Question 1

Because public goods are

Accepted Answer

A)  excludable, people have an incentive to be free riders. 
B)  excludable, people do not have an incentive to be free riders. 
C)  not excludable, people have an incentive to be free riders. 
D)  not excludable, people do not have an incentive to be free riders. 
A)  excludable, people have an incentive to be free riders. 
B)  excludable, people do not have an incentive to be free riders. 
C)  not excludable, people have an incentive to be free riders. 
D)  not excludable, people do not have an incentive to be free riders.

Question 2

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False

Question 3

What do we mean when we say that a good is excludable?

Accepted Answer

A good is excludable

Question 4

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

Accepted Answer

A)  private good. 
B)  club good. 
C)  common resource. 
D)  public good. 
A)  private good. 
B)  club good. 
C)  common resource. 
D)  public good.

Question 5

When the absence of property rights causes a market failure, the government can potentially solve the problem

Accepted Answer

A)  by clearly defining property rights. 
B)  through regulation. 
C)  by supplying the good itself. 
D)  All of the above are correct. 
A)  by clearly defining property rights. 
B)  through regulation. 
C)  by supplying the good itself. 
D)  All of the above are correct.

Question 6

Goods that are not excludable are usually

Accepted Answer

A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge. 
A)  higher priced than excludable goods. 
B)  higher priced than rival goods. 
C)  in short supply. 
D)  free of charge.

Question 7

When a good is excludable,

Accepted Answer

A)  one person's use of the good diminishes another person's ability to use it. 
B)  people can be prevented from using the good. 
C)  no more than one person can use the good at the same time. 
D)  everyone will be excluded from using the good. 
A)  one person's use of the good diminishes another person's ability to use it. 
B)  people can be prevented from using the good. 
C)  no more than one person can use the good at the same time. 
D)  everyone will be excluded from using the good.

Question 8

Highway engineers want to improve a dangerous stretch of highway. They expect that it will reduce the risk of someone dying in an accident from 5.3 percent to 2.1 percent over the life of the highway. If a human life is worth $10 million, then the project is worth doing as long as it does not cost more than

Accepted Answer

A)  $53,000. 
B)  $210,000. 
C)  $320,000. 
D)  $2.1 million. 
A)  $53,000. 
B)  $210,000. 
C)  $320,000. 
D)  $2.1 million.

Question 9

Excludability is the property of a good whereby

Accepted Answer

A)  one person's use diminishes other peoples' use. 
B)  a person can be prevented from using it. 
C)  the government rations the quantity of a good that is available. 
D)  the resource is congestible. 
A)  one person's use diminishes other peoples' use. 
B)  a person can be prevented from using it. 
C)  the government rations the quantity of a good that is available. 
D)  the resource is congestible.

Question 10

What can the government do to solve the problem of excessive use of common resources?

Accepted Answer

Government can impose regulati

Question 11

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Accepted Answer

A) True 
 B)False

Question 12

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

A)  Cattle are a valuable source of income for many people, while elephants have no market value. 
B)  There is a high demand for products that come from cows, whereas there is no demand for products that come from elephants. 
C)  There are still lots of cattle that roam free, while all elephants live in zoos. 
D)  Cattle are owned by ranchers, while elephants are owned by no one. 
A)  Cattle are a valuable source of income for many people, while elephants have no market value. 
B)  There is a high demand for products that come from cows, whereas there is no demand for products that come from elephants. 
C)  There are still lots of cattle that roam free, while all elephants live in zoos. 
D)  Cattle are owned by ranchers, while elephants are owned by no one.

Question 13

Why does the commercial value of ivory threaten the elephant, while the commercial value of beef protects the cow?

Accepted Answer

Elephants are a common resource, whereas

Question 14

Which of the following goods is excludable but not rival in consumption?

Accepted Answer

A)  a congested toll road 
B)  fire protection in a small town 
C)  a tornado siren 
D)  whales in the ocean 
A)  a congested toll road 
B)  fire protection in a small town 
C)  a tornado siren 
D)  whales in the ocean

Question 15

If everyone benefits from helping the poor,

Accepted Answer

A)  government intervention cannot improve social well-being. 
B)  eliminating taxes aimed at redistributing income will make rich people better off. 
C)  taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D)  private markets can adequately provide charity programs to help the poor, despite free-rider problems. 
A)  government intervention cannot improve social well-being. 
B)  eliminating taxes aimed at redistributing income will make rich people better off. 
C)  taxing the wealthy to raise living standards of the poor can potentially make everyone better off. 
D)  private markets can adequately provide charity programs to help the poor, despite free-rider problems.

Question 16

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach that anyone may use without paying any fees. This state beach

Accepted Answer

A)  will tend to be overused because it is nonexcludable. 
B)  is a common resource when it becomes crowded on sunny summer weekends. 
C)  is rival in consumption when it becomes crowded on sunny summer weekends. 
D)  All of the above are correct. 
A)  will tend to be overused because it is nonexcludable. 
B)  is a common resource when it becomes crowded on sunny summer weekends. 
C)  is rival in consumption when it becomes crowded on sunny summer weekends. 
D)  All of the above are correct.

Question 17

In a certain city, the government is considering acquiring some land and turning it into a park without any fences or gates). In an attempt to determine the extent to which residents of the city would value the park, residents are asked to fill out a questionnaire. Which of the following is correct?

Accepted Answer

A)  On the questionnaire, some residents are likely to exaggerate the value they associate with the park. 
B)  On the questionnaire, some residents are likely to exaggerate the costs they associate with the park. 
C)  The use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of residents' perceptions of the costs and benefits of a park. 
D)  All of the above are correct. 
A)  On the questionnaire, some residents are likely to exaggerate the value they associate with the park. 
B)  On the questionnaire, some residents are likely to exaggerate the costs they associate with the park. 
C)  The use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of residents' perceptions of the costs and benefits of a park. 
D)  All of the above are correct.

Question 18

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

Accepted Answer

National defense is

Question 19

Aristotle writes, "What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others." In this statement, Aristotle is referring to the free-rider problem that occurs when a person receives the benefit of a good without paying for it.

Accepted Answer

A) True 
 B)False

Question 20

Private decisions about consumption of common resources and production of public goods usually lead to an

Accepted Answer

A)  efficient allocation of resources and external effects. 
B)  efficient allocation of resources and no external effects. 
C)  inefficient allocation of resources and external effects. 
D)  inefficient allocation of resources and no external effects. 
A)  efficient allocation of resources and external effects. 
B)  efficient allocation of resources and no external effects. 
C)  inefficient allocation of resources and external effects. 
D)  inefficient allocation of resources and no external effects.

Exam 11: Public Goods and Common Resources

Because public goods are

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

What do we mean when we say that a good is excludable?

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

When the absence of property rights causes a market failure, the government can potentially solve the problem

Goods that are not excludable are usually

When a good is excludable,

Excludability is the property of a good whereby

What can the government do to solve the problem of excessive use of common resources?

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Why do elephants face the threat of extinction while cows do not?

Why does the commercial value of ivory threaten the elephant, while the commercial value of beef protects the cow?

Which of the following goods is excludable but not rival in consumption?

If everyone benefits from helping the poor,

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach that anyone may use without paying any fees. This state beach

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

Private decisions about consumption of common resources and production of public goods usually lead to an

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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