Question 1

Free goods are usually efficiently allocated without government intervention.

Accepted Answer

A) True 
 B)False  False

Question 2

If a road is congested,then use of that road by an additional person would lead to a

Accepted Answer

A)   negative externality.
B)   positive externality.
C)   Pigovian externality.
D)   free-rider problem with rush hour drivers stuck in traffic. A

Question 3

Excessive fishing occurs because

Accepted Answer

A)   each individual fisherman has little incentive to maintain the species for the next year.
B)   fishermen rely on government managers to worry about fish populations.
C)   fishermen are unionized, so they are not concerned with externalities.
D)   fishermen have other marketable skills and do not fear exploitation of fish reserves. A

Question 4

Table 11-2
Consider a small town with only three families, the Johnson family, the Marshall family, and the Walker 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 $450 and the families have agreed to split the cost of the streetlights equally.If the families vote to determine the number of streetlights to install,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus),what is the greatest number of streetlights for which the majority of families would vote "yes?"

Accepted Answer

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

Question 5

It should not be surprising if the public sector fails to pay for the right amount or right kinds of basic research because

Accepted Answer

A)   basic research is not a public good.
B)   the benefits of basic research are hard to measure.
C)   members of Congress usually have little expertise in science.
D)   Both b and c are correct.

Question 6

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 constucting a high-performance microchip
D)   the chemical formula for an adhesive

Question 7

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

Question 8

Some goods,such as lighthouses,can switch between being public goods and being private goods depending on the circumstances.

Accepted Answer

A) True 
 B)False

Question 9

Place each of the following in the correct location in the table.

a.	Congested toll roads
b.	Knowledge
c.	Fish in the ocean
d.	National defense
e.	Congested nontoll roads
f.	Cable TV
g.	The environment
h.	Fire protection
i.	Ice-cream cones
j.	Uncongested toll roads
k.	Clothing
l.	Uncongested nontoll roads

Accepted Answer

The answer of Place each of the following in the...

Question 10

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Accepted Answer

A)   Cows reproduce at a high rate and have adapted well to their environment.
B)   Public policies protect cows from predators and diseases.
C)   Cows are privately owned, whereas many endangered species are owned by no one.
D)   There is a natural ecological balance between the birth rate of cows and human consumption.

Question 11

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 12

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.An economist would suggest that

Accepted Answer

A)   every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient.
B)   it would be more efficient if the electric company raised its rates for electricity at peak times.
C)   it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times.
D)   it would be more efficient to force everyone to cut their usage of electricity by the same amount.

Question 13

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.

Question 14

Each of the following would be considered a common resource except

Accepted Answer

A)   clean air.
B)   congested nontoll roads.
C)   national defense.
D)   open grazing land.

Question 15

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Accepted Answer

A)   fiscal analysis.
B)   monetary analysis.
C)   welfare analysis.
D)   cost-benefit analysis.

Question 16

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following goods is rival and excludable?

Accepted Answer

A)   an uncongested toll road
B)   an uncongested nontoll road
C)   a congested nontoll road
D)   a congested toll road

Question 18

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

A)   Cattle are a valuable source of income for many people, while elephants have no market value.
B)   There is a high demand for products that come from cows, whereas there is no demand for products that come from elephants.
C)   There are still lots of cattle that roam free, while all elephants live in zoos.
D)   Cattle are owned by ranchers, while elephants are owned by no one.

Question 19

Market failure associated with the free-rider problem is a result of

Accepted Answer

A)   a problem associated with pollution.
B)   benefits that accrue to those who don't pay.
C)   losses that accrue to providers of the product.
D)   market power.

Question 20

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources.

Free goods are usually efficiently allocated without government intervention.

If a road is congested,then use of that road by an additional person would lead to a

Excessive fishing occurs because

It should not be surprising if the public sector fails to pay for the right amount or right kinds of basic research because

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

Some goods,such as lighthouses,can switch between being public goods and being private goods depending on the circumstances.

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

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

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.An economist would suggest that

A lighthouse is typically considered to be a public good because

Each of the following would be considered a common resource except

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

Which of the following goods is rival and excludable?

Why do elephants face the threat of extinction while cows do not?

Market failure associated with the free-rider problem is a result of

The pollution market failure is an example of the free rider problem.