Question 1

Nonexcludability causes:

Accepted Answer

A) people to demand a higher quantity than they would if they had to pay for what they consumed. 
B) people to demand a lower quantity than they would if they paid for what they consumed. 
C) firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good. 
D) firms to supply a higher quantity than they would if they had to pay for what they supplied. 
A) people to demand a higher quantity than they would if they had to pay for what they consumed. 
B) people to demand a lower quantity than they would if they paid for what they consumed. 
C) firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good. 
D) firms to supply a higher quantity than they would if they had to pay for what they supplied.

Question 2

The marginal social benefit is:

Accepted Answer

A) the sum of the marginal benefit gained by each individual user. 
B) the benefit gained by the last user. 
C) the total benefit gained by the last user. 
D) the sum of the benefit gained by each individual user. 
A) the sum of the marginal benefit gained by each individual user. 
B) the benefit gained by the last user. 
C) the total benefit gained by the last user. 
D) the sum of the benefit gained by each individual user.

Question 3

Using a common resource:

Accepted Answer

A) creates a positive externality for others. 
B) maximizes total surplus. 
C) is an irrational decision. 
D) imposes a negative externality on others. 
A) creates a positive externality for others. 
B) maximizes total surplus. 
C) is an irrational decision. 
D) imposes a negative externality on others.

Question 4

One of the difficulties of the government privatizing a common resource is:

Accepted Answer

A) figuring out who owns what when many are using the resource. 
B) deciding which individuals will have to decrease their consumption. 
C) compounded the more users there are. 
D) All of these statements are true. 
A) figuring out who owns what when many are using the resource. 
B) deciding which individuals will have to decrease their consumption. 
C) compounded the more users there are. 
D) All of these statements are true.

Question 5

Social disapproval is likely to be more effective:

Accepted Answer

A) in a small town than a large city. 
B) in solving a free rider problem than a tragedy of the commons problem. 
C) than taxation. 
D) All of these statements are true. 
A) in a small town than a large city. 
B) in solving a free rider problem than a tragedy of the commons problem. 
C) than taxation. 
D) All of these statements are true.

Question 6

When the free rider problem is present in a market:

Accepted Answer

A) the good will be oversupplied. 
B) the good will be underconsumed. 
C) the good is rival in consumption. 
D) the good is not excludable. 
A) the good will be oversupplied. 
B) the good will be underconsumed. 
C) the good is rival in consumption. 
D) the good is not excludable.

Question 7

An artificially scarce good is:

Accepted Answer

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

Question 8

Which of the following is likely to cause market failure and be undersupplied?

Accepted Answer

A) Research 
B) Orange juice 
C) River water 
D) Grazing pasture 
A) Research 
B) Orange juice 
C) River water 
D) Grazing pasture

Question 9

A modern example of privatizing a common resource is:

Accepted Answer

A) patents. 
B) quotas. 
C) taxes. 
D) subsidies. 
A) patents. 
B) quotas. 
C) taxes. 
D) subsidies.

Question 10

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the problem of overuse if:

Accepted Answer

A) countries have the resources to enforce them. 
B) the community agrees to aid in its enforcement. 
C) the community affected participates in setting the punishments for breaking the policy. 
D) None of these statements is true. 
A) countries have the resources to enforce them. 
B) the community agrees to aid in its enforcement. 
C) the community affected participates in setting the punishments for breaking the policy. 
D) None of these statements is true.

Exam 19: Public Goods and Common Resources

Nonexcludability causes:

The marginal social benefit is:

Using a common resource:

One of the difficulties of the government privatizing a common resource is:

Social disapproval is likely to be more effective:

When the free rider problem is present in a market:

An artificially scarce good is:

Which of the following is likely to cause market failure and be undersupplied?

A modern example of privatizing a common resource is:

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the problem of overuse if:

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