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Exam 11: Public Goods and Common Resources

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Question 151

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

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Question 152

Multiple Choice

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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?

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 C)

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Question 153

Multiple Choice

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A tax on gasoline often reduces road congestion because gasoline

Which of the following types of goods are rival in consumption?

Which of the following goods is rival and excludable?

Figure 11-1 -Refer to Figure 11-1. For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Goods that are not excludable include both

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 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Restaurant 1 prefer to have?

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

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

For all types of goods that are not private goods, the market fails to allocate resources efficiently because _________________.

The commercial value of ivory is a threat to the elephant, but the commercial value of beef is a guardian of the cow. This is because

People cannot be prevented from using a good if the good is

Figure 11-1 Rival in Consumption? -Refer to Figure 11-1. A mathematical theorem is an example of general knowledge. In which of the boxes - A, B, C, or D - does a mathematical theorem belong?

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

Figure 11-1 -Refer to Figure 11-1. Once good x is provided, policymakers need to be concerned about how much of it is used. Good x is an example of the type of good represented by Box

Why does the commercial value of ivory threaten the elephant, while the commercial value of beef protects the cow?

Depending on congestion, national parks can be either a common resource or a public good.

A rather large city has only one fire station, two fire trucks, and four firefighters. Is fire protection in this city characterized by rivalry in consumption?