Question 1

Which example is BEST characterized as a common resource?

Accepted Answer

A)  national defence 
B)  a bottle opener 
C)  a dorm kitchen 
D)  a pair of boots 
A)  national defence 
B)  a bottle opener 
C)  a dorm kitchen 
D)  a pair of boots

Question 2

The BEST example of common resources is:

Accepted Answer

A)  public education. 
B)  a football match. 
C)  fish to catch in a local public lake. 
D)  cable television programming. 
A)  public education. 
B)  a football match. 
C)  fish to catch in a local public lake. 
D)  cable television programming.

Question 3

The problem with common resources is similar to the problem with negative externalities because:

Accepted Answer

A)  both issues deal with natural resources. 
B)  the marginal social benefit of producing another unit exceeds the individual's marginal benefit. 
C)  the marginal social cost of producing another unit exceeds the individual's marginal cost. 
D)  the individual's marginal cost of producing another unit exceeds the individual's marginal benefit. 
A)  both issues deal with natural resources. 
B)  the marginal social benefit of producing another unit exceeds the individual's marginal benefit. 
C)  the marginal social cost of producing another unit exceeds the individual's marginal cost. 
D)  the individual's marginal cost of producing another unit exceeds the individual's marginal benefit.

Question 4

If the marginal social benefit received from a good is greater than the marginal social cost of production:

Accepted Answer

A)  an increase in production will improve society's well-being. 
B)  a decrease in production will improve society's well-being. 
C)  no change in production can improve society's well-being. 
D)  the market is producing too much of the good. 
A)  an increase in production will improve society's well-being. 
B)  a decrease in production will improve society's well-being. 
C)  no change in production can improve society's well-being. 
D)  the market is producing too much of the good.

Question 5

Use the following to answer questions : $\begin{array}{l}
\begin{array}{lcc}
\hline\text { Quantity of } & \text { Dave's } & \text { Art's } \
\text { Streetlights in the } & \text { Individual } & \text { Individual } \
\text { Neighbourhood } & \text { Marginal Benefit } & \text { Marginal Benefit }\
\hline0&&\
1&\$ 15 & \$ 20 \
2&10 & 15 \
3&5 & 10 \
4&2 & 3\
\hline 
\end{array}\
\end{array}$

-(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.If Dave had to pay for streetlights on his own,how many streetlights would there be?

Accepted Answer

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

Question 6

Assigning property rights helps correct the problems associated with common resources:

Accepted Answer

A)  because it allows property owners to exclude users and to manage the resource more efficiently. 
B)  because it allows the government to determine the amount that would lead to the socially optimal outcome. 
C)  because it makes the good nonrival in consumption. 
D)  and therefore allows the market to better assess the marginal social benefits. 
A)  because it allows property owners to exclude users and to manage the resource more efficiently. 
B)  because it allows the government to determine the amount that would lead to the socially optimal outcome. 
C)  because it makes the good nonrival in consumption. 
D)  and therefore allows the market to better assess the marginal social benefits.

Question 7

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 G streetlights?

Accepted Answer

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

Question 8

Which example is considered a common resource?

Accepted Answer

A)  a public beach with free access 
B)  a seat on an airplane 
C)  a highway to which access is granted only to those who pay a specified toll 
D)  a city sewer system 
A)  a public beach with free access 
B)  a seat on an airplane 
C)  a highway to which access is granted only to those who pay a specified toll 
D)  a city sewer system

Question 9

Use the following to answer questions :
Figure: Market Failure  
-(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity G:

Accepted Answer

A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit. 
A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit.

Question 10

The best example of a good whose consumption is NOT excludable is:

Accepted Answer

A)  a yard. 
B)  a house. 
C)  a bicycle. 
D)  national defence. 
A)  a yard. 
B)  a house. 
C)  a bicycle. 
D)  national defence.

Question 11

Volunteer fire departments are good examples of the _____ provision of _____.

Accepted Answer

A)  private;private goods 
B)  public;common resources 
C)  private;public goods 
D)  public;artificially scarce goods 
A)  private;private goods 
B)  public;common resources 
C)  private;public goods 
D)  public;artificially scarce goods

Question 12

If a good is nonrival in consumption and a positive price is charged by the supplier:

Accepted Answer

A)  more people want to use this good at the supplier's price than at the efficient price. 
B)  consumption of it is inefficiently low. 
C)  free-riding occurs. 
D)  there is a socially optimal level of consumption. 
A)  more people want to use this good at the supplier's price than at the efficient price. 
B)  consumption of it is inefficiently low. 
C)  free-riding occurs. 
D)  there is a socially optimal level of consumption.

