Question 1

Even economists who advocate small government agree that national defense is a good that the government should provide.

Accepted Answer

A) True 
 B)False

Question 2

Goods that are not rival in consumption include both

Accepted Answer

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

Question 3

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full,the Sunday Service is

Accepted Answer

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

Question 4

National defense is provided by the government because

Accepted Answer

A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues. 
A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues.

Question 5

Suppose that installing an overhead pedestrian walkway would cost a college town $80,000.The walkway is expected to reduce the risk of fatality by 1.6 percent,and the cost of a human life is estimated at $10 million.The town should

Accepted Answer

A)  install the walkway because the estimated benefit is twice the cost. 
B)  install the walkway because the estimated benefit equals the cost. 
C)  not install the walkway,since the cost is twice the estimated benefit. 
D)  install the walkway,since the cost of even a single life is too great not to take action. 
A)  install the walkway because the estimated benefit is twice the cost. 
B)  install the walkway because the estimated benefit equals the cost. 
C)  not install the walkway,since the cost is twice the estimated benefit. 
D)  install the walkway,since the cost of even a single life is too great not to take action.

Question 6

Neither public goods nor common resources are

Accepted Answer

A)  excludable,but only public goods are not rival in consumption. 
B)  excludable,but only common resources are not rival in consumption. 
C)  rival in consumption,but only public goods are not excludable. 
D)  rival in consumption,but only common resources are not excludable. 
A)  excludable,but only public goods are not rival in consumption. 
B)  excludable,but only common resources are not rival in consumption. 
C)  rival in consumption,but only public goods are not excludable. 
D)  rival in consumption,but only common resources are not excludable.

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Common resources are nonexcludable and nonrival in consumption. 
B)  Uncongested toll roads are an example of the free rider problem. 
C)  When African elephants were privatized,the survival of the species improved. 
D)  Fish in the ocean are excludable but nonrival in consumption. 
A)  Common resources are nonexcludable and nonrival in consumption. 
B)  Uncongested toll roads are an example of the free rider problem. 
C)  When African elephants were privatized,the survival of the species improved. 
D)  Fish in the ocean are excludable but nonrival in consumption.

Question 8

One of the least regulated common resources today is

Accepted Answer

A)  state parks. 
B)  the ocean. 
C)  forest preserves. 
D)  the Great Lakes. 
A)  state parks. 
B)  the ocean. 
C)  forest preserves. 
D)  the Great Lakes.

Question 9

Before considering any public project,the government should

Accepted Answer

A)  (i)only 
B)  (ii)only 
C)  (i)and (ii)only 
D)  (i),(ii),and (iii) 
A)  (i)only 
B)  (ii)only 
C)  (i)and (ii)only 
D)  (i),(ii),and (iii)

Question 10

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.How many acres 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 11

Imagine a 2,000-acre park with picnic benches,trees,and a pond.Suppose it is publicly owned,and people are invited to enjoy its beauty.When the weather is nice,it is difficult to find parking on summer afternoons.Otherwise,it is a great place.An efficient solution to the parking problem would be to

Accepted Answer

A)  prohibit parking in the vicinity of the park. 
B)  charge higher prices for parking at busy times. 
C)  police the parking area and ticket cars that are parked illegally. 
D)  do nothing. 
A)  prohibit parking in the vicinity of the park. 
B)  charge higher prices for parking at busy times. 
C)  police the parking area and ticket cars that are parked illegally. 
D)  do nothing.

Question 12

Both public goods and common resources are

Accepted Answer

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

Question 13

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $80,000.The walkway is expected to reduce the risk of fatality by 0.8 percent,and the cost of a human life is estimated at $10 million.The town should

Accepted Answer

A)  install the walkway because the estimated benefit is twice the cost. 
B)  install the walkway because the estimated benefit equals the cost. 
C)  not install the walkway,since the cost is twice the estimated benefit. 
D)  install the walkway,since the cost of even a single life is too great not to take action. 
A)  install the walkway because the estimated benefit is twice the cost. 
B)  install the walkway because the estimated benefit equals the cost. 
C)  not install the walkway,since the cost is twice the estimated benefit. 
D)  install the walkway,since the cost of even a single life is too great not to take action.

