Question 1

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 2

Advocates of antipoverty programs claim that

Accepted Answer

A)   the government has good information about what people are willing to pay to eliminate poverty.
B)   fighting poverty is a public good.
C)   private sector will incur higher costs than the public sector for these programs.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 3

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 roadE) B) and C)
F) None of the above

Question 4

If one person's use of a good diminishes another person's enjoyment of it, the good is

Accepted Answer

A)   rival in consumption.
B)   excludable.
C)   normal.
D)   exhaustible.E) A) and B)
F) C) and D)

Question 5

The Occupational Safety and Health Administration (OSHA)  has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks. The cost of imposing a regulation that would ban the chemical is $10 million. OSHA has calculated that each person saved by this regulation has a value equal to $10 million. If the benefits are exactly equal to the costs, what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

Accepted Answer

A)   0.001
B)   0.01
C)   0.1
D)   1.0E) All of the above
F) C) and D)

Question 6

When good X is produced, some people benefit. A free-rider problem arises when

Accepted Answer

A)   the number of people who benefit is small and it is impossible to prevent anyone from benefiting.
B)   the number of beneficiaries is small and it is possible to prevent some people from benefiting.
C)   the number of beneficiaries is large and it is impossible to prevent anyone from benefiting.
D)   the number of beneficiaries is large and it is possible to prevent some people from benefiting.E) A) and D)
F) None of the above

Question 7

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 8

When a free-rider problem exists,

Accepted Answer

A)   the market will devote too few resources to the production of the good.
B)   the cost of the good will always be more than the benefit of the good.
C)   the good will not be produced.
D)   entrepreneurs will eventually find a way to make free-riders pay their share.E) A) and D)
F) A) and B)

Question 9

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

It is possible that everyone can agree t...

Question 10

An economics professor, upset about the rising cost of textbooks, proposed that his department purchase 50 copies of a statistics book so the students in the statistics class would not have to purchase their own books but rather could borrow a book for the semester and then return it for the next class to use. Which of the following strategies would not prevent a common resource problem with the textbooks?

Accepted Answer

A)   Students will be required to pay a deposit for the textbook, which is refundable at the end of the semester when the book is returned in good condition.
B)   The textbooks are placed in a common area of the department so students can borrow and return them as needed.
C)   Students must sign a form agreeing to return the book or pay a fine equal to the replacement cost of the book.
D)   The textbooks are placed in the professor's office and will only be given to students who are registered members of the class. These students will not receive their final course grades until the books are returned.E) A) and B)
F) A) and C)

Question 11

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 and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) , what is the largest park size for which the majority of residents would vote "yes?"

Accepted Answer

A)   1 acre
B)   2 acres
C)   3 acres
D)   4 acresE) A) and C)
F) B) and C)

Question 12

Which of the following represents a potential solution to the problem of environmental pollution?

Accepted Answer

A)   corrective taxes
B)   well established property rights
C)   government regulation
D)   All of the above are correct.E) A) and C)
F) A) and D)

Question 13

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Accepted Answer

A)   reduced travel time during peak hours
B)   reduced need for public transportation
C)   improved environmental quality
D)   improved valuation of a common resourceE) None of the above
F) A) and C)

Question 14

Private markets usually fail to provide lighthouses because

Accepted Answer

A)   lighthouses cost too much to build relative to their benefits.
B)   government intervention makes it hard for private lighthouse owners to compete in the market.
C)   ship captains have incentives to use lighthouses without paying.
D)   lighthouses are valued very little by ship captains these days.E) B) and C)
F) A) and D)

Question 15

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Accepted Answer

A)   to prevent overuse
B)   to decrease taxes
C)   to fight poverty
D)   to increase consumptionE) C) and D)
F) A) and D)

Question 16

Fire protection is a

Accepted Answer

A)   club good, because it is excludable but not rival in consumption.
B)   club good, because it is rival in consumption but not excludable.
C)   a public good, because it is excludable but not rival in consumption.
D)   a public good, because it is rival in consumption but not excludable.E) A) and B)
F) C) and D)

Question 17

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

Accepted Answer

Other people, besides the pers...

Question 18

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 19

Using a toll to reduce traffic when congestion is greatest is an example of a

Accepted Answer

A)   regulation solution.
B)   command-and-control policy.
C)   corrective tax.
D)   Coase theorem solution.E) A) and B)
F) A) and C)

Question 20

The overuse of a common resource relative to its economically efficient use is called

Accepted Answer

A)   the free rider problem.
B)   the Tragedy of the Commons.
C)   a public good.
D)   cost-benefit analysis.E) B) and D)
F) A) and D)

Exam 11: Public Goods and Common Resources

Correct Answer
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It is possible that everyone can agree t...
View Answer

Which of the following represents a potential solution to the problem of environmental pollution?

Correct Answer
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Correct Answer
verified

If one person's use of a good diminishes another person's enjoyment of it, the good is

Correct Answer
verified

When good X is produced, some people benefit. A free-rider problem arises when

Correct Answer
verified

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Correct Answer
verified

Which of the following goods is rival and excludable?

Correct Answer
verified

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct Answer
verified

Private markets usually fail to provide lighthouses because

Correct Answer
verified

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Correct Answer
verified

The overuse of a common resource relative to its economically efficient use is called

Correct Answer
verified

Advocates of antipoverty programs claim that

Correct Answer
verified

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

Correct Answer
verified
Other people, besides the pers...
View Answer

Fire protection is a

Correct Answer
verified

Correct Answer
verified

Using a toll to reduce traffic when congestion is greatest is an example of a

Correct Answer
verified

Correct Answer
verified

When a free-rider problem exists,

Correct Answer
verified

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

Correct Answer
verified

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Correct Answer
verified

Exam 11: Public Goods and Common Resources

Correct AnswerverifiedIt is possible that everyone can agree t...View AnswerShow Answer

Which of the following represents a potential solution to the problem of environmental pollution?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If one person's use of a good diminishes another person's enjoyment of it, the good is

Correct AnswerverifiedShow Answer

When good X is produced, some people benefit. A free-rider problem arises when

Correct AnswerverifiedShow Answer

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Correct AnswerverifiedShow Answer

Which of the following goods is rival and excludable?

Correct AnswerverifiedShow Answer

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct AnswerverifiedShow Answer

Private markets usually fail to provide lighthouses because

Correct AnswerverifiedShow Answer

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Correct AnswerverifiedShow Answer

The overuse of a common resource relative to its economically efficient use is called

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs claim that

Correct AnswerverifiedShow Answer

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

Correct AnswerverifiedOther people, besides the pers...View AnswerShow Answer

Fire protection is a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using a toll to reduce traffic when congestion is greatest is an example of a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a free-rider problem exists,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Correct AnswerverifiedShow Answer

Correct Answer
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It is possible that everyone can agree t...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Other people, besides the pers...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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