Question 1

A characteristic of public goods is that:

Accepted Answer

A)  people pay for them in proportion to the benefits received. 
B)  the costs of producing them are less than if they were private goods. 
C)  their benefits cannot be withheld from anyone,regardless of whether a person pays for them. 
D)  they are produced only by the private sector,not by the public sector. 
A)  people pay for them in proportion to the benefits received. 
B)  the costs of producing them are less than if they were private goods. 
C)  their benefits cannot be withheld from anyone,regardless of whether a person pays for them. 
D)  they are produced only by the private sector,not by the public sector.

Question 2

Use the following to answer questions :
Figure: Correcting for Market Failure  
-(Figure: Correcting for Market Failure)Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.When the government intervenes to correct for the external cost,the output will _____ from _____ to _____.

Accepted Answer

A)  fall;W;R 
B)  increase;W;R 
C)  fall;R;W 
D)  fall;W;0 
A)  fall;W;R 
B)  increase;W;R 
C)  fall;R;W 
D)  fall;W;0

Question 3

Common resource goods are similar to:

Accepted Answer

A)  public goods because they are both nonexcludable and nonrival in consumption. 
B)  goods with negative externalities because not all users take into account the external costs imposed on society. 
C)  private goods because they are both excludable and rival. 
D)  artificially scarce goods because they are both excludable and nonrival in consumption. 
A)  public goods because they are both nonexcludable and nonrival in consumption. 
B)  goods with negative externalities because not all users take into account the external costs imposed on society. 
C)  private goods because they are both excludable and rival. 
D)  artificially scarce goods because they are both excludable and nonrival in consumption.

Question 4

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Total Cost and Total Individual Benefit }\
\begin{array} { l c c } 
\begin{array} { l } 
\text { Quantity of Animal } \
\text { Control Officers }
\end{array} & \text { Total Cost } & \begin{array} { c } 
\text { Total Individual } \
\text { Benefit }
\end{array} \
\hline 0 & \$ 0 & \$ 0 \
1 & 20000 & 40 \
2 & 40000 & 70 \
3 & 60000 & 90 \
4 & 80000 & 100 \
5 & 100000 & 105 \
\hline
\end{array}
\end{array}$$
-(Table: Total Cost and Total Individual Benefit)Use Table: Total Cost and Total Individual Benefit.If an individual resident were to decide about hiring and paying for animal control officers on his or her own,how many officers would that resident hire?

Accepted Answer

A)  0 
B)  1 
C)  3 
D)  5 
A)  0 
B)  1 
C)  3 
D)  5

Question 5

Suppose that the lobster harvest is unregulated,and any person with a boat can go offshore,lower a lobster trap,and harvest lobster.This common resource will likely be _____ because the marginal social cost of harvesting lobsters _____ the market price of lobster.

Accepted Answer

A)  overfished;is equal to 
B)  overfished;is less than 
C)  efficiently fished;is equal to 
D)  overfished;exceeds 
A)  overfished;is equal to 
B)  overfished;is less than 
C)  efficiently fished;is equal to 
D)  overfished;exceeds

Question 6

Use the following to answer questions :
Figure: Correcting for Market Failure  
-(Figure: Correcting for Market Failure)Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.Economists argue that in an unregulated private market,too _____ is produced.In the figure,the supply curve (S1)reflects _____ marginal cost.

Accepted Answer

A)  little;private 
B)  much;private 
C)  much;social 
D)  little;social and private 
A)  little;private 
B)  much;private 
C)  much;social 
D)  little;social and private

Question 7

A market produces too much of a good when the price of the good is:

Accepted Answer

A)  greater than the marginal social cost of providing it. 
B)  equal to the marginal social cost of providing it. 
C)  less than the marginal social cost of providing it. 
D)  equal to 1. 
A)  greater than the marginal social cost of providing it. 
B)  equal to the marginal social cost of providing it. 
C)  less than the marginal social cost of providing it. 
D)  equal to 1.

Question 8

Use the following to answer questions :
Scenario: Alexander and Vanessa
Alexander and Vanessa benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation MPB = 200 - Q,where Q refers to the amount of research undertaken and MPB captures the marginal private benefit Alexander gets from different marginal quantities.Meanwhile,Vanessa's marginal private benefit from such research is given by the equation MPB = 100 - Q.The marginal social cost of such research is constant at $100.
-(Scenario: Alexander and Vanessa)Use Scenario: Alexander and Vanessa.What is the socially optimal amount of scientific research for this economy?

