Question 1

In deciding whether a good is a public good,one must determine the

Accepted Answer

A)  incomes of those who benefit from the good. 
B)  value of the external benefits that accrue to resource owners. 
C)  excludability of the good. 
D)  All of the above are correct. 
A)  incomes of those who benefit from the good. 
B)  value of the external benefits that accrue to resource owners. 
C)  excludability of the good. 
D)  All of the above are correct.

Question 2

A good is excludable if

Accepted Answer

A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it. 
A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it.

Question 3

Both public goods and common resources are

Accepted Answer

A)  rival in consumption. 
B)  nonrival in consumption. 
C)  excludable. 
D)  nonexcludable. 
A)  rival in consumption. 
B)  nonrival in consumption. 
C)  excludable. 
D)  nonexcludable.

Question 4

Markets do not ensure that the air we breathe is clean because

Accepted Answer

A)  clean air has no value. 
B)  the government prevents markets from doing so. 
C)  property rights are not well established for clean air. 
D)  clean air is impossible to produce . 
A)  clean air has no value. 
B)  the government prevents markets from doing so. 
C)  property rights are not well established for clean air. 
D)  clean air is impossible to produce .

Question 5

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

A)  Cattle are a valuable source of income for many people,while elephants have no market value. 
B)  There is a high demand for products that come from cows,whereas there is no demand for products that come from elephants. 
C)  There are still lots of cattle that roam free,while all elephants live in zoos. 
D)  Cattle are owned by ranchers,while elephants are owned by no one. 
A)  Cattle are a valuable source of income for many people,while elephants have no market value. 
B)  There is a high demand for products that come from cows,whereas there is no demand for products that come from elephants. 
C)  There are still lots of cattle that roam free,while all elephants live in zoos. 
D)  Cattle are owned by ranchers,while elephants are owned by no one.

Question 6

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 the streetlights equally.If the families vote to determine the number of streetlights to install,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus),what is the greatest number of streetlights for which the majority of families would vote "yes?"

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 7

The greatest difficulty with cost-benefit analysis of a public project is determining

Accepted Answer

A)  whether government revenue is sufficient to cover the cost of the project. 
B)  which contractor should be awarded the project. 
C)  the cost of the project. 
D)  the value or benefit of the project. 
A)  whether government revenue is sufficient to cover the cost of the project. 
B)  which contractor should be awarded the project. 
C)  the cost of the project. 
D)  the value or benefit of the project.

Question 8

Goods that are not excludable are usually

Accepted Answer

A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge. 
A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge.

Question 9

Which of the following is a disadvantage of government provision of a public good?

Accepted Answer

A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage. 
A)  The government lacks information about what people are willing to pay for the good. 
B)  The government does not provide enough of any public good. 
C)  The private sector can provide all public goods at a lower cost. 
D)  None of the above is a disadvantage.

Question 10

The idea of requiring motorists to pay to use the busiest streets in a city

Accepted Answer

A)  has been proposed by many public officials,but to date the idea never has been tried in a major city anywhere in the world. 
B)  was tried in New York City in the 1990s,but the result was more - not less - congestion on busy streets,and the experiment was short-lived. 
C)  reflects the fact that a congested road is a public good. 
D)  reflects the fact that a congested road is a common resource. 
A)  has been proposed by many public officials,but to date the idea never has been tried in a major city anywhere in the world. 
B)  was tried in New York City in the 1990s,but the result was more - not less - congestion on busy streets,and the experiment was short-lived. 
C)  reflects the fact that a congested road is a public good. 
D)  reflects the fact that a congested road is a common resource.

Question 11

What causes the Tragedy of the Commons? (i)Social and private incentives differ.
(ii)Common resources are not rival in consumption and are not excludable.
(iii)Common resources are not excludable but are rival in consumption.

Accepted Answer

A)  (i)only 
B)  (ii)only 
C)  (i)and (ii)only 
D)  (i)and (iii)only 
A)  (i)only 
B)  (ii)only 
C)  (i)and (ii)only 
D)  (i)and (iii)only

Question 12

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Accepted Answer

A) True 
 B)False

Question 13

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered 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 14

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 15

Because public goods are

Accepted Answer

A)  excludable,people have an incentive to be free riders. 
B)  excludable,people do not have an incentive to be free riders. 
C)  not excludable,people have an incentive to be free riders. 
D)  not excludable,people do not have an incentive to be free riders. 
A)  excludable,people have an incentive to be free riders. 
B)  excludable,people do not have an incentive to be free riders. 
C)  not excludable,people have an incentive to be free riders. 
D)  not excludable,people do not have an incentive to be free riders.

Question 16

For private goods allocated in markets,

Accepted Answer

A)  prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
B)  prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
C)  the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
D)  the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
A)  prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
B)  prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
C)  the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
D)  the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

Question 17

Figure 11-1
  
-Refer to Figure 11-1.Which of the following statements is correct?

Accepted Answer

A)  A congested toll road is an example of the type of good represented by Box B. 
B)  An uncongested toll road is an example of the type of good represented by Box D. 
C)  A congested nontoll road is an example of the type of good represented by Box C. 
D)  An uncongested nontoll road is an example of the type of good represented by Box A. 
A)  A congested toll road is an example of the type of good represented by Box B. 
B)  An uncongested toll road is an example of the type of good represented by Box D. 
C)  A congested nontoll road is an example of the type of good represented by Box C. 
D)  An uncongested nontoll road is an example of the type of good represented by Box A.

Question 18

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Accepted Answer

A) True 
 B)False

Question 19

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 $15 per acre and that the residents have agreed to split the cost of building the park equally.If the residents vote to determine the size of park to build,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus),what is the largest park size for which the majority of residents would vote "yes?"

Accepted Answer

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

Question 20

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis 
A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis

Exam 11: Public Goods and Common Resources

In deciding whether a good is a public good,one must determine the

A good is excludable if

Both public goods and common resources are

Markets do not ensure that the air we breathe is clean because

Why do elephants face the threat of extinction while cows do not?

The greatest difficulty with cost-benefit analysis of a public project is determining

Goods that are not excludable are usually

Which of the following is a disadvantage of government provision of a public good?

The idea of requiring motorists to pay to use the busiest streets in a city

What causes the Tragedy of the Commons? (i)Social and private incentives differ. (ii)Common resources are not rival in consumption and are not excludable. (iii)Common resources are not excludable but are rival in consumption.

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Because public goods are

For private goods allocated in markets,

Figure 11-1 -Refer to Figure 11-1.Which of the following statements is correct?

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

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