Question 1

Before considering any public project,the government should

Accepted Answer

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

Question 2

Which of the following statements is correct?

Accepted Answer

A)   Common resources are nonexcludable and nonrival in consumption.
B)   Uncongested toll roads are an example of the free rider problem.
C)   When African elephants were privatized,the survival of the species improved.
D)   Fish in the ocean are excludable but nonrival in consumption.E) A) and C)
F) All of the above

Question 3

National defense is provided by the government because

Accepted Answer

A)   it is impossible for private markets to produce public goods.
B)   products provided by the government are produced more efficiently.
C)   free-riders make it difficult for private markets to supply the socially optimal quantity.
D)   public goods increase government revenues.E) A) and D)
F) A) and C)

Question 4

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $80,000.The walkway is expected to reduce the risk of fatality by 0.8 percent,and the cost of a human life is estimated at $10 million.The town should

Accepted Answer

A)   install the walkway because the estimated benefit is twice the cost.
B)   install the walkway because the estimated benefit equals the cost.
C)   not install the walkway,since the cost is twice the estimated benefit.
D)   install the walkway,since the cost of even a single life is too great not to take action.E) A) and B)
F) A) and C)

Question 5

Table 11-1
Consider the town of Tritown with only three residents,Ed,Jim,and Tony.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 $30 per acre.How many acres should the park be to maximize total surplus from the park in Tritown?

Accepted Answer

A)   2 acres
B)   3 acres
C)   4 acres
D)   5 acresE) All of the above
F) B) and C)

Question 6

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Accepted Answer

A) True 
 B)False

Question 7

Excessive fishing occurs because

Accepted Answer

A)   each individual fisherman has little incentive to maintain the species for the next year.
B)   fishermen rely on government managers to worry about fish populations.
C)   fishermen are unionized,so they are not concerned with externalities.
D)   fishermen have other marketable skills and do not fear exploitation of fish reserves.E) A) and C)
F) A) and D)

Question 8

Neither public goods nor common resources are

Accepted Answer

A)   excludable,but only public goods are not rival in consumption.
B)   excludable,but only common resources are not rival in consumption.
C)   rival in consumption,but only public goods are not excludable.
D)   rival in consumption,but only common resources are not excludable.E) All of the above
F) A) and C)

Question 9

A free rider is a person who

Accepted Answer

A)   will only purchase a product on sale.
B)   receives the benefit of a good but avoids paying for it.
C)   can produce a good at no cost.
D)   rides public transit regularly.E) C) and D)
F) B) and D)

Question 10

The privately-owned school system in Smalltown has a virtually unlimited capacity.It accepts all applicants and operates on both tuition and private donations.Although every resident places value on having an educated community,the school's revenues have suffered lately due to a large decline in private donations from the elderly population.Since the benefit that each citizen receives from having an educated community is a public good,which of the following would not be correct?

Accepted Answer

A)   The free-rider problem causes the private market to undersupply education to the community.
B)   The government can potentially help the market reach a socially optimal level of education.
C)   A tax increase to pay for education could potentially make the community better off.
D)   The private market is the best way to supply education.E) A) and B)
F) A) and D)

Question 11

Goods that are not rival in consumption include both

Accepted Answer

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

Question 12

One of the least regulated common resources today is

Accepted Answer

A)   state parks.
B)   the ocean.
C)   forest preserves.
D)   the Great Lakes.E) None of the above
F) B) and C)

Question 13

The old lyric "the best things in life are free"

Accepted Answer

A)   is not true for any goods.
B)   is even true for some goods that have a price.
C)   refers to goods provided by nature or the government.
D)   refers to goods provided by the market.E) All of the above
F) B) and D)

Question 14

Both public goods and common resources are

Accepted Answer

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

Question 15

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 on summer afternoons.Otherwise,it is a great place.An efficient solution to the parking problem would be to

Accepted Answer

A)   prohibit parking in the vicinity of the park.
B)   charge higher prices for parking at busy times.
C)   police the parking area and ticket cars that are parked illegally.
D)   do nothing.E) All of the above
F) A) and B)

Question 16

Even economists who advocate small government agree that national defense is a good that the government should provide.

