Question 1

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000.The walkway is expected to reduce the risk of fatality by 1.5 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)   be indifferent between installing and not installing 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 C)
F) A) and D)

Question 2

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.Suppose that the Minnesota State Park Service institutes a variable fee structure.On weekdays when the picnic areas get little use,the fee is zero.On normal weekends,the fee is $8 per person.On holiday weekends,the fee is $14 per person.The fee system corrects a problem known as the

Accepted Answer

A)   Coase theorem.
B)   free rider problem.
C)   Tragedy of the Commons.
D)   public goods problem.E) All of the above
F) A) and B)

Question 3

The Great Lakes are

Accepted Answer

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

Question 4

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 $300.How many trees should be planted to maximize the total surplus of the four homeowners?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) A) and B)
F) C) and D)

Question 5

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

Question 6

An overcrowded beach is an example of

Accepted Answer

A)   a positive externality.
B)   a Tragedy of the Commons.
C)   an environmentally inefficient allocation of resources.
D)   an economically unfair allocation of resources.E) A) and B)
F) A) and C)

Question 7

Which of the following quotations illustrates the Tragedy of the Commons?

Accepted Answer

A)   "A bird in the hand is worth two in the bush."
B)   "The only difference between the rich and other people is that the rich have more money."
C)   "What is common to many is taken least care of,for all men have greater regard for what is their own than for what they possess in common with others."
D)   "Anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no head."E) C) and D)
F) A) and B)

Question 8

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Accepted Answer

A)   over time,the aquifer is likely to be overused.
B)   each farmer has a sufficient incentive to conserve the water.
C)   state governments have an incentive to insure that their farmers do not overuse the water.
D)   resources would be used more efficiently if the government paid for the pumps farmers use to get the water.E) None of the above
F) A) and C)

Question 9

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?

Accepted Answer

A)   Lobsters are rival but not excludable.
B)   The lobster population is an example of the tragedy of the commons.
C)   Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population.
D)   If left unregulated,the lobster population will likely increase.E) B) and D)
F) A) and C)

Question 10

A free rider is a person who pays for a good but does not receive the benefit of it.

Accepted Answer

A) True 
 B)False

Question 11

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Accepted Answer

A) True 
 B)False

Question 12

Each of the following would be considered a common resource except

Accepted Answer

A)   clean air.
B)   congested nontoll roads.
C)   national defense.
D)   open grazing land.E) A) and B)
F) A) and C)

Question 13

Which of the following goods is rival in consumption and excludable?

Accepted Answer

A)   a tornado siren
B)   an uncongested toll road
C)   a home
D)   the environmentE) All of the above
F) A) and B)

Question 14

If the use of a common resource is not regulated,

Accepted Answer

A)   no one can enjoy it.
B)   it will tend to be underused.
C)   property rights will be clearly defined.
D)   it will be overused.E) A) and B)
F) All of the above

Question 15

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Accepted Answer

A)   $50,000.
B)   $180,000.
C)   $230,000.
D)   $500,000.E) C) and D)
F) B) and C)

Question 16

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Accepted Answer

A) True 
 B)False

Question 17

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 18

Producers have little incentive to produce a public good because

Accepted Answer

A)   the social benefit is less than the private benefit.
B)   the social benefit is less than the social cost.
C)   there is a free-rider problem.
D)   there is a Tragedy of the Commons.E) A) and C)
F) None of the above

Question 19

A good that is excludable but not rival is known as a club good.

Accepted Answer

A) True 
 B)False

Question 20

When one person enjoys the benefit of a tornado siren,she reduces the benefit to others.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Correct Answer
verified

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000.The walkway is expected to reduce the risk of fatality by 1.5 percent,and the cost of a human life is estimated at $10 million.The town should

Correct Answer
verified

Which of the following quotations illustrates the Tragedy of the Commons?

Correct Answer
verified

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?

Correct Answer
verified

The pollution market failure is an example of the free rider problem.

Correct Answer
verified

If the use of a common resource is not regulated,

Correct Answer
verified

Each of the following would be considered a common resource except

Correct Answer
verified

Advocates of antipoverty programs believe that fighting poverty

Correct Answer
verified

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Correct Answer
verified

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Correct Answer
verified

Producers have little incentive to produce a public good because

Correct Answer
verified

When one person enjoys the benefit of a tornado siren,she reduces the benefit to others.

Correct Answer
verified

A free rider is a person who pays for a good but does not receive the benefit of it.

Correct Answer
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Correct Answer
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The Great Lakes are

Correct Answer
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When free riders are present in a market,the market generally fails to provide the efficient outcome.

Correct Answer
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A good that is excludable but not rival is known as a club good.

Correct Answer
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An overcrowded beach is an example of

Correct Answer
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Correct Answer
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Which of the following goods is rival in consumption and excludable?

Correct Answer
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Exam 11: Public Goods and Common Resources

Suppose a human life is worth $10 million.Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.3 to 1.8 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Correct AnswerverifiedShow Answer

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000.The walkway is expected to reduce the risk of fatality by 1.5 percent,and the cost of a human life is estimated at $10 million.The town should

Correct AnswerverifiedShow Answer

Which of the following quotations illustrates the Tragedy of the Commons?

Correct AnswerverifiedShow Answer

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The pollution market failure is an example of the free rider problem.

Correct AnswerverifiedShow Answer

If the use of a common resource is not regulated,

Correct AnswerverifiedShow Answer

Each of the following would be considered a common resource except

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs believe that fighting poverty

Correct AnswerverifiedShow Answer

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.We might expect that

Correct AnswerverifiedShow Answer

Pollution is a negative externality,but it is not appropriate to view the problem of pollution as a common-resource problem.

Correct AnswerverifiedShow Answer

Producers have little incentive to produce a public good because

Correct AnswerverifiedShow Answer

When one person enjoys the benefit of a tornado siren,she reduces the benefit to others.

Correct AnswerverifiedShow Answer

A free rider is a person who pays for a good but does not receive the benefit of it.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Great Lakes are

Correct AnswerverifiedShow Answer

When free riders are present in a market,the market generally fails to provide the efficient outcome.

Correct AnswerverifiedShow Answer

A good that is excludable but not rival is known as a club good.

Correct AnswerverifiedShow Answer

An overcrowded beach is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following goods is rival in consumption and excludable?

Correct AnswerverifiedShow Answer

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