Accepted Answer

A)  60 units 
B)  300 units 
C)  100 units 
D)  200 units 
A)  60 units 
B)  300 units 
C)  100 units 
D)  200 units

Question 9

The private market will lead to _____ of clean air because _____.

Accepted Answer

A)  too little consumption;it is nonexcludable but rival in consumption 
B)  too much consumption;it is nonexcludable but rival in consumption 
C)  production of the socially optimal amount;the marginal cost is zero 
D)  government provision;it is a public good 
A)  too little consumption;it is nonexcludable but rival in consumption 
B)  too much consumption;it is nonexcludable but rival in consumption 
C)  production of the socially optimal amount;the marginal cost is zero 
D)  government provision;it is a public good

Question 10

Which example BEST fits the characteristics of a private good?

Accepted Answer

A)  a professor giving a lecture in a large classroom 
B)  an ice-cream cone 
C)  fire protection 
D)  disease prevention 
A)  a professor giving a lecture in a large classroom 
B)  an ice-cream cone 
C)  fire protection 
D)  disease prevention

Question 11

Public goods are NOT sold in efficient quantities in the private marketplace because:

Accepted Answer

A)  once supplied to a buyer,they can be made available at no cost to someone else. 
B)  the more one person has,the less another person has. 
C)  they are usually so costly that only the wealthy can afford them. 
D)  they are usually very poor-quality goods. 
A)  once supplied to a buyer,they can be made available at no cost to someone else. 
B)  the more one person has,the less another person has. 
C)  they are usually so costly that only the wealthy can afford them. 
D)  they are usually very poor-quality goods.

Question 12

Use the following to answer questions :
Figure: An Individual's Marginal Benefit from a Public Good  
-(Figure: An Individual's Marginal Benefit from a Public Good)Use Figure: An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good;each individual has the marginal benefit curve shown in the figure.If the marginal cost of the good is $24,what is the total benefit of the level of the public good that maximizes society's welfare?

Accepted Answer

A)  $0 
B)  $24 
C)  $124 
D)  $248 
A)  $0 
B)  $24 
C)  $124 
D)  $248

Question 13

A(n)_____ is excludable and rival in consumption.

Accepted Answer

A)  private good 
B)  artificially scarce good 
C)  public good 
D)  common resource 
A)  private good 
B)  artificially scarce good 
C)  public good 
D)  common resource

Question 14

Television programmes are nonrival because:

Accepted Answer

A)  the supplier cannot prevent consumption by people who do not pay for it. 
B)  more than one person can consume the same unit of the good at the same time. 
C)  individuals ignore the effect of their use on the amount of the resource remaining for others. 
D)  the market suffers from inefficiently low consumption. 
A)  the supplier cannot prevent consumption by people who do not pay for it. 
B)  more than one person can consume the same unit of the good at the same time. 
C)  individuals ignore the effect of their use on the amount of the resource remaining for others. 
D)  the market suffers from inefficiently low consumption.

Question 15

National defence and e-books are similar in that both are _____,but they differ in that national defence is _____,while e-books are _____.

Accepted Answer

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

Question 16

Some public goods would not be provided without government intervention because the marginal cost of the good:

Accepted Answer

A)  exceeds an individual's marginal benefit. 
B)  is less than an individual's marginal benefit. 
C)  would equal an individual's marginal benefit. 
D)  would need to be maximized. 
A)  exceeds an individual's marginal benefit. 
B)  is less than an individual's marginal benefit. 
C)  would equal an individual's marginal benefit. 
D)  would need to be maximized.

Question 17

Imposing a Pigouvian tax on a good,establishing a system of tradable licences,and assigning property rights are methods to alleviate the problems associated with:

Accepted Answer

A)  private goods. 
B)  positive externalities. 
C)  public goods. 
D)  common resources. 
A)  private goods. 
B)  positive externalities. 
C)  public goods. 
D)  common resources.

