Question 1

When property rights are not well established,

Accepted Answer

A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently. 
A)  private goods become public goods. 
B)  markets fail to allocate resources efficiently. 
C)  the distribution of private goods is unfair. 
D)  government resources are used inefficiently.

Question 2

85 Refer to Table 11-4. Suppose the cost to plant each tree is $220 and the 4 homeowners have agreed to split all tree-planting costs equally. Which homeowner(s) would be in favor of planting at least 3 trees?
a. only Benitez
b. only Benitez and Chen
c. only Benitez, Chen, and Davis
d. Adams, Benitez, Chen, and Davis
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Challenging
LEARNING OBJECTIVES: ECON.MANK.15.51 - LO: 11-2
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC: Public Economics Public Choice
KEYWORDS: BLOOM'S: Application
-Refer to Table 11-4. Suppose the cost to plant each tree is $340 and the 4 homeowners have agreed to split all tree-planting costs equally. Which homeowner(s) would be in favor of planting at least 1 tree?

Accepted Answer

A)  only Benitez 
B)  only Benitez and Chen 
C)  only Benitez, Chen, and Davis 
D)  Adams, Benitez, Chen, and Davis 
A)  only Benitez 
B)  only Benitez and Chen 
C)  only Benitez, Chen, and Davis 
D)  Adams, Benitez, Chen, and Davis

Question 3

The old lyric "the best things in life are free"

Accepted Answer

A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market. 
A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market.

Question 4

On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?

Accepted Answer

A)  The lack of a fireworks display in Yankeeville arises because of an externality. 
B)  The lack of a fireworks display in Yankeeville arises because the free-rider problem does not apply to goods such as fireworks displays. 
C)  In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately irrational. 
D)  All of the above are correct. 
A)  The lack of a fireworks display in Yankeeville arises because of an externality. 
B)  The lack of a fireworks display in Yankeeville arises because the free-rider problem does not apply to goods such as fireworks displays. 
C)  In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately irrational. 
D)  All of the above are correct.

Question 5

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 6

Pollution is a

Accepted Answer

A)  problem that is entirely unrelated to the parable called the Tragedy of the Commons. 
B)  problem that cannot be remedied with regulations or corrective taxes. 
C)  negative externality that can be viewed as a public-goods problem. 
D)  negative externality that can be viewed as a common-resource problem. 
A)  problem that is entirely unrelated to the parable called the Tragedy of the Commons. 
B)  problem that cannot be remedied with regulations or corrective taxes. 
C)  negative externality that can be viewed as a public-goods problem. 
D)  negative externality that can be viewed as a common-resource problem.

Question 7

Which of the following is not a common resource?

Accepted Answer

A)  clean air 
B)  clean water 
C)  open grazing land 
D)  national defense 
A)  clean air 
B)  clean water 
C)  open grazing land 
D)  national defense

Question 8

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Accepted Answer

As described, good x is rival

Question 9

The difference between specific knowledge and general knowledge is that

Accepted Answer

A)  the creation of general knowledge is usually more profitable for the creator. 
B)  specific knowledge is excludable, while general knowledge is not excludable. 
C)  general knowledge is excludable, while specific knowledge is not excludable. 
D)  general knowledge is rival in consumption, while specific knowledge is not rival in consumption. 
A)  the creation of general knowledge is usually more profitable for the creator. 
B)  specific knowledge is excludable, while general knowledge is not excludable. 
C)  general knowledge is excludable, while specific knowledge is not excludable. 
D)  general knowledge is rival in consumption, while specific knowledge is not rival in consumption.

Question 10

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

Accepted Answer

A)  a fireworks display in a town with many residents 
B)  national defense 
C)  general knowledge 
D)  a lighthouse 
A)  a fireworks display in a town with many residents 
B)  national defense 
C)  general knowledge 
D)  a lighthouse

Question 11

All goods that are excludable are also rival in consumption, but not all goods that are rival in consumption are excludable.

Accepted Answer

A) True 
 B)False

Question 12

Who among the following is a free rider?

Accepted Answer

A)  Ernie listens to National Public Radio, but does not contribute to any fundraising efforts. 
B)  Bert takes the commuter rail to work, but he purchases the discounted monthly passes rather than buying tickets each day. 
C)  Grover sends his 5 children to a private school rather than to the public school in his neighborhood. 
D)  Oscar goes to Elmo's house to watch a football game on the local television channel. 
A)  Ernie listens to National Public Radio, but does not contribute to any fundraising efforts. 
B)  Bert takes the commuter rail to work, but he purchases the discounted monthly passes rather than buying tickets each day. 
C)  Grover sends his 5 children to a private school rather than to the public school in his neighborhood. 
D)  Oscar goes to Elmo's house to watch a football game on the local television channel.

Question 13

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 14

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

Accepted Answer

A)  a DVD 
B)  a movie in an empty theater 
C)  an outdoor movie shown at a public park 
D)  a movie shown on cable television. 
A)  a DVD 
B)  a movie in an empty theater 
C)  an outdoor movie shown at a public park 
D)  a movie shown on cable television.

Question 15

Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes     No
-Refer to Figure 11-1. The box labeled C represents what type of good?

Accepted Answer

Box C repr

Question 16

National defense is provided by the government because

Accepted Answer

A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues. 
A)  it is impossible for private markets to produce public goods. 
B)  products provided by the government are produced more efficiently. 
C)  free-riders make it difficult for private markets to supply the socially optimal quantity. 
D)  public goods increase government revenues.

Question 17

Table 11-4
There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners -- Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree.  
-Refer to Table 11-4. Suppose the cost to plant each tree is $300. How many trees should be planted to maximize the total surplus of the four homeowners?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 18

A mobile phone 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 19

Suppose that everyone prefers to live in a society without poverty. Further suppose that some private charities are successful in reducing poverty. People who do not contribute to the charities

Accepted Answer

A)  receive no external benefit from private antipoverty programs. 
B)  decrease the reliance of individuals on antipoverty programs. 
C)  can free ride on the generosity of others. 
D)  are most likely to be in favor of government-sponsored programs. 
A)  receive no external benefit from private antipoverty programs. 
B)  decrease the reliance of individuals on antipoverty programs. 
C)  can free ride on the generosity of others. 
D)  are most likely to be in favor of government-sponsored programs.

Question 20

What causes the Tragedy of the Commons?

Accepted Answer

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

Exam 11: Public Goods and Common Resources

When property rights are not well established,

The old lyric "the best things in life are free"

On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Pollution is a

Which of the following is not a common resource?

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

The difference between specific knowledge and general knowledge is that

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

All goods that are excludable are also rival in consumption, but not all goods that are rival in consumption are excludable.

Who among the following is a free rider?

Goods that are not excludable are usually

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

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. The box labeled C represents what type of good?

National defense is provided by the government because

A mobile phone is a

Suppose that everyone prefers to live in a society without poverty. Further suppose that some private charities are successful in reducing poverty. People who do not contribute to the charities

What causes the Tragedy of the Commons?

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. Which of the following items is not a clear-cut example of the type of good represented by Box D?