Question 1

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

Accepted Answer

A)   the local government should put on the display,but you should not.
B)   you should still put on the display,but the local government should not.
C)   neither you nor the local government should put on the display.
D)   either you or the local government should put on the display.E) A) and B)
F) All of the above

Question 2

Goods that are not excludable include both

Accepted Answer

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

Question 3

You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.The cost to build the library is $500,000.Which of the following is the most efficient option?

Accepted Answer

A)   The library should be built and paid for with donations collected from residents,as these donations should more than cover the cost of the library.
B)   The library should be built and paid for by the town government and paid for with a tax on the residents because all residents would benefit from it but some residents would not donate if they were asked.
C)   The library should be built and paid for by the wealthiest ten percent of the residents.
D)   The library should not be built.E) C) and D)
F) B) and D)

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 $180.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 streetlightsE) A) and C)
F) All of the above

Question 5

A cable television broadcast of a movie 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) A) and B)
F) A) and C)

Question 6

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Accepted Answer

The government assigns and protects the ...

Question 7

One economically efficient way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)   tax the owners of the resource.
B)   prevent anyone from using the resource.
C)   reduce the marginal social benefit of the resource.
D)   establish private ownership of the resource.E) All of the above
F) B) and D)

Question 8

Reggie owns 3 acres of beautiful wooded land.When Reggie decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

Accepted Answer

A)   both rival in consumption and excludable.
B)   neither rival in consumption nor excludable.
C)   nonrival in consumption and excludable.
D)   rival in consumption and nonexcludable.E) None of the above
F) A) and B)

Question 9

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) A) and D)
F) B) and C)

Question 10

Imagine a 2,000-acre park with picnic benches,trees,and a pond.Suppose it is publicly owned,and people are invited to enjoy its beauty.When the weather is nice,it is difficult to find parking,and the trash cans overflow with food wrappers on summer afternoons.Otherwise,it is a great place.The park is a common resource because

Accepted Answer

A)   people can be prevented from using it.
B)   access is limited due to driving distances.
C)   if too many people use it,one person's use diminishes other peoples' use.
D)   anyone can use it without affecting anyone else.E) B) and C)
F) A) and C)

Question 11

You and your friends watch a movie in your bedroom.For you and your friends,the enjoyment that you get from watching the movie is not rival in consumption.

Accepted Answer

A) True 
 B)False

Question 12

If people can be prevented from using a certain good,then that good is called

Accepted Answer

A)   rival in consumption.
B)   excludable.
C)   a common resource.
D)   a public good.E) A) and D)
F) A) and C)

Question 13

The free-rider problem

Accepted Answer

A)   forces the supply of a public good to exceed its demand.
B)   results in common resources becoming club goods.
C)   explains why many local governments supply public goods.
D)   results in public goods becoming private goods.E) A) and D)
F) A) and C)

Question 14

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

Accepted Answer

A)   reduced carbon monoxide pollution
B)   increased use of public transportation
C)   improved taxi service
D)   shorter travel timeE) A) and B)
F) A) and C)

Question 15

Goods that are not rival in consumption include both

Accepted Answer

A)   private goods and common resources.
B)   club goods and public goods.
C)   common resources and public goods.
D)   private goods and club goods.E) All of the above
F) A) and B)

Question 16

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 17

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Accepted Answer

A)   allow individual shepherds to chose their own flock sizes.
B)   internalize the externality by subsidizing the production of sheep's wool.
C)   auction off a limited number of sheep-grazing permits.
D)   wait until the market corrects the problem.E) C) and D)
F) None of the above

Question 18

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.E) A) and D)
F) B) and D)

Question 19

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

Accepted Answer

A)   patents correct for an unknown portion of the externality.
B)   benefits are hard to measure.
C)   members of Congress are often experts in the sciences.
D)   the costs always exceed the benefits.E) B) and C)
F) None of the above

Question 20

Figure 11-1
 
-Refer to Figure 11-1.Cable TV is an example of the type of good represented by Box

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) C) and D)

Exam 11: Public Goods and Common Resources

Correct Answer
verified

Goods that are not excludable include both

Correct Answer
verified

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct Answer
verified

If people can be prevented from using a certain good,then that good is called

Correct Answer
verified

A cable television broadcast of a movie is

Correct Answer
verified

Reggie owns 3 acres of beautiful wooded land.When Reggie decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

Correct Answer
verified

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

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

One economically efficient way to eliminate the Tragedy of the Commons is to

Correct Answer
verified

You and your friends watch a movie in your bedroom.For you and your friends,the enjoyment that you get from watching the movie is not rival in consumption.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Correct Answer
verified
The government assigns and protects the ...
View Answer

The free-rider problem

Correct Answer
verified

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct Answer
verified

Correct Answer
verified

Private markets usually fail to provide lighthouses because

Correct Answer
verified

Figure 11-1 -Refer to Figure 11-1.Cable TV is an example of the type of good represented by Box

Correct Answer
verified

Goods that are not rival in consumption include both

Correct Answer
verified

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

Correct Answer
verified

Exam 11: Public Goods and Common Resources

Correct AnswerverifiedShow Answer

Goods that are not excludable include both

Correct AnswerverifiedShow Answer

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct AnswerverifiedShow Answer

If people can be prevented from using a certain good,then that good is called

Correct AnswerverifiedShow Answer

A cable television broadcast of a movie is

Correct AnswerverifiedShow Answer

Reggie owns 3 acres of beautiful wooded land.When Reggie decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

Correct AnswerverifiedShow Answer

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

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

One economically efficient way to eliminate the Tragedy of the Commons is to

Correct AnswerverifiedShow Answer

You and your friends watch a movie in your bedroom.For you and your friends,the enjoyment that you get from watching the movie is not rival in consumption.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Correct AnswerverifiedThe government assigns and protects the ...View AnswerShow Answer

The free-rider problem

Correct AnswerverifiedShow Answer

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private markets usually fail to provide lighthouses because

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1.Cable TV is an example of the type of good represented by Box

Correct AnswerverifiedShow Answer

Goods that are not rival in consumption include both

Correct AnswerverifiedShow Answer

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

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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The government assigns and protects the ...
View 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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