Question 1

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Accepted Answer

A)  regulation 
B)  taxes 
C)  turning the common resource into a public good 
D)  turning the common resource into a private good 
A)  regulation 
B)  taxes 
C)  turning the common resource into a public good 
D)  turning the common resource into a private good

Question 2

A free rider problem arrises when

Accepted Answer

A)  there are very few beneficiaries and exclusion of any one of them is possible. 
B)  there are many beneficiaries and exclusion of any one of them is possible. 
C)  there are many beneficiaries and exclusion of any one of them is impossible. 
D)  there are very few beneficiaries and they all try to use the good simultaneously. 
A)  there are very few beneficiaries and exclusion of any one of them is possible. 
B)  there are many beneficiaries and exclusion of any one of them is possible. 
C)  there are many beneficiaries and exclusion of any one of them is impossible. 
D)  there are very few beneficiaries and they all try to use the good simultaneously.

Question 3

The overuse of a common resource relative to its economically efficient use is called

Accepted Answer

A)  the free rider problem. 
B)  the Tragedy of the Commons. 
C)  a public good. 
D)  cost-benefit analysis. 
A)  the free rider problem. 
B)  the Tragedy of the Commons. 
C)  a public good. 
D)  cost-benefit analysis.

Question 4

Using a toll to reduce traffic when congestion is greatest is an example of a

Accepted Answer

A)  regulation solution. 
B)  command-and-control policy. 
C)  corrective tax. 
D)  Coase theorem solution. 
A)  regulation solution. 
B)  command-and-control policy. 
C)  corrective tax. 
D)  Coase theorem solution.

Question 5

Which of the following is an example of the Tragedy of the Commons?

Accepted Answer

A)  The number of professional football teams increases to the point where the quality of the games decreases,as does television viewership. 
B)  The number of satellites increases to the point where they begin running into each other. 
C)  Disney World becomes so crowded that it institutes a lottery for admissions. 
D)  A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats. 
A)  The number of professional football teams increases to the point where the quality of the games decreases,as does television viewership. 
B)  The number of satellites increases to the point where they begin running into each other. 
C)  Disney World becomes so crowded that it institutes a lottery for admissions. 
D)  A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.

Question 6

A city street is

Accepted Answer

A)  always a public good,whether or not it is congested. 
B)  a public good when it is congested,but it is a common resource when it is not congested. 
C)  a common resource when it is congested,but it is a public good when it is not congested. 
D)  always a common resource,whether or not it is congested. 
A)  always a public good,whether or not it is congested. 
B)  a public good when it is congested,but it is a common resource when it is not congested. 
C)  a common resource when it is congested,but it is a public good when it is not congested. 
D)  always a common resource,whether or not it is congested.

Question 7

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 guard is $120 per day and the 4 store owners have agreed to split the costs of hiring guards equally.How many guards would the owner of Store C prefer to hire?

Accepted Answer

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

Question 8

When something of value has no price attached to it,

Accepted Answer

A)  externalities will be present. 
B)  production of the product has no cost. 
C)  government should not intervene to produce the product. 
D)  private companies will eventually produce the product,and the good will no longer be free. 
A)  externalities will be present. 
B)  production of the product has no cost. 
C)  government should not intervene to produce the product. 
D)  private companies will eventually produce the product,and the good will no longer be free.

Question 9

Which of the following is an example of general knowledge,as opposed to specific knowledge that can be patented?

Accepted Answer

A)  the invention of a longer-lasting battery 
B)  a mathematical theorem 
C)  a method for constucting a high-performance microchip 
D)  the chemical formula for an adhesive 
A)  the invention of a longer-lasting battery 
B)  a mathematical theorem 
C)  a method for constucting a high-performance microchip 
D)  the chemical formula for an adhesive

Question 10

A cost-benefit analysis of a highway is difficult to conduct because analysts

Accepted Answer

A)  cannot estimate the explicit cost of a project that has not been completed. 
B)  are unlikely to have access to costs on similar projects. 
C)  are not able to consider the opportunity cost of resources. 
D)  will have difficulty estimating the value of the highway. 
A)  cannot estimate the explicit cost of a project that has not been completed. 
B)  are unlikely to have access to costs on similar projects. 
C)  are not able to consider the opportunity cost of resources. 
D)  will have difficulty estimating the value of the highway.

Question 11

Table 11-1
Consider the town of Anywhere with only three residents,Mary,Bill,and Tricia.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 $33 per acre and that the residents have agreed to split the cost of building the park equally.If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park,how much total surplus will Mary receive?

