Question 1

A congested side street in your neighborhood is

Accepted Answer

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

Question 2

Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?

Accepted Answer

A)  Use of the beach by the nine new beachgoers will yield a negative externality. 
B)  The town can reduce the congestion externality by raising the fee to access the beach. 
C)  An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion. 
D)  Each of the nine friends would have been better off staying at home. 
A)  Use of the beach by the nine new beachgoers will yield a negative externality. 
B)  The town can reduce the congestion externality by raising the fee to access the beach. 
C)  An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion. 
D)  Each of the nine friends would have been better off staying at home.

Question 3

Under which of the following scenarios would a park be considered a public 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 4

To achieve the optimal provision of public goods, the

Accepted Answer

A)  market should be allowed to arrive at an equilibrium without government intervention. 
B)  government must limit the provision of the goods. 
C)  government must tax producers of the goods. 
D)  government must either provide the goods or subsidize their production. 
A)  market should be allowed to arrive at an equilibrium without government intervention. 
B)  government must limit the provision of the goods. 
C)  government must tax producers of the goods. 
D)  government must either provide the goods or subsidize their production.

Question 5

Governments can improve market outcomes for

Accepted Answer

A)  public goods but not common resources. 
B)  common resources but not public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources. 
A)  public goods but not common resources. 
B)  common resources but not public goods. 
C)  both public goods and common resources. 
D)  neither public goods nor common resources.

Question 6

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.  
-Refer to Table 11-2. Suppose the cost to install each streetlight is $900 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Black's like the town to install?

Accepted Answer

A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights 
A)  0 streetlights 
B)  1 streetlight 
C)  2 streetlights 
D)  3 streetlights

Question 7

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.

Question 8

Which of the following is an example of general knowledge, as opposed to specific knowledge that can be patented?

Accepted Answer

A)  the invention of a longer-lasting battery 
B)  a mathematical theorem 
C)  a method for constructing a high-performance microchip 
D)  the chemical formula for an adhesive 
A)  the invention of a longer-lasting battery 
B)  a mathematical theorem 
C)  a method for constructing a high-performance microchip 
D)  the chemical formula for an adhesive

Question 9

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential), the troubling implication is that

Accepted Answer

A)  it is possible for a retired or disabled person to have no value to society. 
B)  economists are more valuable than entrepreneurs. 
C)  retired people who volunteer in their communities are more valuable than physicians. 
D)  all workers have equal value. 
A)  it is possible for a retired or disabled person to have no value to society. 
B)  economists are more valuable than entrepreneurs. 
C)  retired people who volunteer in their communities are more valuable than physicians. 
D)  all workers have equal value.

Question 10

Scenario 11-1
Becky is a single mother of two young children who spend their days at a daycare center while Becky goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late.
-Refer to Scenario 11-1. Due to traffic, Becky expects to be 20 minutes late to pick up her children. How much would she be willing to pay for a variable toll road that would get her to the daycare center on time?

Accepted Answer

A)  any price less than $5 
B)  any price less than $10 
C)  any price less than $20 
D)  Becky would not be willing to pay out of pocket to avoid traffic. 
A)  any price less than $5 
B)  any price less than $10 
C)  any price less than $20 
D)  Becky would not be willing to pay out of pocket to avoid traffic.

Question 11

A good that is excludable but not rival is known as a club good.

Accepted Answer

A) True 
 B)False

Question 12

A vacation home in Malibu is

Accepted Answer

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

Question 13

The value and cost of goods are easiest to determine when the goods are

Accepted Answer

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

Question 14

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

Accepted Answer

A)  society finds them so valuable that citizens are happy to pay for their full cost. 
B)  these goods create a free-rider problem. 
C)  if they were funded privately, too many of these goods would be produced. 
D)  All of the above are correct. 
A)  society finds them so valuable that citizens are happy to pay for their full cost. 
B)  these goods create a free-rider problem. 
C)  if they were funded privately, too many of these goods would be produced. 
D)  All of the above are correct.

Question 15

What is the main difficulty facing cost-benefit analysts when they attempt to evaluate the worthiness of proposed public projects?

Accepted Answer

The main difficulty is that co

Question 16

Producers have little incentive to produce a public good because

Accepted Answer

A)  the social benefit is less than the private benefit. 
B)  the social benefit is less than the social cost. 
C)  there is a free-rider problem. 
D)  there is a Tragedy of the Commons. 
A)  the social benefit is less than the private benefit. 
B)  the social benefit is less than the social cost. 
C)  there is a free-rider problem. 
D)  there is a Tragedy of the Commons.

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 $120 and the 4 homeowners have agreed to split all tree-planting costs equally. How many trees would Adams prefer to plant?

Accepted Answer

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

Question 18

The Tragedy of the Commons results when a good is

Accepted Answer

A)  rival in consumption and not excludable. 
B)  excludable and not rival in consumption. 
C)  both rival in consumption and excludable. 
D)  neither rival in consumption nor excludable. 
A)  rival in consumption and not excludable. 
B)  excludable and not rival in consumption. 
C)  both rival in consumption and excludable. 
D)  neither rival in consumption nor excludable.

Question 19

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. Then total surplus for the 4 business owners is

Accepted Answer

A)  $750 if there is 1 ferry trip. 
B)  $40 if there are 2 ferry trips. 
C)  $150 if there are 3 ferry trips. 
D)  -$400 if there are 4 ferry trips. 
A)  $750 if there is 1 ferry trip. 
B)  $40 if there are 2 ferry trips. 
C)  $150 if there are 3 ferry trips. 
D)  -$400 if there are 4 ferry trips.

Question 20

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Accepted Answer

A)  The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot. 
B)  The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year. 
C)  The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce. 
D)  Both a and b are possible solutions to this example of the Tragedy of the Commons 
A)  The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot. 
B)  The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year. 
C)  The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce. 
D)  Both a and b are possible solutions to this example of the Tragedy of the Commons

Exam 11: Public Goods and Common Resources

A congested side street in your neighborhood is

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

To achieve the optimal provision of public goods, the

Governments can improve market outcomes for

Elephant populations in some African countries have started to rise because

Which of the following is an example of general knowledge, as opposed to specific knowledge that can be patented?

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential), the troubling implication is that

A good that is excludable but not rival is known as a club good.

A vacation home in Malibu is

The value and cost of goods are easiest to determine when the goods are

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

What is the main difficulty facing cost-benefit analysts when they attempt to evaluate the worthiness of proposed public projects?

Producers have little incentive to produce a public good because

The Tragedy of the Commons results when a good is

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of 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

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