Question 1

Government policy can potentially raise economic well-being

Accepted Answer

A)  in all markets for goods and services. 
B)  in economic models,but not in reality. 
C)  when a good does not have a price attached to it. 
D)  never. 
A)  in all markets for goods and services. 
B)  in economic models,but not in reality. 
C)  when a good does not have a price attached to it. 
D)  never.

Question 2

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Accepted Answer

A)  Cows reproduce at a high rate and have adapted well to their environment. 
B)  Public policies protect cows from predators and diseases. 
C)  Cows are privately owned,whereas many endangered species are owned by no one. 
D)  There is a natural ecological balance between the birth rate of cows and human consumption. 
A)  Cows reproduce at a high rate and have adapted well to their environment. 
B)  Public policies protect cows from predators and diseases. 
C)  Cows are privately owned,whereas many endangered species are owned by no one. 
D)  There is a natural ecological balance between the birth rate of cows and human consumption.

Question 3

The U.S.military defends Jacob from foreign attackers.The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it.For this reason,we say that national defense is

Accepted Answer

A)  excludable. 
B)  not excludable. 
C)  rival in consumption. 
D)  not rival in consumption. 
A)  excludable. 
B)  not excludable. 
C)  rival in consumption. 
D)  not rival in consumption.

Question 4

Table 11-5
A small strip mall contains four retail stores,and crime has recently been on the increase in the neighborhood of the strip mall.The owners of the four stores - Stores A,B,C,and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards.The table represents their willingness to pay,that is,the maximum amount that each store owner is willing to contribute,per day,to hire each security guard.
  
-Refer to Table 11-5.Suppose the cost to hire each individual guard is $130 per day.How many guards should be hired to maximize the total surplus of the four store owners?

Accepted Answer

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

Question 5

Which of the following goods is excludable but not rival in consumption?

Accepted Answer

A)  a congested toll road 
B)  fire protection in a small town 
C)  a tornado siren 
D)  whales in the ocean 
A)  a congested toll road 
B)  fire protection in a small town 
C)  a tornado siren 
D)  whales in the ocean

Question 6

The idea that "externalities arise because something of value has no price attached to it" is associated with

Accepted Answer

A)  public goods,but not with common resources. 
B)  common resources,but not with public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources. 
A)  public goods,but not with common resources. 
B)  common resources,but not with public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources.

Question 7

The Mansfield Public Library has a large number of books that anyone with a library card may borrow.Anyone can obtain a card for free.Because the number of copies of each book is limited,not everyone can have the same book at the same time.What type of good would the library books be classified as in this case?

Accepted Answer

A)  private goods 
B)  club goods 
C)  common resources 
D)  public goods 
A)  private goods 
B)  club goods 
C)  common resources 
D)  public goods

Question 8

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

Accepted Answer

A)  1 percentage point. 
B)  3 percentage points. 
C)  5 percentage points. 
D)  30 percentage points. 
A)  1 percentage point. 
B)  3 percentage points. 
C)  5 percentage points. 
D)  30 percentage points.

Question 9

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 10

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Accepted Answer

Eliminating poverty is not a good that t

Question 11

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Accepted Answer

A)  Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products. 
B)  Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price. 
C)  Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered. 
D)  American drivers and Soviet shoppers have nothing in common. 
A)  Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products. 
B)  Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price. 
C)  Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered. 
D)  American drivers and Soviet shoppers have nothing in common.

Question 12

Table 11-4
There are four homes along Belmont Circle,which surrounds a small plot of land.The land currently has no trees,and the 4 homeowners -- Adams,Benitez,Chen,and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees.The table represents their willingness to pay,that is,the maximum amount that each homeowner is willing to contribute toward each tree.
  
-Refer to Table 11-4.Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split all tree-planting costs equally.How many trees would Adams prefer to plant?

Accepted Answer

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

Question 13

Table 11-2
Consider a small town with only three families,the Johnson family,the Marshall family,and the Walker 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 $180 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Johnson's like the town to install?

Accepted Answer

A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights 
A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights

Question 14

A pair of jeans is rival but non-excludable.

Accepted Answer

A) True 
 B)False

Question 15

Cost-benefit analysis is important to determine the role of government in our economy because

Accepted Answer

A)  the government should provide all goods for which the benefits exceed the costs. 
B)  cost-benefit analysis identifies the possible gains to society from government provision of a particular good. 
C)  markets for private goods cannot effectively assign costs and benefits. 
D)  cost-benefit analysis is the best tool to identify market failures. 
A)  the government should provide all goods for which the benefits exceed the costs. 
B)  cost-benefit analysis identifies the possible gains to society from government provision of a particular good. 
C)  markets for private goods cannot effectively assign costs and benefits. 
D)  cost-benefit analysis is the best tool to identify market failures.

Question 16

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 17

Which of the following is an approach used by economists to calculate the value of a human life?

Accepted Answer

A)  comparing the salaries of people who live in cities with more traffic lights to those who live in cities with fewer traffic lights 
B)  comparing the wages of more risky occupations to less risky occupations 
C)  comparing the costs of vehicles with safety features such as side-impact airbags to those without such safety features 
D)  All of the above are correct. 
A)  comparing the salaries of people who live in cities with more traffic lights to those who live in cities with fewer traffic lights 
B)  comparing the wages of more risky occupations to less risky occupations 
C)  comparing the costs of vehicles with safety features such as side-impact airbags to those without such safety features 
D)  All of the above are correct.

Question 18

Table 11-2
Consider a small town with only three families,the Johnson family,the Marshall family,and the Walker 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 $450.How many streetlights should the town install to maximize total surplus from the streetlights?

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 19

Figure 11-1
  
-Refer to Figure 11-1.Which of the following items is not an example of the type of good represented by Box D?

Accepted Answer

A)  a mathematical theorem 
B)  an uncongested toll road 
C)  national defense 
D)  fighting poverty 
A)  a mathematical theorem 
B)  an uncongested toll road 
C)  national defense 
D)  fighting poverty

Question 20

A tax on gasoline often reduces road congestion because gasoline

Accepted Answer

A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good,while driving is an inferior good. 
D)  is an inferior good,while driving is a normal good. 
A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good,while driving is an inferior good. 
D)  is an inferior good,while driving is a normal good.

Government policy can potentially raise economic well-being

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

The U.S.military defends Jacob from foreign attackers.The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it.For this reason,we say that national defense is

Which of the following goods is excludable but not rival in consumption?

The idea that "externalities arise because something of value has no price attached to it" is associated with

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

A pair of jeans is rival but non-excludable.

Cost-benefit analysis is important to determine the role of government in our economy because

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

Which of the following is an approach used by economists to calculate the value of a human life?

Figure 11-1 -Refer to Figure 11-1.Which of the following items is not an example of the type of good represented by Box D?

A tax on gasoline often reduces road congestion because gasoline

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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Exam 11: Public Goods and Common Resources

Government policy can potentially raise economic well-being

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

The U.S.military defends Jacob from foreign attackers.The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it.For this reason,we say that national defense is

Which of the following goods is excludable but not rival in consumption?

The idea that "externalities arise because something of value has no price attached to it" is associated with

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

A pair of jeans is rival but non-excludable.

Cost-benefit analysis is important to determine the role of government in our economy because

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

Which of the following is an approach used by economists to calculate the value of a human life?

Figure 11-1 -Refer to Figure 11-1.Which of the following items is not an example of the type of good represented by Box D?

A tax on gasoline often reduces road congestion because gasoline

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Filters