Question 18

Use the following to answer questions :
Figure: Market Failure  
-(Figure: Market Failure)Use Figure: Market Failure.Suppose that the supply curve represents the marginal cost of providing streetlights in a neighbourhood where only two people,Ann and Joe,reside.The demand curve represents the marginal benefit that Ann receives from the streetlights.Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to the vertical distance A-C.How much is Ann willing to pay for F streetlights?

Accepted Answer

A)  0 
B)  A 
C)  B 
D)  C 
A)  0 
B)  A 
C)  B 
D)  C

Question 19

Use the following to answer questions :
Scenario: Alexander and Vanessa
Alexander and Vanessa benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation MPB = 200 - Q,where Q refers to the amount of research undertaken and MPB captures the marginal private benefit Alexander gets from different marginal quantities.Meanwhile,Vanessa's marginal private benefit from such research is given by the equation MPB = 100 - Q.The marginal social cost of such research is constant at $100.
-(Scenario: Alexander and Vanessa)Use Scenario: Alexander and Vanessa.If the socially optimal level of scientific research is produced and if both Vanessa and Alexander are truthful in disclosing the marginal private benefits they expect to receive from this research,what is the price per unit of research that Vanessa is willing to pay at the social optimum?

Accepted Answer

A)  $0 
B)  $50 
C)  $100 
D)  $300 
A)  $0 
B)  $50 
C)  $100 
D)  $300

Question 20

If the extent to which common resources (such as fish in the sea)should be used is left to the private market:

Accepted Answer

A)  resource use will be efficient and will maximize social welfare. 
B)  each individual will use the resource until his or her marginal benefit is equal to the marginal social cost. 
C)  the marginal social cost and each individual's marginal private cost will be the same. 
D)  the marginal social cost will be greater than the marginal private cost,and the resource will be overused. 
A)  resource use will be efficient and will maximize social welfare. 
B)  each individual will use the resource until his or her marginal benefit is equal to the marginal social cost. 
C)  the marginal social cost and each individual's marginal private cost will be the same. 
D)  the marginal social cost will be greater than the marginal private cost,and the resource will be overused.

A characteristic of public goods is that:

Common resource goods are similar to:

Suppose that the lobster harvest is unregulated,and any person with a boat can go offshore,lower a lobster trap,and harvest lobster.This common resource will likely be _ because the marginal social cost of harvesting lobsters _ the market price of lobster.

A market produces too much of a good when the price of the good is:

The private market will lead to _ of clean air because _.

Which example BEST fits the characteristics of a private good?

Public goods are NOT sold in efficient quantities in the private marketplace because:

A(n)_____ is excludable and rival in consumption.

Television programmes are nonrival because:

National defence and e-books are similar in that both are ___,but they differ in that national defence is _,while e-books are ___.

Some public goods would not be provided without government intervention because the marginal cost of the good:

Imposing a Pigouvian tax on a good,establishing a system of tradable licences,and assigning property rights are methods to alleviate the problems associated with:

If the extent to which common resources (such as fish in the sea)should be used is left to the private market:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 17: Public Goods and Common Resources

A characteristic of public goods is that:

Common resource goods are similar to:

Suppose that the lobster harvest is unregulated,and any person with a boat can go offshore,lower a lobster trap,and harvest lobster.This common resource will likely be _____ because the marginal social cost of harvesting lobsters _____ the market price of lobster.

A market produces too much of a good when the price of the good is:

The private market will lead to _____ of clean air because _____.

Which example BEST fits the characteristics of a private good?

Public goods are NOT sold in efficient quantities in the private marketplace because:

A(n)_____ is excludable and rival in consumption.

Television programmes are nonrival because:

National defence and e-books are similar in that both are _____,but they differ in that national defence is _____,while e-books are _____.

Some public goods would not be provided without government intervention because the marginal cost of the good:

Imposing a Pigouvian tax on a good,establishing a system of tradable licences,and assigning property rights are methods to alleviate the problems associated with:

If the extent to which common resources (such as fish in the sea)should be used is left to the private market:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Suppose that the lobster harvest is unregulated,and any person with a boat can go offshore,lower a lobster trap,and harvest lobster.This common resource will likely be _ because the marginal social cost of harvesting lobsters _ the market price of lobster.

The private market will lead to _ of clean air because _.

National defence and e-books are similar in that both are ___,but they differ in that national defence is _,while e-books are ___.