Question 15

Advocates of antipoverty programs believe that fighting poverty

Accepted Answer

A)  can make everyone better off. 
B)  is most successfully accomplished by charities. 
C)  is most efficiently accomplished by the market. 
D)  reduces the well-being of tax payers. 
A)  can make everyone better off. 
B)  is most successfully accomplished by charities. 
C)  is most efficiently accomplished by the market. 
D)  reduces the well-being of tax payers.

Question 16

The old lyric "the best things in life are free"

Accepted Answer

A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market. 
A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market.

Question 17

Goods that are excludable include both

Accepted Answer

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

Question 18

Excessive fishing occurs because

Accepted Answer

A)  each individual fisherman has little incentive to maintain the species for the next year. 
B)  fishermen rely on government managers to worry about fish populations. 
C)  fishermen are unionized,so they are not concerned with externalities. 
D)  fishermen have other marketable skills and do not fear exploitation of fish reserves. 
A)  each individual fisherman has little incentive to maintain the species for the next year. 
B)  fishermen rely on government managers to worry about fish populations. 
C)  fishermen are unionized,so they are not concerned with externalities. 
D)  fishermen have other marketable skills and do not fear exploitation of fish reserves.

Question 19

The privately-owned school system in Smalltown has a virtually unlimited capacity.It accepts all applicants and operates on both tuition and private donations.Although every resident places value on having an educated community,the school's revenues have suffered lately due to a large decline in private donations from the elderly population.Since the benefit that each citizen receives from having an educated community is a public good,which of the following would not be correct?

Accepted Answer

A)  The free-rider problem causes the private market to undersupply education to the community. 
B)  The government can potentially help the market reach a socially optimal level of education. 
C)  A tax increase to pay for education could potentially make the community better off. 
D)  The private market is the best way to supply education. 
A)  The free-rider problem causes the private market to undersupply education to the community. 
B)  The government can potentially help the market reach a socially optimal level of education. 
C)  A tax increase to pay for education could potentially make the community better off. 
D)  The private market is the best way to supply education.

Question 20

A free rider is a person who

Accepted Answer

A)  will only purchase a product on sale. 
B)  receives the benefit of a good but avoids paying for it. 
C)  can produce a good at no cost. 
D)  rides public transit regularly. 
A)  will only purchase a product on sale. 
B)  receives the benefit of a good but avoids paying for it. 
C)  can produce a good at no cost. 
D)  rides public transit regularly.

Exam 11: Public Goods and Common Resources

Even economists who advocate small government agree that national defense is a good that the government should provide.

Goods that are not rival in consumption include both

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full,the Sunday Service is

National defense is provided by the government because

Suppose that installing an overhead pedestrian walkway would cost a college town $80,000.The walkway is expected to reduce the risk of fatality by 1.6 percent,and the cost of a human life is estimated at $10 million.The town should

Neither public goods nor common resources are

Which of the following statements is correct?

One of the least regulated common resources today is

Before considering any public project,the government should

Imagine a 2,000-acre park with picnic benches,trees,and a pond.Suppose it is publicly owned,and people are invited to enjoy its beauty.When the weather is nice,it is difficult to find parking on summer afternoons.Otherwise,it is a great place.An efficient solution to the parking problem would be to

Both public goods and common resources are

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $80,000.The walkway is expected to reduce the risk of fatality by 0.8 percent,and the cost of a human life is estimated at $10 million.The town should

Advocates of antipoverty programs believe that fighting poverty

The old lyric "the best things in life are free"

Goods that are excludable include both

Excessive fishing occurs because

A free rider is a person who

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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