Question 1

The provision of a public good generates a

Accepted Answer

A)  positive externality, as does the use of a common resource. 
B)  positive externality and the use of a common resource generates a negative externality. 
C)  negative externality, as does the use of a common resource. 
D)  negative externality and the use of a common resource generates a positive externality. 
A)  positive externality, as does the use of a common resource. 
B)  positive externality and the use of a common resource generates a negative externality. 
C)  negative externality, as does the use of a common resource. 
D)  negative externality and the use of a common resource generates a positive externality.

Question 2

Examples of goods that are excludable include

Accepted Answer

A)  fireworks displays and fire protection. 
B)  internet radio subscriptions and knowledge. 
C)  premium movie channels and streetlights. 
D)  mobile phones and fire protection. 
A)  fireworks displays and fire protection. 
B)  internet radio subscriptions and knowledge. 
C)  premium movie channels and streetlights. 
D)  mobile phones and fire protection.

Question 3

Figure 11-1
 
-Refer to Figure 11-1. Once good x is provided, policymakers need to be concerned about how much of it is used. Good x 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

Which of the following goods is rival in consumption and excludable?

Accepted Answer

A)  a fireworks display 
B)  national defense 
C)  a box of sparklers 
D)  a parade 
A)  a fireworks display 
B)  national defense 
C)  a box of sparklers 
D)  a parade

Question 5

The overuse of a common resource relative to its economically efficient use is called

Accepted Answer

A)  the free rider problem. 
B)  the Tragedy of the Commons. 
C)  a public good. 
D)  cost-benefit analysis. 
A)  the free rider problem. 
B)  the Tragedy of the Commons. 
C)  a public good. 
D)  cost-benefit analysis.

Question 6

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

Accepted Answer

A)  $60,000. 
B)  $290,000. 
C)  $350,000. 
D)  $600,000. 
A)  $60,000. 
B)  $290,000. 
C)  $350,000. 
D)  $600,000.

Question 7

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Accepted Answer

A)  regulation 
B)  taxes 
C)  turning the common resource into a public good 
D)  turning the common resource into a private good 
A)  regulation 
B)  taxes 
C)  turning the common resource into a public good 
D)  turning the common resource into a private good

Question 8

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 public good? Briefly explain.

Accepted Answer

The beautiful mural is the bes

Question 9

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. How many ferry trips should there be to maximize the total surplus of the four business owners?

Accepted Answer

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

Question 10

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 11

A view of a spectacular sunset along a private beach is an example of a

Accepted Answer

A)  private good. 
B)  public good. 
C)  nonrival but excludable good. 
D)  rival but nonexcludable good. 
A)  private good. 
B)  public good. 
C)  nonrival but excludable good. 
D)  rival but nonexcludable good.

Question 12

On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. An overcrowded picnic area is an example of

Accepted Answer

A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good. 
A)  a private good. 
B)  a club good. 
C)  a Tragedy of the Commons. 
D)  public good.

Question 13

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Accepted Answer

Yes. Both national d

Question 14

The provision of public goods gives rise to

Accepted Answer

A)  no externalities. 
B)  positive externalities. 
C)  negative externalities. 
D)  rivalries in consumption. 
A)  no externalities. 
B)  positive externalities. 
C)  negative externalities. 
D)  rivalries in consumption.

Question 15

Property rights are well established for

Accepted Answer

A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  both b) and c). 
A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  both b) and c).

Question 16

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Accepted Answer

A) True 
 B)False

Question 17

Is a congested nontoll road excludable? Is it rival in consumption? How do we classify a congested nontoll road in terms of the four types of goods?

Accepted Answer

A congested nontoll road is no

Question 18

The idea that "externalities arise because something of value has no price attached to it" is associated with

Accepted Answer

A)  public goods, but not with common resources. 
B)  common resources, but not with public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources. 
A)  public goods, but not with common resources. 
B)  common resources, but not with public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources.

Question 19

Which of the following is correct regarding road tolls as a way to reduce traffic?

Accepted Answer

A)  They can vary based on the amount of traffic that is present. 
B)  They reduce drivers' explicit cost of driving but increase drivers' implicit cost. 
C)  Some drivers can be made better off, but some drivers will inevitably made worse off. 
D)  They are the solution to the free rider problem that occurs on roads. 
A)  They can vary based on the amount of traffic that is present. 
B)  They reduce drivers' explicit cost of driving but increase drivers' implicit cost. 
C)  Some drivers can be made better off, but some drivers will inevitably made worse off. 
D)  They are the solution to the free rider problem that occurs on roads.

Question 20

Are whales excludable? Are they rival in consumption? How do we classify whales in terms of the four types of goods?

Accepted Answer

Whales are not excludable, but

Exam 11: Public Goods and Common Resources

The provision of a public good generates a

Examples of goods that are excludable include

Figure 11-1 -Refer to Figure 11-1. Once good x is provided, policymakers need to be concerned about how much of it is used. Good x is an example of the type of good represented by Box

Which of the following goods is rival in consumption and excludable?

The overuse of a common resource relative to its economically efficient use is called

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

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 public good? Briefly explain.

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

A view of a spectacular sunset along a private beach is an example of a

On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. An overcrowded picnic area is an example of

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

The provision of public goods gives rise to

Property rights are well established for

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Is a congested nontoll road excludable? Is it rival in consumption? How do we classify a congested nontoll road in terms of the four types of goods?

The idea that "externalities arise because something of value has no price attached to it" is associated with

Which of the following is correct regarding road tolls as a way to reduce traffic?

Are whales excludable? Are they rival in consumption? How do we classify whales in terms of the four types of goods?

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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