Question 1

A tax on gasoline often reduces road congestion because gasoline

Accepted Answer

A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good, while driving is an inferior good. 
D)  is an inferior good, while driving is a normal good. 
A)  and driving are complements. 
B)  and driving are substitutes. 
C)  is a normal good, while driving is an inferior good. 
D)  is an inferior good, while driving is a normal good.

Question 2

Which of the following statements about private goods and public goods is correct?

Accepted Answer

A)  Private goods and public goods are both excludable. 
B)  Private goods and public goods are both rival in consumption. 
C)  Private goods are not excludable and public goods are excludable. 
D)  Private goods are rival in consumption and public goods are not excludable. 
A)  Private goods and public goods are both excludable. 
B)  Private goods and public goods are both rival in consumption. 
C)  Private goods are not excludable and public goods are excludable. 
D)  Private goods are rival in consumption and public goods are not excludable.

Question 3

Goods that are rival in consumption but not excludable would be considered

Accepted Answer

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

Question 4

If one person's use of a good diminishes another person's enjoyment of it, the good is

Accepted Answer

A)  rival in consumption. 
B)  excludable. 
C)  normal. 
D)  exhaustible. 
A)  rival in consumption. 
B)  excludable. 
C)  normal. 
D)  exhaustible.

Question 5

The mayor of Newton is considering proposals to deal with an unsafe intersection. She could install a traffic light at a cost of $50,000 or she could install stop signs at a cost of $5,000. The traffic light is expected to reduce the risk of fatality by 0.45 percent and the stop signs are expected to reduce the risk of fatality by 0.054 percent. If the value of human life is estimated to be $10 million, what choice should the mayor make? Briefly explain.

Accepted Answer

The mayor should install stop

Question 6

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Accepted Answer

Eliminating poverty is not a good that t

Question 7

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Accepted Answer

The answer of Drivers have to pay a toll to...

Question 8

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis 
A)  subsidizing basic research 
B)  building lighthouses 
C)  toll charges on congested roads 
D)  cost-benefit analysis

Question 9

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

Accepted Answer

A)  every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient. 
B)  it would be more efficient if the electric company raised its rates for electricity at peak times. 
C)  it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times. 
D)  it would be more efficient to force everyone to cut their usage of electricity by the same amount. 
A)  every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient. 
B)  it would be more efficient if the electric company raised its rates for electricity at peak times. 
C)  it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times. 
D)  it would be more efficient to force everyone to cut their usage of electricity by the same amount.

Question 10

Because it is

Accepted Answer

A)  excludable but not rival in consumption, a sweatshirt is a club good. 
B)  rival in consumption but not excludable, a sweatshirt is a club good. 
C)  both excludable and rival in consumption, a sweatshirt is a private good. 
D)  neither excludable nor rival in consumption, a sweatshirt is a public good. 
A)  excludable but not rival in consumption, a sweatshirt is a club good. 
B)  rival in consumption but not excludable, a sweatshirt is a club good. 
C)  both excludable and rival in consumption, a sweatshirt is a private good. 
D)  neither excludable nor rival in consumption, a sweatshirt is a public good.

Question 11

The greatest difficulty with cost-benefit analysis of a public project is determining

Accepted Answer

A)  whether government revenue is sufficient to cover the cost of the project. 
B)  which contractor should be awarded the project. 
C)  the cost of the project. 
D)  the value or benefit of the project. 
A)  whether government revenue is sufficient to cover the cost of the project. 
B)  which contractor should be awarded the project. 
C)  the cost of the project. 
D)  the value or benefit of the project.

Question 12

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

Accepted Answer

A)  people can be prevented from using it. 
B)  access is limited due to driving distances. 
C)  if too many people use it, one person's use diminishes other peoples' use. 
D)  anyone can use it without affecting anyone else. 
A)  people can be prevented from using it. 
B)  access is limited due to driving distances. 
C)  if too many people use it, one person's use diminishes other peoples' use. 
D)  anyone can use it without affecting anyone else.