Accepted Answer

A)  -$6 
B)  -$3 
C)  $3 
D)  $10 
A)  -$6 
B)  -$3 
C)  $3 
D)  $10

Question 12

Which of the following statements is not correct?

Accepted Answer

A)  Medical research can be an example of a public good. 
B)  The private market will tend to undersupply public goods. 
C)  The free-rider problem occurs when a good is nonexcludable. 
D)  All goods provided by the government are public goods. 
A)  Medical research can be an example of a public good. 
B)  The private market will tend to undersupply public goods. 
C)  The free-rider problem occurs when a good is nonexcludable. 
D)  All goods provided by the government are public goods.

Question 13

Table 11-3
This table describes the defense demands for three equal sized groups of people in Nirvanaville.The second,third,and fourth column shows the quantity that a group will demand for a given price (the first column).
  
-Refer to Table 11-3.What is the value of the 13th unit of national defense in Nirvananville?

Accepted Answer

A)  $8 
B)  $14 
C)  $18 
D)  $24 
A)  $8 
B)  $14 
C)  $18 
D)  $24

Question 14

Although national defense is currently a public good,economists who advocate small government generally agree that the U.S.should privatize national defense to increase the efficiency of the good.

Accepted Answer

A) True 
 B)False

Question 15

A stairwell in a certain office building is always congested at 12:00 p.m.and 1:00 p.m.The congestion is so bad that people have been complaining to the building's owner.Which of the following methods would be the most efficient way of reducing congestion?

Accepted Answer

A)  Assign each person in the building a time when they are allowed to use the stairwell. 
B)  Encourage people to voluntarily keep off the stairwell during peak times. 
C)  Charge everyone who uses the stairwell when it is congested the same fee.People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D)  Hold a lottery to determine who wins the right to use the stairwell at peak times. 
A)  Assign each person in the building a time when they are allowed to use the stairwell. 
B)  Encourage people to voluntarily keep off the stairwell during peak times. 
C)  Charge everyone who uses the stairwell when it is congested the same fee.People who value the use of the stairs the most will be the ones who use the stairwell at peak times. 
D)  Hold a lottery to determine who wins the right to use the stairwell at peak times.

Question 16

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

Accepted Answer

A) True 
 B)False

Question 17

If Dave and Jesse are the only two fishermen in town and neither is bothered by the other's fishing,the lake they fish in is not a common resource.

Accepted Answer

A) True 
 B)False

Question 18

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Accepted Answer

No one owns the wild salmon,while privat

Question 19

Why is the commercial value of ivory a threat to the elephant,while the commercial value of beef is the cow's guardian?

Accepted Answer

A)  Elephants live in Africa,whereas cows live in the United States. 
B)  Elephants are a common resource. 
C)  Cows are a common resource. 
D)  Cows are a public good. 
A)  Elephants live in Africa,whereas cows live in the United States. 
B)  Elephants are a common resource. 
C)  Cows are a common resource. 
D)  Cows are a public good.

Question 20

One proposed solution to overused,deteriorating national parks would be to

Accepted Answer

A)  increase the number of bears through breeding programs. 
B)  have Congress increase the entrance fees. 
C)  decrease management and maintenance of facilities. 
D)  reduce the number of improved camping facilities. 
A)  increase the number of bears through breeding programs. 
B)  have Congress increase the entrance fees. 
C)  decrease management and maintenance of facilities. 
D)  reduce the number of improved camping facilities.

Exam 11: Public Goods and Common Resources

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

A free rider problem arrises when

The overuse of a common resource relative to its economically efficient use is called

Using a toll to reduce traffic when congestion is greatest is an example of a

Which of the following is an example of the Tragedy of the Commons?

A city street is

When something of value has no price attached to it,

Which of the following is an example of general knowledge,as opposed to specific knowledge that can be patented?

A cost-benefit analysis of a highway is difficult to conduct because analysts

Which of the following statements is not correct?

Although national defense is currently a public good,economists who advocate small government generally agree that the U.S.should privatize national defense to increase the efficiency of the good.

A stairwell in a certain office building is always congested at 12:00 p.m.and 1:00 p.m.The congestion is so bad that people have been complaining to the building's owner.Which of the following methods would be the most efficient way of reducing congestion?

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

If Dave and Jesse are the only two fishermen in town and neither is bothered by the other's fishing,the lake they fish in is not a common resource.

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Why is the commercial value of ivory a threat to the elephant,while the commercial value of beef is the cow's guardian?

One proposed solution to overused,deteriorating national parks would be to

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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