Question 1

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Accepted Answer

A)  Without prices,it is difficult to be sure how much people really value a good. 
B)  Analysts can't be sure that the respondents to surveys are telling the truth. 
C)  Analysis must include not only the cost of building the project but also the cost of maintenance,if any. 
D)  People value goods differently if they are publicly provided rather than privately provided. 
A)  Without prices,it is difficult to be sure how much people really value a good. 
B)  Analysts can't be sure that the respondents to surveys are telling the truth. 
C)  Analysis must include not only the cost of building the project but also the cost of maintenance,if any. 
D)  People value goods differently if they are publicly provided rather than privately provided.

Question 2

A good that is excludable but not rival is known as a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 3

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except

Accepted Answer

A)  The toll provides an incentive for commuters to drive at times other than rush hour. 
B)  The toll provides an incentive for commuters to use public transit rather than driving. 
C)  The toll provides an incentive for commuters to drive more fuel-efficient cars. 
D)  The toll provides an incentive for commuters to car-pool. 
A)  The toll provides an incentive for commuters to drive at times other than rush hour. 
B)  The toll provides an incentive for commuters to use public transit rather than driving. 
C)  The toll provides an incentive for commuters to drive more fuel-efficient cars. 
D)  The toll provides an incentive for commuters to car-pool.

Question 4

Using a toll to reduce traffic when congestion is greatest is an example of a

Accepted Answer

A)  regulation solution. 
B)  command-and-control policy. 
C)  corrective tax. 
D)  Coase theorem solution. 
A)  regulation solution. 
B)  command-and-control policy. 
C)  corrective tax. 
D)  Coase theorem solution.

Question 5

If a road is congested,then use of that road by an additional person would lead to a

Accepted Answer

A)  negative externality. 
B)  positive externality. 
C)  Pigovian externality. 
D)  free-rider problem with rush hour drivers stuck in traffic. 
A)  negative externality. 
B)  positive externality. 
C)  Pigovian externality. 
D)  free-rider problem with rush hour drivers stuck in traffic.

Question 6

Knowledge is an example of a

Accepted Answer

A)  public good. 
B)  private good. 
C)  common resource. 
D)  natural monopoly good. 
A)  public good. 
B)  private good. 
C)  common resource. 
D)  natural monopoly good.

Question 7

Four friends decide to meet at a Chinese restaurant for dinner.They decide that each person will order an item off the menu,and they will share all dishes.They will split the cost of the final bill evenly among each of the people at the table.A Tragedy of the Commons problem is likely for each of the following reasons except

Accepted Answer

A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats,he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption. 
A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats,he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption.

Question 8

Table 11-3
This table describes the defense demands for three groups of people in Happyville.The second,third,and fourth column shows the quantity that a group will demand for a given price (the first column).
  
-Refer to Table 11-3.If the marginal cost of national defense is constant at $12 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A)  3 units 
B)  13 units 
C)  22 units 
D)  33 units 
A)  3 units 
B)  13 units 
C)  22 units 
D)  33 units

Question 9

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Accepted Answer

A)  over time,the aquifer is likely to be overused. 
B)  each farmer has a sufficient incentive to conserve the water. 
C)  state governments have an incentive to insure that their farmers do not overuse the water. 
D)  resources would be used more efficiently if the government paid for the pumps farmers use to get the water. 
A)  over time,the aquifer is likely to be overused. 
B)  each farmer has a sufficient incentive to conserve the water. 
C)  state governments have an incentive to insure that their farmers do not overuse the water. 
D)  resources would be used more efficiently if the government paid for the pumps farmers use to get the water.

Question 10

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

Accepted Answer

A)  the local government should put on the display,but you should not. 
B)  you should still put on the display,but the local government should not. 
C)  neither you nor the local government should put on the display. 
D)  either you or the local government should put on the display. 
A)  the local government should put on the display,but you should not. 
B)  you should still put on the display,but the local government should not. 
C)  neither you nor the local government should put on the display. 
D)  either you or the local government should put on the display.

Question 11

In a cost-benefit analysis,the value of a human life is sometimes calculated on the basis of

Accepted Answer

A)  the risks that a person voluntarily exposes herself to in her job and/or recreational choices. 
B)  the value of each individual's assets. 
C)  the belief that human life is priceless. 
D)  the amount of resources required to adequately sustain life. 
A)  the risks that a person voluntarily exposes herself to in her job and/or recreational choices. 
B)  the value of each individual's assets. 
C)  the belief that human life is priceless. 
D)  the amount of resources required to adequately sustain life.

Question 12

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 $14 per acres.How large should the park be to maximize total surplus from the park in Tritown?

Accepted Answer

A)  2 acres 
B)  3 acres 
C)  4 acres 
D)  5 acres 
A)  2 acres 
B)  3 acres 
C)  4 acres 
D)  5 acres

Question 13

Which of the following is a disadvantage of government provision of a public good?

Accepted Answer

A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage. 
A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage.

Question 14

Goods that are not excludable are usually

Accepted Answer

A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge. 
A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge.

Question 15

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis 
A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis

Question 16

A good is excludable if

Accepted Answer

A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it. 
A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it.

Question 17

The Great Lakes are

Accepted Answer

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

Question 18

The Massachusetts Turnpike is a tolled freeway running through the state of Massachusetts.Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway.Suppose that despite the tolls,many motorists in the urban areas use the Turnpike causing traffic to slow during peak times.What type of good would the Turnpike be classified as in this case?

Accepted Answer

A)  Private good 
B)  Natural monopoly 
C)  Common resource 
D)  Public good 
A)  Private good 
B)  Natural monopoly 
C)  Common resource 
D)  Public good

Question 19

Which of the following goods is rival in consumption and excludable?

Accepted Answer

A)  a tornado siren 
B)  an uncongested toll road 
C)  a home 
D)  the environment 
A)  a tornado siren 
B)  an uncongested toll road 
C)  a home 
D)  the environment

Question 20

Private goods are both

Accepted Answer

A)  excludable and nonrival in consumption. 
B)  nonexcludable and rival in consumption. 
C)  excludable and rival in consumption. 
D)  nonexcludable and nonrival consumption. 
A)  excludable and nonrival in consumption. 
B)  nonexcludable and rival in consumption. 
C)  excludable and rival in consumption. 
D)  nonexcludable and nonrival consumption.

Exam 11: Public Goods and Common Resources

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

A good that is excludable but not rival is known as a natural monopoly.

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except

Using a toll to reduce traffic when congestion is greatest is an example of a

If a road is congested,then use of that road by an additional person would lead to a

Knowledge is an example of a

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

In a cost-benefit analysis,the value of a human life is sometimes calculated on the basis of

Which of the following is a disadvantage of government provision of a public good?

Goods that are not excludable are usually

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

A good is excludable if

The Great Lakes are

Which of the following goods is rival in consumption and excludable?

Private goods are both

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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