Question 13

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 14

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is

Accepted Answer

A)  excludable, but nonrival in consumption. 
B)  not excludable, but rival in consumption. 
C)  excludable and rival in consumption. 
D)  not excludable and nonrival in consumption. 
A)  excludable, but nonrival in consumption. 
B)  not excludable, but rival in consumption. 
C)  excludable and rival in consumption. 
D)  not excludable and nonrival in consumption.

Question 15

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 $500. 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 16

Congressman Smith and Congresswoman Johnson both consider themselves advocates for the national parks and are introducing different bills designed to benefit the parks. Congressman Smith's bill calls for an increase in the entrance fees. Congresswoman Johnson's bill calls for a decrease in the entrance fees. Which of the bills would be more effective at ensuring the quality of the national parks?

Accepted Answer

A)  Congressman Smith's bill because it will reduce the overuse of the parks 
B)  Congresswoman Johnson's bill because more visitors means more citizens will value and care for the parks 
C)  Both bills would be equally effective. 
D)  Neither bill would be effective. 
A)  Congressman Smith's bill because it will reduce the overuse of the parks 
B)  Congresswoman Johnson's bill because more visitors means more citizens will value and care for the parks 
C)  Both bills would be equally effective. 
D)  Neither bill would be effective.

Question 17

Which of the following would not be considered a private good?

Accepted Answer

A)  a pair of scissors 
B)  a pair of shoes 
C)  an SUV 
D)  cable TV service 
A)  a pair of scissors 
B)  a pair of shoes 
C)  an SUV 
D)  cable TV service

Question 18

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Accepted Answer

A)  assigning land property rights. 
B)  auctioning off sheep-grazing permits. 
C)  taxing sheep flocks. 
D)  subsidizing sheep flocks. 
A)  assigning land property rights. 
B)  auctioning off sheep-grazing permits. 
C)  taxing sheep flocks. 
D)  subsidizing sheep flocks.

Question 19

The idea of requiring motorists to pay to use the busiest streets in a city

Accepted Answer

A)  has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. 
B)  was tried in New York City in the 1990s, but the result was more - not less - congestion on busy streets, and the experiment was short-lived. 
C)  reflects the fact that a congested road is a public good. 
D)  reflects the fact that a congested road is a common resource. 
A)  has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. 
B)  was tried in New York City in the 1990s, but the result was more - not less - congestion on busy streets, and the experiment was short-lived. 
C)  reflects the fact that a congested road is a public good. 
D)  reflects the fact that a congested road is a common resource.

Question 20

Elephant populations in some African countries have started to rise because

Accepted Answer

A)  environmentalists have developed effective educational campaigns. 
B)  the value of ivory has decreased. 
C)  some elephants have been made a private good, and people are allowed to kill elephants on their own property. 
D)  regulations are being enforced more forcefully. 
A)  environmentalists have developed effective educational campaigns. 
B)  the value of ivory has decreased. 
C)  some elephants have been made a private good, and people are allowed to kill elephants on their own property. 
D)  regulations are being enforced more forcefully.

A tax on gasoline often reduces road congestion because gasoline

Which of the following statements about private goods and public goods is correct?

Goods that are rival in consumption but not excludable would be considered

If one person's use of a good diminishes another person's enjoyment of it, the good is

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

Because it is

The greatest difficulty with cost-benefit analysis of a public project is determining

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is

Which of the following would not be considered a private good?

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

The idea of requiring motorists to pay to use the busiest streets in a city

Elephant populations in some African countries have started to rise 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

Filters

Exam 11: Public Goods and Common Resources

A tax on gasoline often reduces road congestion because gasoline

Which of the following statements about private goods and public goods is correct?

Goods that are rival in consumption but not excludable would be considered

If one person's use of a good diminishes another person's enjoyment of it, the good is

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

Because it is

The greatest difficulty with cost-benefit analysis of a public project is determining

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is

Which of the following would not be considered a private good?

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

The idea of requiring motorists to pay to use the busiest streets in a city

Elephant populations in some African countries have started to rise 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

Filters