Question 1

When property rights are not well established,

Accepted Answer

A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently. 
A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently.

Question 2

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Accepted Answer

A)  taxing the use of the common resource 
B)  turning the common resource into a natural monopoly 
C)  turning the common resource into a private good 
D)  regulating the use of the common resource 
A)  taxing the use of the common resource 
B)  turning the common resource into a natural monopoly 
C)  turning the common resource into a private good 
D)  regulating the use of the common resource

Question 3

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Accepted Answer

A) True 
 B)False

Question 4

Table 11-2
Consider a small town with only three families,the Jones family,the Harris family,and the Wong family.The town does not currently have any streetlights so it is very dark at night.The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install.The table below shows each family's willingness to pay for each streetlight.
  
-Refer to Table 11-2.Suppose the cost to install each streetlight is $200 and the families have agreed to split the cost of the streetlights equally.If the families vote to determine the number of streetlights to install,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus),what is the greatest number of streetlights for which the majority of families would vote "yes?"

Accepted Answer

A)  1 streetlight 
B)  2 streetlights 
C)  3 streetlights 
D)  4 streetlights 
A)  1 streetlight 
B)  2 streetlights 
C)  3 streetlights 
D)  4 streetlights

Question 5

The value and cost of goods are easiest to determine when the goods are

Accepted Answer

A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  natural monopolies. 
A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  natural monopolies.

Question 6

When the absence of property rights causes a market failure,the government can potentially solve the problem

Accepted Answer

A)  by clearly defining property rights. 
B)  through regulation. 
C)  by supplying the good itself. 
D)  All of the above are correct. 
A)  by clearly defining property rights. 
B)  through regulation. 
C)  by supplying the good itself. 
D)  All of the above are correct.

Question 7

Suppose the cost to erect a tornado siren in a small town is $20,000.In addition,suppose the value of a human life is $10 million.By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

Accepted Answer

A)  By at least 0.2 percentage points. 
B)  By at least 0.5 percentage points. 
C)  By at least 2 percentage points. 
D)  By at least 5 percentage points. 
A)  By at least 0.2 percentage points. 
B)  By at least 0.5 percentage points. 
C)  By at least 2 percentage points. 
D)  By at least 5 percentage points.

Question 8

Table 11-1
Consider the town of Tritown with only three residents,Ed,Jim,and Tony.The three residents are trying to determine how large,in acres,they should build the public park.The table below shows each resident's willingness to pay for each acre of the park.
  
-Refer to Table 11-1.Suppose the cost to build the park is $30 per acre and that the residents have agreed to split the cost of building the park equally.To maximize his own surplus,how many acres would Jim like Tritown to build the park?

Accepted Answer

A)  0 acres 
B)  1 acre 
C)  2 acres 
D)  3 acres 
A)  0 acres 
B)  1 acre 
C)  2 acres 
D)  3 acres

Question 9

One way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)  increase law enforcement in public areas. 
B)  limit access to the commons. 
C)  increase access to the commons. 
D)  decrease taxes. 
A)  increase law enforcement in public areas. 
B)  limit access to the commons. 
C)  increase access to the commons. 
D)  decrease taxes.

Question 10

If one person's use of a good diminishes another person's enjoyment of it,the good is

Accepted Answer

A)  rival in consumption. 
B)  excludable. 
C)  normal. 
D)  exhaustible. 
A)  rival in consumption. 
B)  excludable. 
C)  normal. 
D)  exhaustible.

Question 11

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Accepted Answer

A)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
A)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good.

Question 12

A free rider is a person who pays for a good but does not receive the benefit of it.

Accepted Answer

A) True 
 B)False

Question 13

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.On these days,electricity is

Accepted Answer

A)  excludable,but nonrival in consumption. 
B)  not excludable,but rival in consumption. 
C)  excludable and rival in consumption. 
D)  not excludable and nonrival in consumption. 
A)  excludable,but nonrival in consumption. 
B)  not excludable,but rival in consumption. 
C)  excludable and rival in consumption. 
D)  not excludable and nonrival in consumption.

Question 14

Property rights are well established for

Accepted Answer

A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  both (b)and (c). 
A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  both (b)and (c).

Question 15

Residents of Hong Kong are able to find restaurants that advertise a dish that contains grizzly bear paws.Since it is unlikely that grizzly bear paws are purchased from a private producer of animal paws,we can likely conclude that

Accepted Answer

A)  international laws making it illegal to sell grizzly bear paws are likely to be very effective at eliminating these offerings at Hong Kong restaurants. 
B)  higher penalties for poaching grizzly bears will prevent poachers from killing. 
C)  there are likely to be very few grizzly bear poachers. 
D)  allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of extinction to grizzly bear populations. 
A)  international laws making it illegal to sell grizzly bear paws are likely to be very effective at eliminating these offerings at Hong Kong restaurants. 
B)  higher penalties for poaching grizzly bears will prevent poachers from killing. 
C)  there are likely to be very few grizzly bear poachers. 
D)  allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of extinction to grizzly bear populations.

Question 16

A toll on a congested road is in essence

Accepted Answer

A)  an interstate highway tax. 
B)  a Department of Motor Vehicles tax. 
C)  a gasoline tax. 
D)  a corrective tax. 
A)  an interstate highway tax. 
B)  a Department of Motor Vehicles tax. 
C)  a gasoline tax. 
D)  a corrective tax.

Question 17

The Tragedy of the Commons describes

Accepted Answer

A)  government regulation that is necessary to combat externalities. 
B)  overuse of a common resource relative to its economically efficient use. 
C)  the nonrivalry feature of a common resource. 
D)  an effective cost-benefit analysis. 
A)  government regulation that is necessary to combat externalities. 
B)  overuse of a common resource relative to its economically efficient use. 
C)  the nonrivalry feature of a common resource. 
D)  an effective cost-benefit analysis.

Question 18

If everyone benefits from helping the poor,

Accepted Answer

A)  government intervention cannot improve social well-being. 
B)  eliminating taxes aimed at redistributing income will make rich people better off. 
C)  taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D)  private markets can adequately provide charity programs to help the poor,despite free-rider problems. 
A)  government intervention cannot improve social well-being. 
B)  eliminating taxes aimed at redistributing income will make rich people better off. 
C)  taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D)  private markets can adequately provide charity programs to help the poor,despite free-rider problems.

Question 19

One benefit to the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 20

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Accepted Answer

A)  fiscal analysis. 
B)  monetary analysis. 
C)  welfare analysis. 
D)  cost-benefit analysis. 
A)  fiscal analysis. 
B)  monetary analysis. 
C)  welfare analysis. 
D)  cost-benefit analysis.

Exam 11: Public Goods and Common Resources

When property rights are not well established,

Which of the following is not a typical solution to the "Tragedy of the Commons?"

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

The value and cost of goods are easiest to determine when the goods are

When the absence of property rights causes a market failure,the government can potentially solve the problem

Suppose the cost to erect a tornado siren in a small town is $20,000.In addition,suppose the value of a human life is $10 million.By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

One way to eliminate the Tragedy of the Commons is to

If one person's use of a good diminishes another person's enjoyment of it,the good is

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

A free rider is a person who pays for a good but does not receive the benefit of it.

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.On these days,electricity is

Property rights are well established for

Residents of Hong Kong are able to find restaurants that advertise a dish that contains grizzly bear paws.Since it is unlikely that grizzly bear paws are purchased from a private producer of animal paws,we can likely conclude that

A toll on a congested road is in essence

The Tragedy of the Commons describes

If everyone benefits from helping the poor,

One benefit to the patent system is that it encourages the production of technical knowledge.

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Ten Principles of 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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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

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