Question 1

A pair of jeans is rival but non-excludable.

Accepted Answer

A) True 
 B)False

Question 2

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 C)
F) A) and B)

Question 3

What causes the Tragedy of the Commons? (i)  Social and private incentives differ.
(ii)  Common resources are not rival in consumption and are not excludable.
(iii)  Common resources are not excludable but are rival in consumption.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (ii)  only
D)   (i)  and (iii)  onlyE) A) and B)
F) A) and D)

Question 4

What particular characteristic do public goods and common resources have in common?

Accepted Answer

Public goods and common resour...

Question 5

The government provides public goods because

Accepted Answer

A)   private markets are incapable of producing these types of goods.
B)   free-riders make it difficult for private markets to supply the socially optimal quantity.
C)   markets are always better off with some government oversight.
D)   external benefits will accrue to private producers.E) B) and C)
F) A) and D)

Question 6

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Accepted Answer

Yes. Both national d...

Question 7

Figure 11-1
Rival in Consumption?
  
-Refer to Figure 11-1. The box labeled D represents what type of good?

Accepted Answer

Box D repr...

Question 8

Even economists who advocate small government agree that

Accepted Answer

A)   national defense is a public good and that the government should provide it.
B)   national defense is a common resource and that the government should provide it.
C)   national defense is a public good, but many of them believe that it should be provided by private firms rather than by the government.
D)   national defense is a common resource, but many of them believe that it should be provided by private firms rather than by the government.E) C) and D)
F) A) and B)

Question 9

The difference between specific knowledge and general knowledge is that

Accepted Answer

A)   the creation of general knowledge is usually more profitable for the creator.
B)   specific knowledge is excludable, while general knowledge is not excludable.
C)   general knowledge is excludable, while specific knowledge is not excludable.
D)   general knowledge is rival in consumption, while specific knowledge is not rival in consumption.E) B) and C)
F) A) and D)

Question 10

An overcrowded beach is an example of

Accepted Answer

A)   a positive externality.
B)   a Tragedy of the Commons.
C)   an environmentally inefficient allocation of resources.
D)   an economically unfair allocation of resources.E) C) and D)
F) A) and B)

Question 11

Which of the following is a disadvantage of government provision of a public good such as national defense? (i)  The government does not know the exact willingness of consumers to pay for the public good.
(ii)  The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good.
(iii)  Taxpayers do not agree on the optimal quantity of the public good that the government should provide.

Accepted Answer

A)   (i)  only
B)   (i)  and (ii)  only
C)   (i)  and (iii)  only
D)   (i) , (ii) , and (iii) E) None of the above
F) B) and C)

Question 12

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
 
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $1,000. How many ferry trips should there be to maximize the total surplus of the four business owners?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and D)
F) A) and B)

Question 13

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

Accepted Answer

A)   Carmen smokes a cigarette outside the door to her office building.
B)   Carlita stocks shelves in a grocery store.
C)   Cameron watches a movie in his home theater room.
D)   Cathy docks her boat at her lake house.E) A) and B)
F) B) and D)

Question 14

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
 
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750. Then total surplus for the 4 business owners is

Accepted Answer

A)   $330 if there is 1 ferry trip.
B)   $370 if there are 2 ferry trips.
C)   $150 if there are 3 ferry trips.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 15

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Accepted Answer

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

Question 16

Which of the following is not a public good?

Accepted Answer

A)   national defense
B)   patented technological knowledge
C)   general knowledge
D)   the elimination of povertyE) None of the above
F) C) and D)

Question 17

Private decisions about consumption of common resources and production of public goods usually lead to an

Accepted Answer

A)   efficient allocation of resources and external effects.
B)   efficient allocation of resources and no external effects.
C)   inefficient allocation of resources and external effects.
D)   inefficient allocation of resources and no external effects.E) A) and B)
F) None of the above

Question 18

One benefit of the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 19

What can the government do to solve the problem of excessive use of common resources?

Accepted Answer

Government can impose regulati...

Question 20

A lighthouse might be considered a private good if

Accepted Answer

A)   there is a second lighthouse nearby, thus preventing a monopoly.
B)   the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse.
C)   ships are able to enjoy the benefits of the lighthouse without paying for the benefit.
D)   a nearby port authority is able to avoid paying any fees to the lighthouse owner.E) All of the above
F) A) and D)

Exam 11: Public Goods and Common Resources

A pair of jeans is rival but non-excludable.

Correct Answer
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Correct Answer
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Correct Answer
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Private decisions about consumption of common resources and production of public goods usually lead to an

Correct Answer
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What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption.

Correct Answer
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The difference between specific knowledge and general knowledge is that

Correct Answer
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Figure 11-1 Rival in Consumption? -Refer to Figure 11-1. The box labeled D represents what type of good?

Correct Answer
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Box D repr...
View Answer

What can the government do to solve the problem of excessive use of common resources?

Correct Answer
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Government can impose regulati...
View Answer

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Correct Answer
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Yes. Both national d...
View Answer

Correct Answer
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A lighthouse might be considered a private good if

Correct Answer
verified

Correct Answer
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The government provides public goods because

Correct Answer
verified

An overcrowded beach is an example of

Correct Answer
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Even economists who advocate small government agree that

Correct Answer
verified

What particular characteristic do public goods and common resources have in common?

Correct Answer
verified
Public goods and common resour...
View Answer

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct Answer
verified

Which of the following is not a public good?

Correct Answer
verified

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Correct Answer
verified

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

Correct Answer
verified

Exam 11: Public Goods and Common Resources

A pair of jeans is rival but non-excludable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private decisions about consumption of common resources and production of public goods usually lead to an

Correct AnswerverifiedShow Answer

What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption.

Correct AnswerverifiedShow Answer

The difference between specific knowledge and general knowledge is that

Correct AnswerverifiedShow Answer

Figure 11-1 Rival in Consumption? -Refer to Figure 11-1. The box labeled D represents what type of good?

Correct AnswerverifiedBox D repr...View AnswerShow Answer

What can the government do to solve the problem of excessive use of common resources?

Correct AnswerverifiedGovernment can impose regulati...View AnswerShow Answer

Recall the four types of goods. Are national defense and basic research the same type of good? Briefly explain.

Correct AnswerverifiedYes. Both national d...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A lighthouse might be considered a private good if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The government provides public goods because

Correct AnswerverifiedShow Answer

An overcrowded beach is an example of

Correct AnswerverifiedShow Answer

Even economists who advocate small government agree that

Correct AnswerverifiedShow Answer

What particular characteristic do public goods and common resources have in common?

Correct AnswerverifiedPublic goods and common resour...View AnswerShow Answer

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct AnswerverifiedShow Answer

Which of the following is not a public good?

Correct AnswerverifiedShow Answer

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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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Box D repr...
View Answer

Correct Answer
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Government can impose regulati...
View Answer

Correct Answer
verified
Yes. Both national d...
View Answer

Correct Answer
verified

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
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Public goods and common resour...
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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