Question 1

GA 400 is a state highway that runs through part of Atlanta,GA.In order to travel on one portion of GA 400,drivers are required to pay a toll.It follows that section of GA 400 will exhibit non-rivalry in consumption if

Accepted Answer

A)  the road is congested. 
B)  the road is not congested. 
C)  the toll is decreased. 
D)  the the toll is completely removed.

Question 2

Whether or not people have identical tastes,the marginal entrant is indifferent about using a common property.

Accepted Answer

A) True 
 B)False

Question 3

When a Clarke tax is used,the revenue collected may or may not cover the cost of providing the public good.

Accepted Answer

A) True 
 B)False

Question 4

Frequently,a public good can be adequately provided by private action when its benefits are

Accepted Answer

A)  concentrated among a small number of people. 
B)  equally valued by everyone. 
C)  widespread. 
D)  greater than its costs.

Question 5

All economists agree that a public good is one the is nonrivalrous and nonexcludable.

Accepted Answer

A) True 
 B)False

Question 6

Common Property I

The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property.

-Refer to Common Property I.Suppose the common property becomes privately owned.The owner behaves competitively and charges people an entrance fee for the right to use the property.In this situation,how are the gains from trade divided between the owner and the users of the property?

Accepted Answer

A)  The owner receives area C + D,and the users receive area A + B. 
B)  The owner receives area C,and the users receive area D. 
C)  The owner receives area E,and the users receive area A + B + C + D. 
D)  The owner receives area C + D,and the users receive zero.

Question 7

Which of the following is the best example of a common property?

Accepted Answer

A)  The car of a student who is frequently willing to give her friends rides around town. 
B)  The air that you breathe. 
C)  Bread that you bake and share. 
D)  Disney World

Question 8

Common Property I

The following questions refer to the accompanying diagram, which shows the benefits and costs associated with the use of a common property.

-Refer to Common Property I.Suppose the common property becomes privately owned.The owner behaves competitively and charges people an entrance fee for the right to use the property.The fee will be

Accepted Answer

A)  P1. 
B)  P2. 
C)  P2 - P1. 
D)  zero.

Question 9

Which of the following is an example of a good that is excludable and nonrivalrous?

Accepted Answer

A)  A fishery. 
B)  Cable television. 
C)  Over the air television broadcasts. 
D)  Disney World.

Question 10

An HBO broadcast over cable television is rival in consumption but non-excludable.

Accepted Answer

A) True 
 B)False

Question 11

The term "tragedy of the commons" is used to describe

Accepted Answer

A)  overpricing of computer software by Microsoft. 
B)  an increase in rents when air quality in a community improves. 
C)  the difficulty in obtaining honest evaluations of public goods. 
D)  the elimination of social gains due to the overuse of property without a well-defined owner.

Question 12

Each user of a common property imposes a negative externality on its other users.

Accepted Answer

A) True 
 B)False

Question 13

A non-congested toll road is an example of a good that is excludable,but not rivalrous in consumption.

Accepted Answer

A) True 
 B)False

Question 14

If people have identical tastes,then the economic rent created by a common property is

Accepted Answer

A)  zero. 
B)  as large as possible. 
C)  positive,but not as large as possible. 
D)  negative.

Question 15

When a Clarke tax is used to finance a public good,each person's tax equals

Accepted Answer

A)  the amount that he is willing to pay for the good. 
B)  the difference between the value he places on the public good and its cost. 
C)  the cost of the public good minus the value that other people claim to receive from it. 
D)  everyone else's tax,with the sum equaling the cost of producing the public good.

Question 16

In a Clarke tax scheme,the amount of tax that a person pays depends,in part,on his revealed preference for the public good.

Accepted Answer

A) True 
 B)False

Question 17

Free-riding is a problem associated with

Accepted Answer

A)  nonrivalrous goods. 
B)  nonexclusive goods. 
C)  both nonrivalrous and nonexclusive goods. 
D)  neither nonrivalrous nor nonexclusive goods.

Question 18

Whether or not people have identical tastes,free entry to a common property leads to a suboptimal outcome.

Accepted Answer

A) True 
 B)False

Question 19

A common property is

Accepted Answer

A)  both nonrivalrous and nonexcludable. 
B)  nonrivalrous,but not nonexcludable. 
C)  nonexcludable,but not nonrivalrous. 
D)  either nonrivalrous or nonexcludable,but not both.

Question 20

Private markets tend to undersupply nonrivalrous goods because of free riding.

Accepted Answer

A) True 
 B)False

Exam 14: Common Property and Public Goods

GA 400 is a state highway that runs through part of Atlanta,GA.In order to travel on one portion of GA 400,drivers are required to pay a toll.It follows that section of GA 400 will exhibit non-rivalry in consumption if

Whether or not people have identical tastes,the marginal entrant is indifferent about using a common property.

When a Clarke tax is used,the revenue collected may or may not cover the cost of providing the public good.

Frequently,a public good can be adequately provided by private action when its benefits are

All economists agree that a public good is one the is nonrivalrous and nonexcludable.

Which of the following is the best example of a common property?

Which of the following is an example of a good that is excludable and nonrivalrous?

An HBO broadcast over cable television is rival in consumption but non-excludable.

The term "tragedy of the commons" is used to describe

Each user of a common property imposes a negative externality on its other users.

A non-congested toll road is an example of a good that is excludable,but not rivalrous in consumption.

If people have identical tastes,then the economic rent created by a common property is

When a Clarke tax is used to finance a public good,each person's tax equals

In a Clarke tax scheme,the amount of tax that a person pays depends,in part,on his revealed preference for the public good.

Free-riding is a problem associated with

Whether or not people have identical tastes,free entry to a common property leads to a suboptimal outcome.

A common property is

Private markets tend to undersupply nonrivalrous goods because of free riding.