Question 1

Prices are the signals that guide the decisions of buyers and sellers in the markets.

Accepted Answer

A) True 
 B)False

Question 2

Some workers are in occupations where the risk of death is higher than others. These risks can be used to evaluate the value of human life. You would expect these workers to:

Accepted Answer

A)  require higher rates of pay than other safer jobs using the same skills 
B)  require lower rates of pay than other safer jobs using the same skills 
C)  have the same rate of pay as other safer jobs using the same skills 
D)  all of the above 
A)  require higher rates of pay than other safer jobs using the same skills 
B)  require lower rates of pay than other safer jobs using the same skills 
C)  have the same rate of pay as other safer jobs using the same skills 
D)  all of the above

Question 3

Private markets ensure that the air we breathe is clean and that our country is defended against foreign aggressors.

Accepted Answer

A) True 
 B)False

Question 4

Once it becomes obvious that a common resource is being overused:

Accepted Answer

A)  market forces cause the use of the resource to shift to a sustainable level 
B)  society voluntarily limits its use of the good 
C)  it continues to be overused because individuals have no incentive to reduce their use of the good 
D)  the good becomes a natural monopoly 
A)  market forces cause the use of the resource to shift to a sustainable level 
B)  society voluntarily limits its use of the good 
C)  it continues to be overused because individuals have no incentive to reduce their use of the good 
D)  the good becomes a natural monopoly

Question 5

A fireworks display is excludable because it is possible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 6

Fishing rights are an infrequent source of international tension among normally friendly countries.

Accepted Answer

A) True 
 B)False

Question 7

The fish in the ocean are an example of:

Accepted Answer

A)  a public good 
B)  a common resource 
C)  a private good 
D)  none of the above 
A)  a public good 
B)  a common resource 
C)  a private good 
D)  none of the above

Question 8

Because of the free-rider problem, respondents to cost-benefit surveys:

Accepted Answer

A)  are unable to evaluate the effect of the project on their personal satisfaction. 
B)  are typically not benefited directly by government projects 
C)  have a difficult time identifying explicit costs 
D)  have little incentive to tell the truth 
A)  are unable to evaluate the effect of the project on their personal satisfaction. 
B)  are typically not benefited directly by government projects 
C)  have a difficult time identifying explicit costs 
D)  have little incentive to tell the truth

Question 9

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Accepted Answer

A) True 
 B)False

Question 10

What effect would a tax on gasoline have?

Accepted Answer

A)  It would have no effect on driving behaviour 
B)  It would discourage people from driving on congested roads only 
C)  It would discourage people form driving on uncongested roads only 
D)  It would discourage people from driving on congested and uncongested roads 
A)  It would have no effect on driving behaviour 
B)  It would discourage people from driving on congested roads only 
C)  It would discourage people form driving on uncongested roads only 
D)  It would discourage people from driving on congested and uncongested roads

Question 11

The market does not provide national defence because:

Accepted Answer

A)  national defense is a common resource 
B)  national defence is too expensive 
C)  human life has no price 
D)  none of the above are true 
A)  national defense is a common resource 
B)  national defence is too expensive 
C)  human life has no price 
D)  none of the above are true

Question 12

In Singapore, the road tolls are charged to drivers according to:

Accepted Answer

A)  the time of day when driving occurs 
B)  the pollution problem for the day 
C)  the particular roads used 
D)  all of the above 
A)  the time of day when driving occurs 
B)  the pollution problem for the day 
C)  the particular roads used 
D)  all of the above

Question 13

The creation of knowledge is a public good. This means that markets will not devote enough resources to the creation of knowledge. What, however, are the difficulties governments face in increasing the level of basic research?

Accepted Answer

First, it is difficult to know whether y

Question 14

Common resource goods are:

Accepted Answer

A)  rival and non-excludable 
B)  rival and excludable 
C)  non-rival and excludable 
D)  non-rival and non-excludable 
A)  rival and non-excludable 
B)  rival and excludable 
C)  non-rival and excludable 
D)  non-rival and non-excludable

Question 15

Private goods are:

Accepted Answer

A)  excludable and rival 
B)  non-excludable and rival 
C)  excludable and non-rival 
D)  non-excludable and non-rival 
A)  excludable and rival 
B)  non-excludable and rival 
C)  excludable and non-rival 
D)  non-excludable and non-rival

Question 16

If the owners of a lighthouse receive payments from a nearby port for the lighthouse service, then the lighthouse is now closer to a public good.

Accepted Answer

A) True 
 B)False

Question 17

Residents of Hang-Zhou, China, like seeing fireworks during their Chinese New Year celebration. Each of the city's one million residents places a value of $ one on the fireworks experience. The cost of providing the fireworks is $250 000. Which of the following statements is most correct?

Accepted Answer

A)  because the collective benefits exceed the cost, the private market will provide an efficient number of fireworks 
B)  an entrepreneur in Hang-Zhou is likely to provide some amount of fireworks for residents of the city and the provision level is likely to be efficient 
C)  fireworks are not excludable so private markets will not produce an efficient outcome 
D)  because China is a communist country, market incentives are irrelevant to how people behave 
A)  because the collective benefits exceed the cost, the private market will provide an efficient number of fireworks 
B)  an entrepreneur in Hang-Zhou is likely to provide some amount of fireworks for residents of the city and the provision level is likely to be efficient 
C)  fireworks are not excludable so private markets will not produce an efficient outcome 
D)  because China is a communist country, market incentives are irrelevant to how people behave

Question 18

An ice-cream cone is an example of a public good.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would be considered a private good?

Accepted Answer

A)  a visit to an uncongested amusement park 
B)  a public beach 
C)  local cable television service 
D)  a bottle of natural mineral water 
A)  a visit to an uncongested amusement park 
B)  a public beach 
C)  local cable television service 
D)  a bottle of natural mineral water

Question 20

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

Prices are the signals that guide the decisions of buyers and sellers in the markets.

Some workers are in occupations where the risk of death is higher than others. These risks can be used to evaluate the value of human life. You would expect these workers to:

Private markets ensure that the air we breathe is clean and that our country is defended against foreign aggressors.

Once it becomes obvious that a common resource is being overused:

A fireworks display is excludable because it is possible to prevent someone from seeing the show.

Fishing rights are an infrequent source of international tension among normally friendly countries.

The fish in the ocean are an example of:

Because of the free-rider problem, respondents to cost-benefit surveys:

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

What effect would a tax on gasoline have?

The market does not provide national defence because:

In Singapore, the road tolls are charged to drivers according to:

The creation of knowledge is a public good. This means that markets will not devote enough resources to the creation of knowledge. What, however, are the difficulties governments face in increasing the level of basic research?

Common resource goods are:

Private goods are:

If the owners of a lighthouse receive payments from a nearby port for the lighthouse service, then the lighthouse is now closer to a public good.

Residents of Hang-Zhou, China, like seeing fireworks during their Chinese New Year celebration. Each of the city's one million residents places a value of $ one on the fireworks experience. The cost of providing the fireworks is $250 000. Which of the following statements is most correct?

An ice-cream cone is an example of a public good.

Which of the following would be considered a private good?

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Ten Lessons From 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

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters