Question 1

The marginal benefit of a public good is the

Accepted Answer

A) sum of the marginal benefits of all the individuals at each quantity. 
B) marginal benefit of the individual person who places the lowest value on the good, multiplied by the number of people in the economy. 
C) marginal benefit of the individual person who places the highest value on the good, multiplied by the number of people in the economy. 
D) benefit of the last person's consumption. 
E) average of the marginal benefits of all the individuals at each quantity. 
A) sum of the marginal benefits of all the individuals at each quantity. 
B) marginal benefit of the individual person who places the lowest value on the good, multiplied by the number of people in the economy. 
C) marginal benefit of the individual person who places the highest value on the good, multiplied by the number of people in the economy. 
D) benefit of the last person's consumption. 
E) average of the marginal benefits of all the individuals at each quantity.

Question 2

Which of the following is the best example of a common resource?

Accepted Answer

A) national defense 
B) a Ford Thunderbird 
C) Yosemite National Park 
D) a can of Mountain Dew 
E) a cable television network 
A) national defense 
B) a Ford Thunderbird 
C) Yosemite National Park 
D) a can of Mountain Dew 
E) a cable television network

Question 3

Bureaucrats

Accepted Answer

A) have no incentive to influence the quantity of public goods provided by the government. 
B) have no role in the production of public goods. 
C) attempt to maximize their budget. 
D) make political policy. 
E) are generally rationally ignorant about the size of their budget. 
A) have no incentive to influence the quantity of public goods provided by the government. 
B) have no role in the production of public goods. 
C) attempt to maximize their budget. 
D) make political policy. 
E) are generally rationally ignorant about the size of their budget.

Question 4

The figure above shows the marginal benefit curve (MB)and marginal cost curve (MC)of surveillance satellites that provide national defense services.
-Using the figure above, suppose there are two political parties, the Hawks and the Doves, which agree on all issues except for the quantity of defense satellites.The Hawks want 300 satellites and the Doves want 100 satellites.The voters are well informed and know what is best for them.The parties run a voter survey and discover the marginal benefit curve (MB).They also know the marginal cost curve (MC).What quantity of satellites will most likely result from this political process?

Accepted Answer

A) 200, because unless each party proposes 200 satellites, the other party can beat it in an election 
B) 300, because the Hawks are more likely to win 
C) 100, because the Doves are more likely to win 
D) 200, because the parties will strike a deal: each will agree to give up 100 satellites 
E) Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided 
A) 200, because unless each party proposes 200 satellites, the other party can beat it in an election 
B) 300, because the Hawks are more likely to win 
C) 100, because the Doves are more likely to win 
D) 200, because the parties will strike a deal: each will agree to give up 100 satellites 
E) Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided

Question 5

Which of the following is a correct statement?

Accepted Answer

A) To obtain the economy's marginal benefit for a public good, marginal benefits of all individuals at each quantity have to be added. 
B) To obtain the economy's marginal benefit for a public good, the quantity that all individuals are willing to buy at each price must be added. 
C) To obtain the economy's marginal benefit curve for a public good, we sum the individual demand curves horizontally. 
D) Because public goods are nonexcludable, the economy's marginal benefit curve for a public good is the same as its marginal cost curve. 
E) None of the above answers is correct. 
A) To obtain the economy's marginal benefit for a public good, marginal benefits of all individuals at each quantity have to be added. 
B) To obtain the economy's marginal benefit for a public good, the quantity that all individuals are willing to buy at each price must be added. 
C) To obtain the economy's marginal benefit curve for a public good, we sum the individual demand curves horizontally. 
D) Because public goods are nonexcludable, the economy's marginal benefit curve for a public good is the same as its marginal cost curve. 
E) None of the above answers is correct.

Question 6

-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 second missile gunboat.

Accepted Answer

A) $16 million 
B) $8 million 
C) $12 million 
D) $10 million 
E) $4 million 
A) $16 million 
B) $8 million 
C) $12 million 
D) $10 million 
E) $4 million

Question 7

A professional football game played in a completely full stadium is NOT a public good because it is

Accepted Answer

A) nonexcludable and nonrival. 
B) excludable and nonrival. 
C) excludable and rival. 
D) nonexcludable and rival. 
E) not supplied by the government. 
A) nonexcludable and nonrival. 
B) excludable and nonrival. 
C) excludable and rival. 
D) nonexcludable and rival. 
E) not supplied by the government.

