Question 1

Pay-per-view broadcasts are

Accepted Answer

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

Question 2

The idea that "externalities arise because something of value has no price attached to it" is associated with

Accepted Answer

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

Question 3

The idea of requiring motorists to pay to use the busiest streets in a city

Accepted Answer

A)  has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. 
B)  was tried in New York City in the 1990s, but the result was more - not less - congestion on busy streets, and the experiment was short-lived. 
C)  reflects the fact that a congested road is a public good. 
D)  reflects the fact that a congested road is a common resource.

Question 4

The ocean remains one of the largest unregulated resources for each of the following reasons except

Accepted Answer

A)  many countries have access to the ocean. 
B)  it is difficult to get international cooperation among countries that hold different values. 
C)  the oceans are so vast that enforcing any agreements would be difficult. 
D)  All of the above are reasons the ocean remains one of the largest unregulated resources.

Question 5

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

Question 6

The government often intervenes when private markets fail to provide an optimal level of certain goods and services.
For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

Accepted Answer

The answer of The government often intervenes when private markets...

Question 7

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 8

Which of the following statements is not correct?

Accepted Answer

A)  A free rider is a person who benefits from something for which he or she does not have to pay. 
B)  The creation of general knowledge is a public good. 
C)  The Tragedy of the Commons illustrates the underuse of a common resource. 
D)  A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.

Question 9

Markets may fail to allocate resources efficiently when property rights are not well established.

Accepted Answer

A) True 
 B)False

Question 10

Figure 11-1
 
-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.

Question 11

Because of the free-rider problem,

Accepted Answer

A)  private markets tend to undersupply public goods. 
B)  the federal government spends too many resources on national defense and not enough resources on medical research. 
C)  fireworks displays have become increasingly dangerous. 
D)  poverty has increased.

Question 12

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.
 
-Refer to Table 11-1. Suppose the cost to build the park is $9 per acre. How large should the park be to maximize total surplus from the park in Springfield?

Accepted Answer

A)  2 acres 
B)  3 acres 
C)  4 acres 
D)  5 acres

Question 13

One way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)  increase law enforcement in public areas. 
B)  limit access to the commons. 
C)  increase access to the commons. 
D)  decrease taxes.

Question 14

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.

Question 15

Some goods can be either common resources or public goods depending on

Accepted Answer

A)  whether the good is rival in consumption. 
B)  whether the good is excludable. 
C)  the marginal cost of the good. 
D)  None of the above is correct.

Question 16

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 $360. How many streetlights should the town install to maximize total surplus from the streetlights?

Accepted Answer

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

Question 17

Scenario 11-2
Consider the following goods:
-fire-protection services provided by a fire department
-a beautiful mural on the outside wall of a fire station
-a firefighter's helmet
-Refer to Scenario 11-2. Which of these goods is the best example of a club good? Briefly explain.

Accepted Answer

The answer of Scenario 11-2
Consider the following goods:
-fire-protection services provided...

Question 18

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Accepted Answer

A)  regulation 
B)  taxes 
C)  turning the common resource into a public good 
D)  turning the common resource into a private good

Question 19

One of the least regulated common resources today is

Accepted Answer

A)  state parks. 
B)  the ocean. 
C)  forest preserves. 
D)  the Great Lakes.

Question 20

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.

Exam 11: Public Goods and Common Resources