Question 1

Resources tend to be allocated inefficiently when goods

Accepted Answer

A)  are private goods. 
B)  are rival in consumption and excludable. 
C)  are available free of charge. 
D)  are available only at very high prices. 
A)  are private goods. 
B)  are rival in consumption and excludable. 
C)  are available free of charge. 
D)  are available only at very high prices. C

Question 2

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Accepted Answer

A)  taxing the use of the common resource 
B)  turning the common resource into a club good 
C)  turning the common resource into a private good 
D)  regulating the use of the common resource 
A)  taxing the use of the common resource 
B)  turning the common resource into a club good 
C)  turning the common resource into a private good 
D)  regulating the use of the common resource B

Question 3

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
  
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which of the following statements is correct?

Accepted Answer

A)  The owner of Restaurant 1 would prefer to have 3 ferry trips. 
B)  The owner of Restaurant 2 would prefer to have 2 ferry trips. 
C)  The owner of Store A would prefer to have 1 ferry trip. 
D)  All of the above are correct. 
A)  The owner of Restaurant 1 would prefer to have 3 ferry trips. 
B)  The owner of Restaurant 2 would prefer to have 2 ferry trips. 
C)  The owner of Store A would prefer to have 1 ferry trip. 
D)  All of the above are correct. C

Question 4

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Accepted Answer

Basic research is ne

Question 5

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
-Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Accepted Answer

Fish in the ocean is the best

Question 6

Which two types of goods are excludable?

Accepted Answer

Private go

Question 7

Suppose that the Town of Mapledale is considering hiring an additional firefighter. The expected benefit is estimated to be worth $5 for each of Mapledale's 15,000 residents. What should the city do?

Accepted Answer

A)  Hire the firefighter because additional fire protection is priceless. 
B)  Hire the firefighter if the cost of the new firefighter is less than $75,000. 
C)  Do not hire the firefighter because the costs exceed the benefits. 
D)  Hire the firefighter only if the benefit to the residents exceeds $75,000. 
A)  Hire the firefighter because additional fire protection is priceless. 
B)  Hire the firefighter if the cost of the new firefighter is less than $75,000. 
C)  Do not hire the firefighter because the costs exceed the benefits. 
D)  Hire the firefighter only if the benefit to the residents exceeds $75,000.

Question 8

Which of the following is not a reason why government agencies subsidize basic research?

Accepted Answer

A)  The private market devotes too few resources to basic research. 
B)  The general knowledge developed through basic research can be used without charge. 
C)  The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D)  The government wants to attract the brightest researchers away from private research firms. 
A)  The private market devotes too few resources to basic research. 
B)  The general knowledge developed through basic research can be used without charge. 
C)  The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies. 
D)  The government wants to attract the brightest researchers away from private research firms.

Question 9

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm,

Accepted Answer

A)  he is providing a good that is excludable. 
B)  he is a free rider. 
C)  those who walk on the sidewalk are using a club good. 
D)  he is providing a good that is not rival and not excludable. 
A)  he is providing a good that is excludable. 
B)  he is a free rider. 
C)  those who walk on the sidewalk are using a club good. 
D)  he is providing a good that is not rival and not excludable.

Question 10

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
-Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

Accepted Answer

A firefighter's helmet is the

Question 12

One way to place a value on human life is to examine the risks that people voluntarily take and how much they must be paid for taking them. What is the approximate value of a human life according to studies that use this approach?

Accepted Answer

According to these studies, th

Question 13

It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that

Accepted Answer

A)  resources would be used more efficiently if the government produced the weapons. 
B)  resources would be used more efficiently if private firms provided national defense. 
C)  weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable. 
D)  national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable. 
A)  resources would be used more efficiently if the government produced the weapons. 
B)  resources would be used more efficiently if private firms provided national defense. 
C)  weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable. 
D)  national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable.

Question 14

The town of Isle is on a small island connected to Big City by a single bridge. Most of the residents of Isle work in Big City. As a result, the bridge becomes very congested for 2 hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Isle would likely be most effective in alleviating the congestion?

Accepted Answer

A)  A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times. 
B)  A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times. 
C)  Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25. 
D)  A press conference in which the mayor requests that people try to cross the bridge earlier or later than the typical commute times. 
A)  A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times. 
B)  A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times. 
C)  Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25. 
D)  A press conference in which the mayor requests that people try to cross the bridge earlier or later than the typical commute times.

Question 15

Figure 11-1
 
-Refer to Figure 11-1. The box labeled C represents

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 16

A lighthouse might be considered a private good if

Accepted Answer

A)  there is a second lighthouse nearby, thus preventing a monopoly. 
B)  the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse. 
C)  ships are able to enjoy the benefits of the lighthouse without paying for the benefit. 
D)  a nearby port authority is able to avoid paying any fees to the lighthouse owner. 
A)  there is a second lighthouse nearby, thus preventing a monopoly. 
B)  the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse. 
C)  ships are able to enjoy the benefits of the lighthouse without paying for the benefit. 
D)  a nearby port authority is able to avoid paying any fees to the lighthouse owner.

Question 17

Goods that are rival in consumption include both

Accepted Answer

A)  club goods and public goods. 
B)  public goods and common resources. 
C)  common resources and private goods. 
D)  private goods and club goods. 
A)  club goods and public goods. 
B)  public goods and common resources. 
C)  common resources and private goods. 
D)  private goods and club goods.

Question 18

Roads can be considered either public goods or common resources, depending on how congested they are.

Accepted Answer

A) True 
 B)False

Question 19

The U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is

Accepted Answer

A)  excludable. 
B)  not excludable. 
C)  rival in consumption. 
D)  not rival in consumption. 
A)  excludable. 
B)  not excludable. 
C)  rival in consumption. 
D)  not rival in consumption.

Question 20

By driving onto a congested road for which no toll is charged, a driver

Accepted Answer

A)  contributes to the overuse of a common resource. 
B)  contributes to a negative-externality problem. 
C)  is inflicting additional time cost on all of the other drivers. 
D)  All of the above are correct. 
A)  contributes to the overuse of a common resource. 
B)  contributes to a negative-externality problem. 
C)  is inflicting additional time cost on all of the other drivers. 
D)  All of the above are correct.

Exam 11: Public Goods and Common Resources

Resources tend to be allocated inefficiently when goods

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Which two types of goods are excludable?

Suppose that the Town of Mapledale is considering hiring an additional firefighter. The expected benefit is estimated to be worth $5 for each of Mapledale's 15,000 residents. What should the city do?

Which of the following is not a reason why government agencies subsidize basic research?

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm,

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Scenario 11-2 Consider the following goods: • fire-protection services provided by a fire department • a beautiful mural on the outside wall of a fire station • a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

One way to place a value on human life is to examine the risks that people voluntarily take and how much they must be paid for taking them. What is the approximate value of a human life according to studies that use this approach?

It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that

Figure 11-1 -Refer to Figure 11-1. The box labeled C represents

A lighthouse might be considered a private good if

Goods that are rival in consumption include both

Roads can be considered either public goods or common resources, depending on how congested they are.

The U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is

By driving onto a congested road for which no toll is charged, a driver

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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