Accepted Answer

A) True 
 B)False

Question 17

Advocates of antipoverty programs believe that fighting poverty

Accepted Answer

A)   can make everyone better off.
B)   is most successfully accomplished by charities.
C)   is most efficiently accomplished by the market.
D)   reduces the well-being of tax payers.E) C) and D)
F) All of the above

Question 18

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 natural monopoly.
D)   a common resource.E) B) and D)
F) B) and C)

Question 19

Suppose that installing an overhead pedestrian walkway would cost a college town $80,000.The walkway is expected to reduce the risk of fatality by 1.6 percent,and the cost of a human life is estimated at $10 million.The town should

Accepted Answer

A)   install the walkway because the estimated benefit is twice the cost.
B)   install the walkway because the estimated benefit equals the cost.
C)   not install the walkway,since the cost is twice the estimated benefit.
D)   install the walkway,since the cost of even a single life is too great not to take action.E) A) and B)
F) A) and C)

Question 20

Goods that are excludable include both

Accepted Answer

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

Exam 11: Public Goods and Common Resources

The old lyric "the best things in life are free"

Correct Answer
verified

Excessive fishing occurs because

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Before considering any public project,the government should

Correct Answer
verified

Even economists who advocate small government agree that national defense is a good that the government should provide.

Correct Answer
verified

Correct Answer
verified

One of the least regulated common resources today is

Correct Answer
verified

Neither public goods nor common resources are

Correct Answer
verified

A free rider is a person who

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

Goods that are not rival in consumption include both

Correct Answer
verified

National defense is provided by the government because

Correct Answer
verified

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 on summer afternoons.Otherwise,it is a great place.An efficient solution to the parking problem would be to

Correct Answer
verified

Both public goods and common resources are

Correct Answer
verified

Advocates of antipoverty programs believe that fighting poverty

Correct Answer
verified

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Correct Answer
verified

Suppose that installing an overhead pedestrian walkway would cost a college town $80,000.The walkway is expected to reduce the risk of fatality by 1.6 percent,and the cost of a human life is estimated at $10 million.The town should

Correct Answer
verified

Goods that are excludable include both

Correct Answer
verified

Correct Answer
verified

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $80,000.The walkway is expected to reduce the risk of fatality by 0.8 percent,and the cost of a human life is estimated at $10 million.The town should

Correct Answer
verified

Exam 11: Public Goods and Common Resources

The old lyric "the best things in life are free"

Correct AnswerverifiedShow Answer

Excessive fishing occurs because

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Before considering any public project,the government should

Correct AnswerverifiedShow Answer

Even economists who advocate small government agree that national defense is a good that the government should provide.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the least regulated common resources today is

Correct AnswerverifiedShow Answer

Neither public goods nor common resources are

Correct AnswerverifiedShow Answer

A free rider is a person who

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

Goods that are not rival in consumption include both

Correct AnswerverifiedShow Answer

National defense is provided by the government because

Correct AnswerverifiedShow Answer

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 on summer afternoons.Otherwise,it is a great place.An efficient solution to the parking problem would be to

Correct AnswerverifiedShow Answer

Both public goods and common resources are

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs believe that fighting poverty

Correct AnswerverifiedShow Answer

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Correct AnswerverifiedShow Answer

Suppose that installing an overhead pedestrian walkway would cost a college town $80,000.The walkway is expected to reduce the risk of fatality by 1.6 percent,and the cost of a human life is estimated at $10 million.The town should

Correct AnswerverifiedShow Answer

Goods that are excludable include both

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $80,000.The walkway is expected to reduce the risk of fatality by 0.8 percent,and the cost of a human life is estimated at $10 million.The town should

Correct AnswerverifiedShow Answer

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