Question 1

Private goods are both

Accepted Answer

A)   excludable and nonrival in consumption.
B)   nonexcludable and rival in consumption.
C)   excludable and rival in consumption.
D)   nonexcludable and nonrival consumption.E) A) and C)
F) B) and C)

Question 2

A town engineer comes to the city council with a proposal to install a traffic light at a certain intersection that currently has a stop sign.The benefit of the traffic light is increased safety because the light will reduce the incidence of fatal traffic accidents by 50 percent per year.Which of the following statements is correct?

Accepted Answer

A)   The city council should vote to install the traffic light because the benefits will outweigh the costs.
B)   The city council should carefully evaluate the benefits of reduced fatalities against only the explicit costs of the light.
C)   The city council should carefully evaluate the benefits of reduced fatalities against the costs of the light and of the extra time that drivers will spend waiting for a green light.
D)   The costs will invariably outweigh the benefits.E) B) and D)
F) All of the above

Question 3

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Accepted Answer

A)   assigning land property rights.
B)   auctioning off sheep-grazing permits.
C)   taxing sheep flocks.
D)   subsidizing sheep flocks.E) A) and B)
F) C) and D)

Question 4

The free-rider problem exists with

Accepted Answer

A)   apples.
B)   knowledge.
C)   cable TV service.
D)   congested toll roads.E) A) and D)
F) None of the above

Question 5

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Accepted Answer

A)   private good.
B)   club good.
C)   common resource.
D)   public good.E) None of the above
F) All of the above

Question 6

The failure of markets to adequately protect the environment can viewed either as a problem of

Accepted Answer

A)   externalities or as a problem of common resources.
B)   externalities or as a problem of private goods.
C)   the overprovision of public goods or as a problem of the underprovision of private goods.
D)   club goods or as a problem that arises when the quantity of excludable goods exceeds the socially-efficient quantity.E) C) and D)
F) A) and B)

Question 7

Government policy can potentially raise economic well-being

Accepted Answer

A)   in all markets for goods and services.
B)   in economic models, but not in reality.
C)   when a good does not have a price attached to it.
D)   never.E) None of the above
F) A) and B)

Question 8

The national defense of the United States is not rival because

Accepted Answer

A)   my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States.
B)   my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States.
C)   once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense.
D)   once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense.E) B) and C)
F) A) and C)

Question 9

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Accepted Answer

A) True 
 B)False

Question 10

When a good is excludable,

Accepted Answer

A)   one person's use of the good diminishes another person's ability to use it.
B)   people can be prevented from using the good.
C)   no more than one person can use the good at the same time.
D)   everyone will be excluded from using the good.E) A) and D)
F) A) and C)

Question 11

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Accepted Answer

A) True 
 B)False

Question 12

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.Suppose that the Minnesota State Park Service institutes a variable fee structure.On weekdays when the picnic areas get little use,the fee is zero.On normal weekends,the fee is $8 per person.On holiday weekends,the fee is $14 per person.The fee system corrects a problem known as the

Accepted Answer

A)   Coase theorem.
B)   free rider problem.
C)   Tragedy of the Commons.
D)   public goods problem.E) A) and B)
F) A) and C)

Question 13

A cost-benefit analysis of a highway is difficult to conduct because analysts

Accepted Answer

A)   cannot estimate the explicit cost of a project that has not been completed.
B)   are unlikely to have access to costs on similar projects.
C)   are not able to consider the opportunity cost of resources.
D)   will have difficulty estimating the value of the highway.E) B) and D)
F) A) and B)

Question 14

Table 11-5
A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard.
 
-Refer to Table 11-5.Suppose the cost to hire each guard is $100 per day and the 4 store owners have agreed to split the costs of hiring guards equally.Which store owner(s) would be opposed to hiring any guards?

Accepted Answer

A)   only the owner of Store C
B)   only the owners of Stores A and C
C)   only the owners of Stores A, B, and C
D)   All 4 store owners would be opposed to hiring any guards.E) B) and D)
F) A) and C)

Question 15

A local park filled with picnickers 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.E) B) and C)
F) All of the above

Question 16

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Accepted Answer

A)   a private good.
B)   a club good.
C)   a Tragedy of the Commons.
D)   public good.E) A) and B)
F) A) and C)

Question 17

Knowledge is an example of a

Accepted Answer

A)   public good.
B)   private good.
C)   common resource.
D)   club good.E) C) and D)
F) B) and C)

Question 18

In which of the following examples are property rights not well established?

Accepted Answer

A)   Jim chooses to ride his bike to work rather than drive his car.
B)   Groups of students play loud music in the open area between the dorms.
C)   Aniella reads a book on her patio.
D)   Executives discuss corporate strategy in the company boardroom.E) A) and B)
F) A) and C)

Question 19

Which of the following would be considered a private good?

Accepted Answer

A)   national defense
B)   a public beach
C)   local cable television service
D)   a bottle of natural mineral waterE) A) and B)
F) A) and C)

Question 20

At the local park there is a playground that anyone may use.There is rarely anyone using the playground,so children who use the playground receive full enjoyment from its use.The playground is

Accepted Answer

A)   rival in consumption and is excludable.
B)   not rival in consumption, but is excludable.
C)   rival in consumption, but is not excludable.
D)   not rival in consumption nor is it excludable.E) A) and D)
F) A) and C)

Exam 11: Public Goods and Common Resources.

A cost-benefit analysis of a highway is difficult to conduct because analysts

Correct Answer
verified

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Correct Answer
verified

The failure of markets to adequately protect the environment can viewed either as a problem of

Correct Answer
verified

Knowledge is an example of a

Correct Answer
verified

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Correct Answer
verified

The free-rider problem exists with

Correct Answer
verified

At the local park there is a playground that anyone may use.There is rarely anyone using the playground,so children who use the playground receive full enjoyment from its use.The playground is

Correct Answer
verified

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct Answer
verified

When a good is excludable,

Correct Answer
verified

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct Answer
verified

Correct Answer
verified

A local park filled with picnickers is

Correct Answer
verified

Correct Answer
verified

In which of the following examples are property rights not well established?

Correct Answer
verified

Which of the following would be considered a private good?

Correct Answer
verified

Government policy can potentially raise economic well-being

Correct Answer
verified

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Correct Answer
verified

Correct Answer
verified

The national defense of the United States is not rival because

Correct Answer
verified

Private goods are both

Correct Answer
verified

Exam 11: Public Goods and Common Resources.

A cost-benefit analysis of a highway is difficult to conduct because analysts

Correct AnswerverifiedShow Answer

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Correct AnswerverifiedShow Answer

The failure of markets to adequately protect the environment can viewed either as a problem of

Correct AnswerverifiedShow Answer

Knowledge is an example of a

Correct AnswerverifiedShow Answer

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Correct AnswerverifiedShow Answer

The free-rider problem exists with

Correct AnswerverifiedShow Answer

At the local park there is a playground that anyone may use.There is rarely anyone using the playground,so children who use the playground receive full enjoyment from its use.The playground is

Correct AnswerverifiedShow Answer

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct AnswerverifiedShow Answer

When a good is excludable,

Correct AnswerverifiedShow Answer

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A local park filled with picnickers is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In which of the following examples are property rights not well established?

Correct AnswerverifiedShow Answer

Which of the following would be considered a private good?

Correct AnswerverifiedShow Answer

Government policy can potentially raise economic well-being

Correct AnswerverifiedShow Answer

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The national defense of the United States is not rival because

Correct AnswerverifiedShow Answer

Private goods are both

Correct AnswerverifiedShow Answer

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