Question 1

Goods that are excludable 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 2

Which of the following statements is not correct?

Accepted Answer

A)  A free rider is a person who benefits from something for which he or she does not have to pay. 
B)  The creation of general knowledge is a public good. 
C)  The Tragedy of the Commons illustrates the underuse of a common resource. 
D)  A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads. 
A)  A free rider is a person who benefits from something for which he or she does not have to pay. 
B)  The creation of general knowledge is a public good. 
C)  The Tragedy of the Commons illustrates the underuse of a common resource. 
D)  A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.

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. 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 4

Figure 11-1
Rival in Consumption?
Yes No
Excludable? S1U1P1YesS1S1P0     No
-Refer to Figure 11-1. The box labeled B 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 5

A free rider is a person who pays for a good but does not receive the benefit of it.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.  
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Sophia receive?

Accepted Answer

A)  -$5 
B)  -$2 
C)  $0 
D)  $2 
A)  -$5 
B)  -$2 
C)  $0 
D)  $2

Question 8

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.  
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park size for which the majority of residents would vote "yes?"

Accepted Answer

A)  0 acres 
B)  1 acre 
C)  2 acres 
D)  3 acres 
A)  0 acres 
B)  1 acre 
C)  2 acres 
D)  3 acres

Question 9

Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is excludable and not rival in consumption?

Accepted Answer

A)  pizza, cable TV 
B)  pair of pants, clean air 
C)  clean air, mathematical theorem 
D)  basic research, fireworks display 
A)  pizza, cable TV 
B)  pair of pants, clean air 
C)  clean air, mathematical theorem 
D)  basic research, fireworks display

Question 10

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Accepted Answer

In the absence of government interventio

Question 11

Figure 11-1
Rival in Consumption?
Yes No
Excludable? S1U1P1YesS1S1P0     No
-Refer to Figure 11-1. Which of the following items is not an example of the type of good represented by Box D?

Accepted Answer

A)  a mathematical theorem 
B)  an uncongested toll road 
C)  national defense 
D)  fighting poverty 
A)  a mathematical theorem 
B)  an uncongested toll road 
C)  national defense 
D)  fighting poverty

Question 12

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 13

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 14

An overcrowded beach is an example of

Accepted Answer

A)  a positive externality. 
B)  a Tragedy of the Commons. 
C)  an environmentally inefficient allocation of resources. 
D)  an economically unfair allocation of resources. 
A)  a positive externality. 
B)  a Tragedy of the Commons. 
C)  an environmentally inefficient allocation of resources. 
D)  an economically unfair allocation of resources.

Question 15

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 16

Even economists who advocate small government agree that

Accepted Answer

A)  national defense is a public good and that the government should provide it. 
B)  national defense is a common resource and that the government should provide it. 
C)  national defense is a public good, but many of them believe that it should be provided by private firms rather than by the government. 
D)  national defense is a common resource, but many of them believe that it should be provided by private firms rather than by the government. 
A)  national defense is a public good and that the government should provide it. 
B)  national defense is a common resource and that the government should provide it. 
C)  national defense is a public good, but many of them believe that it should be provided by private firms rather than by the government. 
D)  national defense is a common resource, but many of them believe that it should be provided by private firms rather than by the government.

Question 17

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. Do any of these goods cause an externality? If so, which one(s)? Positive or negative?
Briefly explain.

Accepted Answer

The exotic fish in the huge aquarium res

Question 18

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 19

Under which of the following scenarios would a park be considered a club good?

Accepted Answer

A)  Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables. 
B)  Visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge, but frequently all of the picnic tables are in use. 
A)  Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables. 
B)  Visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use. 
C)  Visitors can enter the park free of charge and there are always plenty of empty picnic tables. 
D)  Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Question 20

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

Exam 11: Public Goods and Common Resources

Goods that are excludable include both

Which of the following statements is not correct?

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. The box labeled B represents

A free rider is a person who pays for a good but does not receive the benefit of it.

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

Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is excludable and not rival in consumption?

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. Which of the following items is not an example of the type of good represented by Box D?

A lighthouse might be considered a private good if

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

An overcrowded beach is an example of

Even economists who advocate small government agree that

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. Do any of these goods cause an externality? If so, which one(s)? Positive or negative? Briefly explain.

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.

Under which of the following scenarios would a park be considered a club good?

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 Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. The box labeled B represents

Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. Which of the following items is not an example of the type of good represented by Box D?