Question 1

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?

Accepted Answer

A)   1 streetlight
B)   2 streetlights
C)   3 streetlights
D)   4 streetlightsE) None of the above
F) A) and C)

Question 2

Suppose that the Town of Bumbletree is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Bumbletree's 5,000 residents.What should the city do?

Accepted Answer

A)   Hire the police officer because additional safety is priceless.
B)   Hire the police officer if the cost of the new officer is less than $50,000.
C)   Do not hire the police officer because the costs exceed the benefits.
D)   Hire the police officer only if the benefit to the residents exceeds $50,000.E) C) and D)
F) B) and C)

Question 3

In a cost-benefit analysis,the value of a human life is sometimes calculated on the basis of

Accepted Answer

A)   the risks that a person voluntarily exposes herself to in her job and/or recreational choices.
B)   the value of each individual's assets.
C)   the belief that human life is priceless.
D)   the amount of resources required to adequately sustain life.E) None of the above
F) All of the above

Question 4

Markets fail to allocate resources efficiently when

Accepted Answer

A)   prices fluctuate.
B)   people who have property rights abuse their privileges.
C)   property rights are not well established.
D)   the government refuses to intervene in private markets.E) B) and D)
F) B) and C)

Question 5

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Accepted Answer

A) True 
 B)False

Question 6

Consider the following problems: overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems have in common?

Accepted Answer

A)   Private markets could easily solve them if governments left the markets alone.
B)   They would all go away if the government sponsored an intensive public-information campaign.
C)   They are all the result of a failure to establish clear property rights over something of value.
D)   They are all the result of a failure of corrective taxes.E) A) and B)
F) B) and C)

Question 7

Private goods and club goods have in common that they are excludable,but are different in that private goods are rival while club goods are not rival in consumption.

Accepted Answer

A) True 
 B)False

Question 8

One benefit of the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 9

The Tragedy of the Commons results when a good is

Accepted Answer

A)   rival in consumption and not excludable.
B)   excludable and not rival in consumption.
C)   both rival in consumption and excludable.
D)   neither rival in consumption nor excludable.E) B) and D)
F) A) and B)

Question 10

It is commonly argued that national defense is a public good.Nevertheless,the weapons used by the U.S.military are produced by private firms.We can conclude that

Accepted Answer

A)   resources would be used more efficiently if the government produced the weapons.
B)   resources would be used more efficiently if private firms provided national defense.
C)   weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable.
D)   national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable.E) None of the above
F) B) and C)

Question 11

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Accepted Answer

A)   On the questionnaire, some residents are likely to exaggerate the value they associate with the park.
B)   On the questionnaire, some residents are likely to exaggerate the costs they associate with the park.
C)   The use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of residents' perceptions of the costs and benefits of a park.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 12

A congested side street in your neighborhood is

Accepted Answer

A)   excludable and rival in consumption.
B)   excludable and not rival in consumption.
C)   not excludable and rival in consumption.
D)   not excludable and not rival in consumption.E) B) and C)
F) A) and D)

Question 13

A pair of jeans is rival but non-excludable.

Accepted Answer

A) True 
 B)False

Question 14

Advocates of antipoverty programs claim that fighting poverty

Accepted Answer

A)   is best accomplished by charities.
B)   is a public good.
C)   is more efficiently accomplished by the market.
D)   should not be attempted with tax dollars.E) B) and C)
F) A) and B)

Question 15

A lighthouse might be considered a private good if

Accepted Answer

A)   there is a second lighthouse nearby, thus preventing a monopoly.
B)   the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse.
C)   ships are able to enjoy the benefits of the lighthouse without paying for the benefit.
D)   a nearby port authority is able to avoid paying any fees to the lighthouse owner.E) B) and D)
F) All of the above

Question 16

Which of the following statements is correct?

Accepted Answer

A)   The efficient provision of private goods is intrinsically more difficult than the efficient provision of public goods.
B)   The efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods.
C)   Private markets provide quantities of public goods that exceed the socially-efficient quantities of those goods.
D)   Private decision makers utilize quantities of common resources that fall short of the socially-efficient quantities of those resources.E) A) and B)
F) C) and D)

Question 17

Tolls are not effective in altering people's incentives to drive during rush hour.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Accepted Answer

A)   Without prices, it is difficult to be sure how much people really value a good.
B)   Analysts can't be sure that the respondents to surveys are telling the truth.
C)   Analysis must include not only the cost of building the project but also the cost of maintenance, if any.
D)   People value goods differently if they are publicly provided rather than privately provided.E) A) and D)
F) A) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Figure 11-1
 
-Refer to Figure 11-1.A ham sandwich is an example of the type of good represented by Box

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) A) and C)

Exam 11: Public Goods and Common Resources.

Markets fail to allocate resources efficiently when

Correct Answer
verified

A congested side street in your neighborhood is

Correct Answer
verified

A lighthouse might be considered a private good if

Correct Answer
verified

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Correct Answer
verified

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

Correct Answer
verified

The Tragedy of the Commons results when a good is

Correct Answer
verified

A pair of jeans is rival but non-excludable.

Correct Answer
verified

Tolls are not effective in altering people's incentives to drive during rush hour.

Correct Answer
verified

Suppose that the Town of Bumbletree is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Bumbletree's 5,000 residents.What should the city do?

Correct Answer
verified

It is commonly argued that national defense is a public good.Nevertheless,the weapons used by the U.S.military are produced by private firms.We can conclude that

Correct Answer
verified

Figure 11-1 -Refer to Figure 11-1.A ham sandwich is an example of the type of good represented by Box

Correct Answer
verified

Private goods and club goods have in common that they are excludable,but are different in that private goods are rival while club goods are not rival in consumption.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Correct Answer
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Advocates of antipoverty programs claim that fighting poverty

Correct Answer
verified

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Correct Answer
verified

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct Answer
verified

Correct Answer
verified

In a cost-benefit analysis,the value of a human life is sometimes calculated on the basis of

Correct Answer
verified

Consider the following problems: overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems have in common?

Correct Answer
verified

Exam 11: Public Goods and Common Resources.

Markets fail to allocate resources efficiently when

Correct AnswerverifiedShow Answer

A congested side street in your neighborhood is

Correct AnswerverifiedShow Answer

A lighthouse might be considered a private good if

Correct AnswerverifiedShow Answer

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Tragedy of the Commons results when a good is

Correct AnswerverifiedShow Answer

A pair of jeans is rival but non-excludable.

Correct AnswerverifiedShow Answer

Tolls are not effective in altering people's incentives to drive during rush hour.

Correct AnswerverifiedShow Answer

Suppose that the Town of Bumbletree is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Bumbletree's 5,000 residents.What should the city do?

Correct AnswerverifiedShow Answer

It is commonly argued that national defense is a public good.Nevertheless,the weapons used by the U.S.military are produced by private firms.We can conclude that

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1.A ham sandwich is an example of the type of good represented by Box

Correct AnswerverifiedShow Answer

Private goods and club goods have in common that they are excludable,but are different in that private goods are rival while club goods are not rival in consumption.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs claim that fighting poverty

Correct AnswerverifiedShow Answer

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Correct AnswerverifiedShow Answer

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a cost-benefit analysis,the value of a human life is sometimes calculated on the basis of

Correct AnswerverifiedShow Answer

Consider the following problems: overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems have in common?

Correct AnswerverifiedShow Answer

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