Question 1

A lighthouse is typically considered to be a public good because

Accepted Answer

A)  the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. 
B)  there is rarely another lighthouse nearby to provide competition. 
C)  a nearby port authority cannot avoid paying fees to the lighthouse owner. 
D)  all passing ships are able to enjoy the benefits of the lighthouse without paying. 
A)  the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse. 
B)  there is rarely another lighthouse nearby to provide competition. 
C)  a nearby port authority cannot avoid paying fees to the lighthouse owner. 
D)  all passing ships are able to enjoy the benefits of the lighthouse without paying.

Question 2

Figure 11-1
Rival in Consumption?
Yes No
Excludable? S1U1P1YesS1S1P0     No
-Refer to Figure 11-1. A tornado siren in a small town 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 3

Why is cable TV reception regarded as a club good?

Accepted Answer

Cable TV reception is excludable, becaus

Question 4

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 5

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

Accepted Answer

A) True 
 B)False

Question 6

The free-rider problem exists with

Accepted Answer

A)  public transportation 
B)  knowledge. 
C)  online music subscriptions. 
D)  All of the above are correct. 
A)  public transportation 
B)  knowledge. 
C)  online music subscriptions. 
D)  All of the above are correct.

Question 7

The government provides public goods because

Accepted Answer

A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers. 
A)  private markets are incapable of producing these types of goods. 
B)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
C)  markets are always better off with some government oversight. 
D)  external benefits will accrue to private producers.

Question 8

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 9

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 10

It would always be a mistake to view

Accepted Answer

A)  many species of animals as common resources. 
B)  a road as a public good. 
C)  national defense as a common resource. 
D)  a fireworks display as a public good. 
A)  many species of animals as common resources. 
B)  a road as a public good. 
C)  national defense as a common resource. 
D)  a fireworks display as a public good.

Question 11

Pay-per-view broadcasts are

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 12

Which of the following statements is correct?

Accepted Answer

A)  Environmental degradation is an example of a free rider problem.. 
B)  The division between public goods and common resources is clear-cut. 
C)  Some goods, such as lighthouses, may be either private or public goods. 
D)  The free-rider problem prevents governments from supplying public goods. 
A)  Environmental degradation is an example of a free rider problem.. 
B)  The division between public goods and common resources is clear-cut. 
C)  Some goods, such as lighthouses, may be either private or public goods. 
D)  The free-rider problem prevents governments from supplying public goods.

Question 13

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Accepted Answer

A)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
A)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
B)  overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good. 
C)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good. 
D)  understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good.

Question 14

One economically efficient way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)  tax the owners of the resource. 
B)  prevent anyone from using the resource. 
C)  reduce the marginal social benefit of the resource. 
D)  establish private ownership of the resource. 
A)  tax the owners of the resource. 
B)  prevent anyone from using the resource. 
C)  reduce the marginal social benefit of the resource. 
D)  establish private ownership of the resource.

Question 15

National defense is a classic example of a public good because

Accepted Answer

A)  there is no market for private security services. 
B)  it is difficult to exclude people from receiving the benefits from national defense once it is provided. 
C)  everyone agrees that some level of national defense is important, but only the government knows the optimal amount. 
D)  there are no private firms willing to supply defense goods such as tanks and weapons. 
A)  there is no market for private security services. 
B)  it is difficult to exclude people from receiving the benefits from national defense once it is provided. 
C)  everyone agrees that some level of national defense is important, but only the government knows the optimal amount. 
D)  there are no private firms willing to supply defense goods such as tanks and weapons.

Question 16

In deciding whether a good is a public good, one must determine the

Accepted Answer

A)  incomes of those who benefit from the good. 
B)  value of the external benefits that accrue to resource owners. 
C)  excludability of the good. 
D)  All of the above are correct. 
A)  incomes of those who benefit from the good. 
B)  value of the external benefits that accrue to resource owners. 
C)  excludability of the good. 
D)  All of the above are correct.

Question 17

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 18

For private goods allocated in markets,

Accepted Answer

A)  prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
B)  prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
C)  the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
D)  the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
A)  prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
B)  prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. 
C)  the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. 
D)  the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

Question 19

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with

Accepted Answer

A)  fire protection. 
B)  poverty. 
C)  pollution. 
D)  national defense. 
A)  fire protection. 
B)  poverty. 
C)  pollution. 
D)  national defense.

Question 20

Even economists who advocate small government agree that national defense is a good that the government should provide.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

A lighthouse is typically considered to be a public good because

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. A tornado siren in a small town is an example of the type of good represented by Box

Why is cable TV reception regarded as a club good?

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

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

The free-rider problem exists with

The government provides public goods because

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

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

It would always be a mistake to view

Pay-per-view broadcasts are

Which of the following statements is correct?

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

One economically efficient way to eliminate the Tragedy of the Commons is to

National defense is a classic example of a public good because

In deciding whether a good is a public good, one must determine the

For private goods allocated in markets,

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with

Even economists who advocate small government agree that national defense is a good that the government should provide.

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. A tornado siren in a small town is an example of the type of good represented by Box