Question 1

Goods that are not rival in consumption include both

Accepted Answer

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

Question 2

A textbook is a

Accepted Answer

A)  private good and the knowledge that one gains from reading the book is a common resource. 
B)  private good and the knowledge that one gains from reading the book is a public good. 
C)  common resource and the knowledge that one gains from reading the book is a public good. 
D)  common resource and the knowledge that one gains from reading the book is a private good. 
A)  private good and the knowledge that one gains from reading the book is a common resource. 
B)  private good and the knowledge that one gains from reading the book is a public good. 
C)  common resource and the knowledge that one gains from reading the book is a public good. 
D)  common resource and the knowledge that one gains from reading the book is a private good.

Question 3

Figure 11-1
 
-Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 4

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 priva

Question 5

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Accepted Answer

A) True 
 B)False

Question 6

Which two types of goods are rival in consumption?

Accepted Answer

Private goods and co

Question 7

Table 11-3
This table describes the police protection demands for three equal sized groups of people in Safetyville. The second, third, and fourth columns show the number of person-hours of police protection per day that a group will demand for a given price the first column).
  
-Refer to Table 11-3. If the marginal cost of police protection is constant at $72 per person-hour, what is the efficient level of police protection to provide?

Accepted Answer

A)  9 person-hours 
B)  18 person-hours 
C)  39 person-hours 
D)  66 person-hours 
A)  9 person-hours 
B)  18 person-hours 
C)  39 person-hours 
D)  66 person-hours

Question 8

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

Accepted Answer

A)  the local government should build the garden, but you should not. 
B)  you should still build the garden, but the local government should not. 
C)  neither you nor the local government should build the garden. 
D)  either you or the local government should build the garden. 
A)  the local government should build the garden, but you should not. 
B)  you should still build the garden, but the local government should not. 
C)  neither you nor the local government should build the garden. 
D)  either you or the local government should build the garden.

Question 9

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 10

The degradation of the environment from litter is a

Accepted Answer

A)  a negative externality. 
B)  free rider problem. 
C)  Tragedy of the Commons. 
D)  Both a and c are correct. 
A)  a negative externality. 
B)  free rider problem. 
C)  Tragedy of the Commons. 
D)  Both a and c are correct.

Question 11

Some goods can be either common resources or public goods depending on

Accepted Answer

A)  whether the good is rival in consumption. 
B)  whether the good is excludable. 
C)  the marginal cost of the good. 
D)  None of the above is correct. 
A)  whether the good is rival in consumption. 
B)  whether the good is excludable. 
C)  the marginal cost of the good. 
D)  None of the above is correct.

Question 12

Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time- share condominium in Alta, Utah. Suppose that the lift lines at the ski resort become more congested when the ten additional people start to ski. Which of the following statements is not correct?

Accepted Answer

A)  Use of the ski resort by the ten new skiers will yield a negative externality. 
B)  The ski resort can reduce the congestion externality by raising lift ticket prices. 
C)  An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion. 
D)  Each of the ten friends would have been better off staying at home. 
A)  Use of the ski resort by the ten new skiers will yield a negative externality. 
B)  The ski resort can reduce the congestion externality by raising lift ticket prices. 
C)  An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion. 
D)  Each of the ten friends would have been better off staying at home.

Question 13

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

Accepted Answer

A)  increase entrance fees. 
B)  decrease camping permit fees. 
C)  require all visitors to register upon entering the park. 
D)  sell the land that the parks currently occupy. 
A)  increase entrance fees. 
B)  decrease camping permit fees. 
C)  require all visitors to register upon entering the park. 
D)  sell the land that the parks currently occupy.

Question 14

What particular characteristic do private goods and club goods have in common?

Accepted Answer

Private go

Question 15

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 16

Are common resources excludable? Are they rival in consumption?

Accepted Answer

No, common resources

Question 17

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

Accepted Answer

A)  society finds them so valuable that citizens are happy to pay for their full cost. 
B)  these goods create a free-rider problem. 
C)  if they were funded privately, too many of these goods would be produced. 
D)  All of the above are correct. 
A)  society finds them so valuable that citizens are happy to pay for their full cost. 
B)  these goods create a free-rider problem. 
C)  if they were funded privately, too many of these goods would be produced. 
D)  All of the above are correct.

Question 18

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black 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 $600 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Brown's like the town to install?

Accepted Answer

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

Question 19

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Accepted Answer

A)  install the light because the expected benefit of $400,000 is greater than the cost. 
B)  install the light because the expected benefit of $45,000 is greater than the cost. 
C)  not install the light because the expected benefit of $45,000 is only equal to the cost. 
D)  not install the light because the expected benefit of $40,000 is less than the cost. 
A)  install the light because the expected benefit of $400,000 is greater than the cost. 
B)  install the light because the expected benefit of $45,000 is greater than the cost. 
C)  not install the light because the expected benefit of $45,000 is only equal to the cost. 
D)  not install the light because the expected benefit of $40,000 is less than the cost.

Question 20

The national defense of the United States is not rival because

Accepted Answer

A)  my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B)  my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C)  once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense. 
D)  once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense. 
A)  my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B)  my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C)  once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense. 
D)  once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense.

Exam 11: Public Goods and Common Resources

Goods that are not rival in consumption include both

A textbook is a

Figure 11-1 -Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

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

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Which two types of goods are rival in consumption?

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

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.

The degradation of the environment from litter is a

Some goods can be either common resources or public goods depending on

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

What particular characteristic do private goods and club goods have in common?

A city street is

Are common resources excludable? Are they rival in consumption?

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

The national defense of the United States is not rival because

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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