Question 1

A common theme among examples of market failure is

Accepted Answer

A)  the good being provided harms society in some systematic way. 
B)  some item of value does not have an owner with the legal authority to control it. 
C)  cost-benefit analysis will show that private markets should provide the goods and services. 
D)  government intervention decreases the social benefits. 
A)  the good being provided harms society in some systematic way. 
B)  some item of value does not have an owner with the legal authority to control it. 
C)  cost-benefit analysis will show that private markets should provide the goods and services. 
D)  government intervention decreases the social benefits.

Question 2

Figure 11-1
  
-Refer to Figure 11-1.For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Accepted Answer

A)  Box A and Box B 
B)  Box A and Box C 
C)  Box B and Box D 
D)  Box C and Box D 
A)  Box A and Box B 
B)  Box A and Box C 
C)  Box B and Box D 
D)  Box C and Box D

Question 3

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 4

Figure 11-1
  
-Refer to Figure 11-1.The more Jane uses good x,the less of that good there is for other people to use.Neither Jane nor anyone else can be prevented from using the good.Good x is an example of the type of good that belongs in

Accepted Answer

A)  Box A,which represents private goods. 
B)  Box B,which represents common resources. 
C)  Box C,which represents common resources. 
D)  Box D,which represents public goods. 
A)  Box A,which represents private goods. 
B)  Box B,which represents common resources. 
C)  Box C,which represents common resources. 
D)  Box D,which represents public goods.

Question 5

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Accepted Answer

A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good. 
A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good.

Question 6

When a good is excludable,

Accepted Answer

A)  one person's use of the good diminishes another person's ability to use it. 
B)  people can be prevented from using the good. 
C)  no more than one person can use the good at the same time. 
D)  everyone will be excluded from using the good. 
A)  one person's use of the good diminishes another person's ability to use it. 
B)  people can be prevented from using the good. 
C)  no more than one person can use the good at the same time. 
D)  everyone will be excluded from using the good.

Question 7

Depending on congestion,national parks can be either a common resource or a public good.

Accepted Answer

A) True 
 B)False

Question 8

The goal of requiring licenses for hunting and fishing is

Accepted Answer

A)  to reduce the use of a common resource. 
B)  to ensure that the people hunting and fishing are qualified. 
C)  to generate revenue for the government. 
D)  to monitor compliance with federal gun laws. 
A)  to reduce the use of a common resource. 
B)  to ensure that the people hunting and fishing are qualified. 
C)  to generate revenue for the government. 
D)  to monitor compliance with federal gun laws.

Question 9

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Accepted Answer

A)  Coase theorem 
B)  Tragedy of the Commons 
C)  Cost-benefit analysis 
D)  Clean Air Act 
A)  Coase theorem 
B)  Tragedy of the Commons 
C)  Cost-benefit analysis 
D)  Clean Air Act

Question 10

Under which of the following scenarios would a park be considered a club good?

Accepted Answer

A)  Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables. 
B)  Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge,but frequently all of the picnic tables are in use. 
A)  Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables. 
B)  Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge,but frequently all of the picnic tables are in use.

Question 11

Nontoll roads can be either public goods or common resources,depending upon the degree of congestion.

Accepted Answer

A) True 
 B)False

Question 12

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.Which of the following statements about the aquifer is correct?

Accepted Answer

A)  The aquifer is a public good which must be publicly owned to be used efficiently. 
B)  The aquifer is a private good which must be privately owned to be used efficiently. 
C)  The aquifer is a common property resource which will be overused if no one owns it. 
D)  The aquifer is a club good which should be left as it is. 
A)  The aquifer is a public good which must be publicly owned to be used efficiently. 
B)  The aquifer is a private good which must be privately owned to be used efficiently. 
C)  The aquifer is a common property resource which will be overused if no one owns it. 
D)  The aquifer is a club good which should be left as it is.

Question 13

Economists think that the best way to determine the value of a human life is to

Accepted Answer

A)  evaluate the value of a person's expected earnings in the labor market. 
B)  evaluate the risks people are willing to take and what they would have to be paid to take them. 
C)  determine a person's accumulated wealth at the time of death. 
D)  do nothing; human life is priceless. 
A)  evaluate the value of a person's expected earnings in the labor market. 
B)  evaluate the risks people are willing to take and what they would have to be paid to take them. 
C)  determine a person's accumulated wealth at the time of death. 
D)  do nothing; human life is priceless.

Question 14

The government provides public goods because

Accepted Answer

A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers. 
A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers.

Question 15

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 16

Figure 11-1
  
-Refer to Figure 11-1.The box labeled D represents

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 17

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False

Question 18

A streetlight is a

Accepted Answer

A)  private good. 
B)  club good. 
C)  common resource. 
D)  public good. 
A)  private good. 
B)  club good. 
C)  common resource. 
D)  public good.

Question 19

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Accepted Answer

A)  Washington,D.C. 
B)  Sydney 
C)  Tokyo 
D)  London 
A)  Washington,D.C. 
B)  Sydney 
C)  Tokyo 
D)  London

Question 20

National defense is a classic example of a public good because

Accepted Answer

A)  there is no market for private security services. 
B)  it is difficult to exclude people from receiving the benefits from national defense once it is provided. 
C)  everyone agrees that some level of national defense is important,but only the government knows the optimal amount. 
D)  there are no private firms willing to supply defense goods such as tanks and weapons. 
A)  there is no market for private security services. 
B)  it is difficult to exclude people from receiving the benefits from national defense once it is provided. 
C)  everyone agrees that some level of national defense is important,but only the government knows the optimal amount. 
D)  there are no private firms willing to supply defense goods such as tanks and weapons.

Exam 11: Public Goods and Common Resources

A common theme among examples of market failure is

Figure 11-1 -Refer to Figure 11-1.For which two boxes is it the case that externalities arise because something of value has no price attached to it?

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Figure 11-1 -Refer to Figure 11-1.The more Jane uses good x,the less of that good there is for other people to use.Neither Jane nor anyone else can be prevented from using the good.Good x is an example of the type of good that belongs in

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

When a good is excludable,

Depending on congestion,national parks can be either a common resource or a public good.

The goal of requiring licenses for hunting and fishing is

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Under which of the following scenarios would a park be considered a club good?

Nontoll roads can be either public goods or common resources,depending upon the degree of congestion.

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.Which of the following statements about the aquifer is correct?

Economists think that the best way to determine the value of a human life is to

The government provides public goods because

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

Figure 11-1 -Refer to Figure 11-1.The box labeled D represents

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

A streetlight is a

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

National defense is a classic example of a public good because

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