Question 13

A public good is _____ and _____ in consumption.

Accepted Answer

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

Question 14

The marginal cost of producing an artificially scarce good is usually equal to:

Accepted Answer

A)  zero. 
B)  the marginal benefit if consumer surplus equals zero. 
C)  the average total cost. 
D)  its price. 
A)  zero. 
B)  the marginal benefit if consumer surplus equals zero. 
C)  the average total cost. 
D)  its price.

Question 15

Use the following to answer questions :
Figure: Market Failure  
-(Figure: Market Failure)Use Figure: Market Failure.In the figure,the equilibrium price is _____,and the equilibrium quantity is _____ for a competitive market.

Accepted Answer

A)  A;E 
B)  A;G 
C)  B;F 
D)  C;E 
A)  A;E 
B)  A;G 
C)  B;F 
D)  C;E

Question 16

As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

Accepted Answer

A)  rival and excludable. 
B)  nonrival and excludable. 
C)  rival and nonexcludable. 
D)  nonrival and nonexcludable. 
A)  rival and excludable. 
B)  nonrival and excludable. 
C)  rival and nonexcludable. 
D)  nonrival and nonexcludable.

Question 17

Which good BEST fits the characteristics of a private good?

Accepted Answer

A)  national defence 
B)  clean water 
C)  a pizza 
D)  police protection 
A)  national defence 
B)  clean water 
C)  a pizza 
D)  police protection

Question 18

An electronic book is an artificially scarce good because the private market _____ prevent consumption by people who do not pay for it.Further,the same e-book _____ be consumed by more than one person at the same time.

Accepted Answer

A)  can;can 
B)  cannot;cannot 
C)  can;cannot 
D)  cannot;can 
A)  can;can 
B)  cannot;cannot 
C)  can;cannot 
D)  cannot;can

Question 19

No individual is willing to pay to provide the efficient level of a public good since the:

Accepted Answer

A)  marginal cost of production is zero. 
B)  good will be nonrival and thus underconsumed. 
C)  individual's marginal benefit is less than the marginal social benefit. 
D)  marginal benefit of allowing one more individual to consume the good is zero. 
A)  marginal cost of production is zero. 
B)  good will be nonrival and thus underconsumed. 
C)  individual's marginal benefit is less than the marginal social benefit. 
D)  marginal benefit of allowing one more individual to consume the good is zero.

Question 20

Which example is considered a nonexcludable good?

Accepted Answer

A)  health care 
B)  national defence 
C)  education 
D)  ice cream 
A)  health care 
B)  national defence 
C)  education 
D)  ice cream

Exam 17: Public Goods and Common Resources

Which example is BEST characterized as a common resource?

The BEST example of common resources is:

The problem with common resources is similar to the problem with negative externalities because:

If the marginal social benefit received from a good is greater than the marginal social cost of production:

Assigning property rights helps correct the problems associated with common resources:

Which example is considered a common resource?

Use the following to answer questions : Figure: Market Failure -(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity G:

The best example of a good whose consumption is NOT excludable is:

Volunteer fire departments are good examples of the _____ provision of _____.

If a good is nonrival in consumption and a positive price is charged by the supplier:

A public good is _____ and _____ in consumption.

The marginal cost of producing an artificially scarce good is usually equal to:

Use the following to answer questions : Figure: Market Failure -(Figure: Market Failure)Use Figure: Market Failure.In the figure,the equilibrium price is _____,and the equilibrium quantity is _____ for a competitive market.

As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

Which good BEST fits the characteristics of a private good?

An electronic book is an artificially scarce good because the private market _____ prevent consumption by people who do not pay for it.Further,the same e-book _____ be consumed by more than one person at the same time.

No individual is willing to pay to provide the efficient level of a public good since the:

Which example is considered a nonexcludable good?

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

Volunteer fire departments are good examples of the _ provision of _.

A public good is _ and _ in consumption.

Use the following to answer questions : Figure: Market Failure -(Figure: Market Failure)Use Figure: Market Failure.In the figure,the equilibrium price is _,and the equilibrium quantity is _ for a competitive market.

An electronic book is an artificially scarce good because the private market _ prevent consumption by people who do not pay for it.Further,the same e-book _ be consumed by more than one person at the same time.