Question 8

Government bureaucracies over-provide public goods and grow larger because of their goal of ________ combined with ________ of the voters.

Accepted Answer

A) budget maximization; rational ignorance 
B) budget minimization; irrational intelligence 
C) budget maximization; minimum differentiation 
D) budget maximization; irrational exuberance 
E) minimum differentiation; budget maximization 
A) budget maximization; rational ignorance 
B) budget minimization; irrational intelligence 
C) budget maximization; minimum differentiation 
D) budget maximization; irrational exuberance 
E) minimum differentiation; budget maximization

Question 9

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Suppose the marginal cost of a missile gunboat is $8 million.What is the efficient quantity of missile gunboats?

Accepted Answer

A) 1 boat 
B) 2 boats 
C) 3 boats 
D) 4 boats 
E) More information about whether the services provided by missile gunboats are rival or not is needed. 
A) 1 boat 
B) 2 boats 
C) 3 boats 
D) 4 boats 
E) More information about whether the services provided by missile gunboats are rival or not is needed.

Question 10

A good that is ________ and ________ is a ________.

Accepted Answer

A) rival; excludable; private good 
B) rival; excludable; public good 
C) nonrival; excludable; public good 
D) rival; nonexcludable; private good 
E) nonrival; nonexcludable; private good 
A) rival; excludable; private good 
B) rival; excludable; public good 
C) nonrival; excludable; public good 
D) rival; nonexcludable; private good 
E) nonrival; nonexcludable; private good

Question 11

An example of a common resource is

Accepted Answer

A) a bridge. 
B) a non-crowded movie theater. 
C) a tuna in the ocean. 
D) national defense. 
E) All of the above answers are correct. 
A) a bridge. 
B) a non-crowded movie theater. 
C) a tuna in the ocean. 
D) national defense. 
E) All of the above answers are correct.

Question 12

When describing goods and services, what is meant by the terms "rival" and "nonrival?" Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?

Accepted Answer

A good is rival if its use by one person

Question 13

-In the figure above, the efficient quantity of satellites to produce is

Accepted Answer

A) 200, because this is where marginal benefit equals marginal cost. 
B) 200, because this is where the market is in equilibrium. 
C) anywhere below 200, i.e. where marginal benefit exceeds marginal cost. 
D) anywhere above 200, i.e. where marginal benefit is below marginal cost. 
E) zero, because no one is willing to pay for satellites. 
A) 200, because this is where marginal benefit equals marginal cost. 
B) 200, because this is where the market is in equilibrium. 
C) anywhere below 200, i.e. where marginal benefit exceeds marginal cost. 
D) anywhere above 200, i.e. where marginal benefit is below marginal cost. 
E) zero, because no one is willing to pay for satellites.

Question 14

The fact that Sha's enjoyment of a sunset on Saint Simon's Island does not preclude Lou from enjoying the sunset is an example of

Accepted Answer

A) a good that is nonrival. 
B) a good that is excludable. 
C) a private good. 
D) the rival nature of consumption. 
E) a common resource. 
A) a good that is nonrival. 
B) a good that is excludable. 
C) a private good. 
D) the rival nature of consumption. 
E) a common resource.

Question 15

The free-rider problem exists because

Accepted Answer

A) private goods or services cause some people to want to take them for free. 
B) some goods or services are excludable and cause envy for those who don't have them. 
C) some goods or services that are rival and leave some people without them. 
D) people cannot be excluded from consuming public goods even if they don't pay for them. 
E) people must all consume the same public good and so everyone wants to pay for it. 
A) private goods or services cause some people to want to take them for free. 
B) some goods or services are excludable and cause envy for those who don't have them. 
C) some goods or services that are rival and leave some people without them. 
D) people cannot be excluded from consuming public goods even if they don't pay for them. 
E) people must all consume the same public good and so everyone wants to pay for it.

Question 16

The free-rider problem
i. means that people can consume a good without paying for it.
ii. means that people pay too much for a good in order to consume it.
iii. applies to a public good.

