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Exam 11: Public Goods and Common Resources

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Question 101

Multiple Choice

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Governments can improve market outcomes for

A) public goods but not common resources.
B) common resources but not public goods.
C) both public goods and common resources.
D) neither public goods nor common resources.

E) B) and C)
F) C) and D)

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Question 102

Multiple Choice

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Which of the following is not a common resource?

A) clean air
B) clean water
C) open grazing land
D) national defense

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

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Question 103

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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. How many ferry trips should there be to maximize the total surplus of the four business owners?

Goods that are not excludable are usually

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates

When good X is produced, some people benefit. A free-rider problem arises when

Private markets usually fail to provide lighthouses because

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Is a tornado siren excludable? Is it rival in consumption? How do we classify a tornado siren in terms of the four types of goods?

Fire protection is a

Table 11-1 Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. 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 $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Sophia receive?

Which of the following is a disadvantage of government provision of a public good?

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Someone who uses a good without paying for it is called a ?

In what sense is it meaningful to say that fighting poverty is a public good?

Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is excludable and not rival in consumption?

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach. Seymour wants an efficient way to prevent overcrowding at the beach, so he should require

A local park filled with picnickers is

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Three business people meet for lunch at an Indian restaurant. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. When the food is delivered to the table, each person faces incentives similar to the