Question 1

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

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 $300.How many trees should be planted to maximize the total surplus of the four homeowners?

Accepted Answer

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

Question 7

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.Suppose that the Minnesota State Park Service institutes a variable fee structure.On weekdays when the picnic areas get little use,the fee is zero.On normal weekends,the fee is $8 per person.On holiday weekends,the fee is $14 per person.The fee system corrects a problem known as the

Accepted Answer

A)  Coase theorem. 
B)  free rider problem. 
C)  Tragedy of the Commons. 
D)  public goods problem. 
A)  Coase theorem. 
B)  free rider problem. 
C)  Tragedy of the Commons. 
D)  public goods problem.

Question 8

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?

Accepted Answer

A)  Lobsters are rival but not excludable. 
B)  The lobster population is an example of the tragedy of the commons. 
C)  Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population. 
D)  If left unregulated,the lobster population will likely increase. 
A)  Lobsters are rival but not excludable. 
B)  The lobster population is an example of the tragedy of the commons. 
C)  Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population. 
D)  If left unregulated,the lobster population will likely increase.

Question 9

The Great Lakes are

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 10

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Accepted Answer

A)  $50,000. 
B)  $180,000. 
C)  $230,000. 
D)  $500,000. 
A)  $50,000. 
B)  $180,000. 
C)  $230,000. 
D)  $500,000.

Question 11

An overcrowded beach is an example of

Accepted Answer

A)  a positive externality. 
B)  a Tragedy of the Commons. 
C)  an environmentally inefficient allocation of resources. 
D)  an economically unfair allocation of resources. 
A)  a positive externality. 
B)  a Tragedy of the Commons. 
C)  an environmentally inefficient allocation of resources. 
D)  an economically unfair allocation of resources.

Question 12

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Accepted Answer

A) True 
 B)False

Question 13

Each of the following would be considered a common resource except

Accepted Answer

A)  clean air. 
B)  congested nontoll roads. 
C)  national defense. 
D)  open grazing land. 
A)  clean air. 
B)  congested nontoll roads. 
C)  national defense. 
D)  open grazing land.

Question 14

Which of the following quotations illustrates the Tragedy of the Commons?

Accepted Answer

A)  "A bird in the hand is worth two in the bush." 
B)  "The only difference between the rich and other people is that the rich have more money." 
C)  "What is common to many is taken least care of,for all men have greater regard for what is their own than for what they possess in common with others." 
D)  "Anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no head." 
A)  "A bird in the hand is worth two in the bush." 
B)  "The only difference between the rich and other people is that the rich have more money." 
C)  "What is common to many is taken least care of,for all men have greater regard for what is their own than for what they possess in common with others." 
D)  "Anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no head."

Question 15

When one person enjoys the benefit of a tornado siren,she reduces the benefit to others.

Accepted Answer

A) True 
 B)False

Question 16

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 17

A free rider is a person who pays for a good but does not receive the benefit of it.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000.The walkway is expected to reduce the risk of fatality by 1.5 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)  be indifferent between installing and not installing 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)  be indifferent between installing and not installing 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 19

If the use of a common resource is not regulated,

Accepted Answer

A)  no one can enjoy it. 
B)  it will tend to be underused. 
C)  property rights will be clearly defined. 
D)  it will be overused. 
A)  no one can enjoy it. 
B)  it will tend to be underused. 
C)  property rights will be clearly defined. 
D)  it will be overused.

Question 20

Producers have little incentive to produce a public good because

Accepted Answer

A)  the social benefit is less than the private benefit. 
B)  the social benefit is less than the social cost. 
C)  there is a free-rider problem. 
D)  there is a Tragedy of the Commons. 
A)  the social benefit is less than the private benefit. 
B)  the social benefit is less than the social cost. 
C)  there is a free-rider problem. 
D)  there is a Tragedy of the Commons.

Exam 11: Public Goods and Common Resources

The pollution market failure is an example of the free rider problem.

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

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Advocates of antipoverty programs believe that fighting poverty

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

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?

The Great Lakes are

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

An overcrowded beach is an example of

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Each of the following would be considered a common resource except

Which of the following quotations illustrates the Tragedy of the Commons?

When one person enjoys the benefit of a tornado siren,she reduces the benefit to others.

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

A free rider is a person who pays for a good but does not receive the benefit of it.

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000.The walkway is expected to reduce the risk of fatality by 1.5 percent,and the cost of a human life is estimated at $10 million.The town should

If the use of a common resource is not regulated,

Producers have little incentive to produce 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

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