Accepted Answer

A) i only 
B) iii only 
C) i and ii 
D) ii and iii 
E) i and iii 
A) i only 
B) iii only 
C) i and ii 
D) ii and iii 
E) i and iii

Question 17

If you can prevent someone from consuming a good, that good is called

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 18

When Jean makes a decision NOT to obtain information about an issue that doesn't have a perceptible effect on her, Jean's choice is referred to as

Accepted Answer

A) rational exuberance. 
B) irrational exuberance. 
C) irrational intelligence. 
D) rational ignorance. 
E) the principle of minimum ignorance. 
A) rational exuberance. 
B) irrational exuberance. 
C) irrational intelligence. 
D) rational ignorance. 
E) the principle of minimum ignorance.

Question 19

A good is nonrival if

Accepted Answer

A) only the government can produce it. 
B) nobody can be excluded from enjoying the benefits of the good. 
C) when you pay for the good, you are guaranteed to be the sole consumer. 
D) when you consume a unit, you have not decreased the amount left for consumption by other people. 
E) anybody can be excluded from enjoying the benefits of the good. 
A) only the government can produce it. 
B) nobody can be excluded from enjoying the benefits of the good. 
C) when you pay for the good, you are guaranteed to be the sole consumer. 
D) when you consume a unit, you have not decreased the amount left for consumption by other people. 
E) anybody can be excluded from enjoying the benefits of the good.

Question 20

When someone enjoys the benefit of a good or service but does not pay for it, that person

Accepted Answer

A) is a free range consumer. 
B) is a free rider. 
C) receives no marginal benefit from the good. 
D) must be consuming an excludable good. 
E) is contributing to the tragedy of the commons. 
A) is a free range consumer. 
B) is a free rider. 
C) receives no marginal benefit from the good. 
D) must be consuming an excludable good. 
E) is contributing to the tragedy of the commons.

The marginal benefit of a public good is the

Which of the following is the best example of a common resource?

Bureaucrats

Which of the following is a correct statement?

-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 second missile gunboat.

A professional football game played in a completely full stadium is NOT a public good because it is

Government bureaucracies over-provide public goods and grow larger because of their goal of combined with of the voters.

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Suppose the marginal cost of a missile gunboat is $8 million.What is the efficient quantity of missile gunboats?

A good that is and is a .

An example of a common resource is

When describing goods and services, what is meant by the terms "rival" and "nonrival?" Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?

-In the figure above, the efficient quantity of satellites to produce is

The fact that Sha's enjoyment of a sunset on Saint Simon's Island does not preclude Lou from enjoying the sunset is an example of

The free-rider problem exists because

The free-rider problem i. means that people can consume a good without paying for it. ii. means that people pay too much for a good in order to consume it. iii. applies to a public good.

If you can prevent someone from consuming a good, that good is called

When Jean makes a decision NOT to obtain information about an issue that doesn't have a perceptible effect on her, Jean's choice is referred to as

A good is nonrival if

When someone enjoys the benefit of a good or service but does not pay for it, that person

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

The marginal benefit of a public good is the

Which of the following is the best example of a common resource?

Bureaucrats

Which of the following is a correct statement?

-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 second missile gunboat.

A professional football game played in a completely full stadium is NOT a public good because it is

Government bureaucracies over-provide public goods and grow larger because of their goal of ________ combined with ________ of the voters.

-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats, a public good.Suppose the marginal cost of a missile gunboat is $8 million.What is the efficient quantity of missile gunboats?

A good that is ________ and ________ is a ________.

An example of a common resource is

When describing goods and services, what is meant by the terms "rival" and "nonrival?" Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?

-In the figure above, the efficient quantity of satellites to produce is

The fact that Sha's enjoyment of a sunset on Saint Simon's Island does not preclude Lou from enjoying the sunset is an example of

The free-rider problem exists because

The free-rider problem i. means that people can consume a good without paying for it. ii. means that people pay too much for a good in order to consume it. iii. applies to a public good.

If you can prevent someone from consuming a good, that good is called

When Jean makes a decision NOT to obtain information about an issue that doesn't have a perceptible effect on her, Jean's choice is referred to as

A good is nonrival if

When someone enjoys the benefit of a good or service but does not pay for it, that person

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

Government bureaucracies over-provide public goods and grow larger because of their goal of combined with of the voters.

A good that is and is a .