Question 1

Nontoll roads can be either public goods or common resources, depending upon the degree of congestion.

Accepted Answer

A) True 
 B)False

Question 2

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

Accepted Answer

A)  patents correct for an unknown portion of the externality. 
B)  benefits are hard to measure. 
C)  members of Congress are often experts in the sciences. 
D)  the costs always exceed the benefits. 
A)  patents correct for an unknown portion of the externality. 
B)  benefits are hard to measure. 
C)  members of Congress are often experts in the sciences. 
D)  the costs always exceed the benefits.

Question 3

Goods that are not excludable include both

Accepted Answer

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

Question 4

A good is excludable if

Accepted Answer

A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it. 
A)  one person's use of the good diminishes another person's enjoyment of it. 
B)  the government can regulate its availability. 
C)  it is not a normal good. 
D)  people can be prevented from using it.

Question 5

Knowledge is an example of a

Accepted Answer

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

Question 6

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1) not toss cigarette butts onto public streets and sidewalks, and (2) pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a

Accepted Answer

A)  private goods problem. 
B)  Nash equilibrium. 
C)  Tragedy of the Commons. 
D)  cost-benefit equilibrium. 
A)  private goods problem. 
B)  Nash equilibrium. 
C)  Tragedy of the Commons. 
D)  cost-benefit equilibrium.

Question 7

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 8

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Accepted Answer

A)  Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products. 
B)  Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price. 
C)  Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered. 
D)  American drivers and Soviet shoppers have nothing in common. 
A)  Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products. 
B)  Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price. 
C)  Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered. 
D)  American drivers and Soviet shoppers have nothing in common.

Question 9

Which of the following is most likely to face extinction?

Accepted Answer

A)  dogs living as pets in households 
B)  dairy cows living on farms and producing milk 
C)  bald eagles living in zoos 
D)  tigers living in the wild 
A)  dogs living as pets in households 
B)  dairy cows living on farms and producing milk 
C)  bald eagles living in zoos 
D)  tigers living in the wild

Question 10

Which of the following is a disadvantage of government provision of a public good such as national defense?

Accepted Answer

A)  (i) only 
B)  (i) and (ii) only 
C)  (i) and (iii) only 
D)  (i), (ii), and (iii) 
A)  (i) only 
B)  (i) and (ii) only 
C)  (i) and (iii) only 
D)  (i), (ii), and (iii)

Question 11

Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Accepted Answer

A) True 
 B)False

Question 12

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

Accepted Answer

A)  regulating the use or consumption of the common resource. 
B)  taxing the use or consumption of the common resource. 
C)  selling the common resource to a private entity. 
D)  asking individuals to voluntarily reduce their use of the resource. 
A)  regulating the use or consumption of the common resource. 
B)  taxing the use or consumption of the common resource. 
C)  selling the common resource to a private entity. 
D)  asking individuals to voluntarily reduce their use of the resource.

Question 13

The Tragedy of the Commons describes

Accepted Answer

A)  government regulation that is necessary to combat externalities. 
B)  overuse of a common resource relative to its economically efficient use. 
C)  the nonrivalry feature of a common resource. 
D)  an effective cost-benefit analysis. 
A)  government regulation that is necessary to combat externalities. 
B)  overuse of a common resource relative to its economically efficient use. 
C)  the nonrivalry feature of a common resource. 
D)  an effective cost-benefit analysis.

Question 14

The Tragedy of the Commons

Accepted Answer

A)  occurs most often with public goods. 
B)  is only applicable to shared grazing rights among sheep herders. 
C)  is eliminated when property rights are assigned to individuals. 
D)  occurs when social incentives are in line with private incentives. 
A)  occurs most often with public goods. 
B)  is only applicable to shared grazing rights among sheep herders. 
C)  is eliminated when property rights are assigned to individuals. 
D)  occurs when social incentives are in line with private incentives.

Question 15

A television broadcast is an example of a good that is

Accepted Answer

A)  private. 
B)  not rival in consumption. 
C)  social. 
D)  normal. 
A)  private. 
B)  not rival in consumption. 
C)  social. 
D)  normal.

Question 16

Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes     No
-Refer to Figure 11-1. To which of the boxes - A, B, C, or D - does the phenomenon of free riding most clearly apply?

Accepted Answer

The phenomenon of fr

Question 17

Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except

Accepted Answer

A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats, he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption. 
A)  each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost. 
B)  there is an externality associated with eating the food on the table. 
C)  when one person eats, he may not take into account how his choice affects his friends. 
D)  each dish would be both excludable and rival in consumption.

Question 18

Stewart is a lobsterman. His traps are

Accepted Answer

A)  private goods and the lobster he catches are common resources. 
B)  private goods and the lobster he catches are public goods. 
C)  rival in consumption and the lobster he catches are not rival in consumption. 
D)  not rival in consumption and the lobster he catches are not rival in consumption. 
A)  private goods and the lobster he catches are common resources. 
B)  private goods and the lobster he catches are public goods. 
C)  rival in consumption and the lobster he catches are not rival in consumption. 
D)  not rival in consumption and the lobster he catches are not rival in consumption.

Question 19

Tolls are not effective in altering people's incentives to drive during rush hour.

Accepted Answer

A) True 
 B)False

Question 20

A common theme among examples of market failure is

Accepted Answer

A)  the good being provided harms society in some systematic way. 
B)  some item of value does not have an owner with the legal authority to control it. 
C)  cost-benefit analysis will show that private markets should provide the goods and services. 
D)  government intervention decreases the social benefits. 
A)  the good being provided harms society in some systematic way. 
B)  some item of value does not have an owner with the legal authority to control it. 
C)  cost-benefit analysis will show that private markets should provide the goods and services. 
D)  government intervention decreases the social benefits.

Exam 11: Public Goods and Common Resources

Nontoll roads can be either public goods or common resources, depending upon the degree of congestion.

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

Goods that are not excludable include both

A good is excludable if

Knowledge is an example of a

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

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Which of the following is most likely to face extinction?

Which of the following is a disadvantage of government provision of a public good such as national defense?

Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

The Tragedy of the Commons describes

The Tragedy of the Commons

A television broadcast is an example of a good that is

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. To which of the boxes - A, B, C, or D - does the phenomenon of free riding most clearly apply?

Stewart is a lobsterman. His traps are

Tolls are not effective in altering people's incentives to drive during rush hour.

A common theme among examples of market failure is

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

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