efficient quantity of a public good is the quantity at which marginal benefit is

Which of the following is necessary for competition in the political marketplace to result in the production of the efficient amount of a public good?

"The problem with a common resource is that no one gets to use the resource." Comment on the preceding assertion.

Some resources are private and others are common.Define a common resource, explain the definition, and provide an example of a private resource and a common resource.

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma.Police protection is a public good.If the city of Hugo hires 5 officers, marginal

The free-rider problem is associated with

One reason the size of the government is large is because

The fact that technology prevents Sam in Nevada from using the email account of Samantha in Virginia means that email is an example of

To determine the efficient quantity of a public good to supply,

When use of a good decreases the quantity available for someone else, the good is

If the government assigns private property rights to a common resource, then the

To achieve the efficient level of national defense,

A private, competitive market

The tragedy of the commons is the absence of incentives to

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 11: Public Goods and Common Resources

A common resource is used efficiently if

A public good is ________ and ________.

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Determine the marginal benefit to society of the fourth missile gunboat.

For a common resource, the equilibrium with no government intervention is such that ________ equals ________.

The efficient quantity of a public good is the quantity at which marginal benefit is

Which of the following is necessary for competition in the political marketplace to result in the production of the efficient amount of a public good?

"The problem with a common resource is that no one gets to use the resource." Comment on the preceding assertion.

Some resources are private and others are common.Define a common resource, explain the definition, and provide an example of a private resource and a common resource.

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma.Police protection is a public good.If the city of Hugo hires 5 officers, marginal

The free-rider problem is associated with

One reason the size of the government is large is because

The fact that technology prevents Sam in Nevada from using the email account of Samantha in Virginia means that email is an example of

To determine the efficient quantity of a public good to supply,

When use of a good decreases the quantity available for someone else, the good is

If the government assigns private property rights to a common resource, then the

To achieve the efficient level of national defense,

A private, competitive market

The tragedy of the commons is the absence of incentives to

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

A public good is and .

For a common resource, the equilibrium with no government intervention is such that equals .