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Exam 11: Public Goods and Common Resources

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Question 171

Multiple Choice

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What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

A) Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products.
B) Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price.
C) Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered.
D) American drivers and Soviet shoppers have nothing in common.

E) All of the above
F) A) and B)

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Question 172

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The Mansfield Public Library has a large number of books that anyone with a library card may borrow.Anyone can obtain a card for free.Because the number of copies of each book is limited,not everyone can have the same book at the same time.What type of good would the library books be classified as in this case?

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

E) A) and B)
F) None of the above

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Question 173

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Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Table 11-4 There are four homes along Belmont Circle,which surrounds a small plot of land.The land currently has no trees,and the 4 homeowners -- Adams,Benitez,Chen,and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees.The table represents their willingness to pay,that is,the maximum amount that each homeowner is willing to contribute toward each tree. -Refer to Table 11-4.Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split all tree-planting costs equally.How many trees would Adams prefer to plant?

Government policy can potentially raise economic well-being

A tax on gasoline often reduces road congestion because gasoline

A pair of jeans is rival but non-excludable.

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

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Which of the following is an approach used by economists to calculate the value of a human life?

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 $450.How many streetlights should the town install to maximize total surplus from the streetlights?

Which of the following goods is excludable but not rival in consumption?

Figure 11-1 -Refer to Figure 11-1.Which of the following items is not an example of the type of good represented by Box D?

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

Cost-benefit analysis is important to determine the role of government in our economy because

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 individual guard is $130 per day.How many guards should be hired to maximize the total surplus of the four store owners?

The U.S.military defends Jacob from foreign attackers.The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it.For this reason,we say that national defense is

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 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Johnson's like the town to install?

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to