Question 1

Which of the following statements is not correct?

Accepted Answer

A)   A free rider is a person who benefits from something for which he or she does not have to pay.
B)   The creation of knowledge is a public good.
C)   The Tragedy of the Commons illustrates the underuse of a common resource.
D)   A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.E) A) and B)
F) All of the above

Question 2

Pay-per-view broadcasts are

Accepted Answer

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

Question 3

Excludability is the property of a good whereby

Accepted Answer

A)   one person's use diminishes other peoples' use.
B)   a person can be prevented from using it.
C)   a good is private,not public.
D)   a good is public,not private.E) A) and D)
F) A) and C)

Question 4

Which of the following is most likely to face extinction?

Accepted Answer

A)   dogs living as pets in households
B)   dairy cows living on farms and producing milk
C)   bald eagles living in zoos
D)   tigers living in the wildE) None of the above
F) B) and C)

Question 5

Markets may fail to allocate resources efficiently when property rights are not well established.

Accepted Answer

A) True 
 B)False

Question 6

Each of the following explains why cost-benefit analysis is difficult except

Accepted Answer

A)   there is no price with which to judge the value of a public good.
B)   surveys are often biased and unreliable.
C)   it is difficult to identify all factors that influence costs and benefits of public goods.
D)   government projects rarely have sufficient funding to complete them on time.E) C) and D)
F) B) and C)

Question 7

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

Question 8

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Accepted Answer

A)   Cows reproduce at a high rate and have adapted well to their environment.
B)   Public policies protect cows from predators and diseases.
C)   Cows are privately owned,whereas many endangered species are owned by no one.
D)   There is a natural ecological balance between the birth rate of cows and human consumption.E) C) and D)
F) All of the above

Question 9

Elephants are endangered,but cows are not because

Accepted Answer

A)   cows are not as valuable as elephants.
B)   elephants are a common resource,while cows are private goods.
C)   cows are a common resource,while elephants are private goods.
D)   it is legal to kill cows but not elephants.E) A) and D)
F) C) and D)

Question 10

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 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?

Accepted Answer

A)   Assign each person in the building a time when they are allowed to use the stairwell.
B)   Encourage people to voluntarily keep off the stairwell during peak times.
C)   Charge everyone who uses the stairwell when it is congested the same fee.People who value the use of the stairs the most will be the ones who use the stairwell at peak times.
D)   Hold a lottery to determine who wins the right to use the stairwell at peak times.E) C) and D)
F) B) and D)

Question 11

When a good is excludable,

Accepted Answer

A)   one person's use of the good diminishes another person's ability to use it.
B)   people can be prevented from using the good.
C)   no more than one person can use the good at the same time.
D)   everyone will be excluded from using the good.E) C) and D)
F) B) and C)

Question 12

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.An overcrowded picnic area is an example of

Accepted Answer

A)   a private good.
B)   a natural monopoly.
C)   a Tragedy of the Commons.
D)   public good.E) C) and D)
F) A) and B)

Question 13

Private markets usually fail to provide lighthouses because

Accepted Answer

A)   lighthouses cost too much to build relative to their benefits.
B)   government intervention makes it hard for private lighthouse owners to compete in the market.
C)   ship captains have incentives to use lighthouses without paying.
D)   lighthouses are valued very little by ship captains these days.E) A) and B)
F) B) and D)

Question 14

The government provides public goods because

Accepted Answer

A)   private markets are incapable of producing these types of goods.
B)   free-riders make it difficult for private markets to supply the socially optimal quantity.
C)   markets are always better off with some government oversight.
D)   external benefits will accrue to private producers.E) A) and C)
F) A) and B)

Question 15

Suppose that the Town of Podunk is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Podunk's 4,500 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 $45,000.
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 $4,500.E) A) and C)
F) None of the above

Question 16

A town engineer comes to the city council with a proposal to install a traffic light at a certain intersection that currently has a stop sign.The benefit of the traffic light is increased safety because the light will reduce the incidence of fatal traffic accidents by 50 percent per year.Which of the following statements is correct?

Accepted Answer

A)   The city council should vote to install the traffic light because the benefits will outweigh the costs.
B)   The city council should carefully evaluate the benefits of reduced fatalities against only the explicit costs of the light.
C)   The city council should carefully evaluate the benefits of reduced fatalities against the costs of the light and of the extra time that drivers will spend waiting for a green light.
D)   The costs will invariably outweigh the benefits.E) A) and B)
F) A) and C)

Question 17

Who among the following is a free rider?

Accepted Answer

A)   Barry buys candy from the store where he works.
B)   Betty rides to work with Sally,but she pays Sally for gasoline and other travel-related expenses.
C)   Joe drives 20,000 miles a year on public streets,but he pays no more in property taxes than Sam,who only drives 1,000 miles.
D)   Fred watches many public television programs,but he has never sent in a contribution to the station.E) B) and C)
F) A) and D)

Question 18

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Accepted Answer

A)   Coase theorem
B)   Tragedy of the Commons
C)   Cost-benefit analysis
D)   Clean Air ActE) B) and C)
F) All of the above

Question 19

Aristotle writes,"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." In this statement,Aristotle is referring to the free-rider problem that occurs when a person receives the benefit of a good without paying for it.

Accepted Answer

A) True 
 B)False

Question 20

Advocates of antipoverty programs claim that fighting poverty is a public good.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

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.An overcrowded picnic area is an example of

Correct Answer
verified

Which of the following is most likely to face extinction?

Correct Answer
verified

Each of the following explains why cost-benefit analysis is difficult except

Correct Answer
verified

Correct Answer
verified

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 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?

Correct Answer
verified

Correct Answer
verified

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Correct Answer
verified

The government provides public goods because

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

Private markets usually fail to provide lighthouses because

Correct Answer
verified

Suppose that the Town of Podunk is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Podunk's 4,500 residents.What should the city do?

Correct Answer
verified

When a good is excludable,

Correct Answer
verified

Elephants are endangered,but cows are not because

Correct Answer
verified

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct Answer
verified

Who among the following is a free rider?

Correct Answer
verified

Markets may fail to allocate resources efficiently when property rights are not well established.

Correct Answer
verified

Excludability is the property of a good whereby

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Correct Answer
verified

Pay-per-view broadcasts are

Correct Answer
verified

Exam 11: Public Goods and Common Resources

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.An overcrowded picnic area is an example of

Correct AnswerverifiedShow Answer

Which of the following is most likely to face extinction?

Correct AnswerverifiedShow Answer

Each of the following explains why cost-benefit analysis is difficult except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

Correct AnswerverifiedShow Answer

The government provides public goods because

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

Private markets usually fail to provide lighthouses because

Correct AnswerverifiedShow Answer

Suppose that the Town of Podunk is considering hiring an additional police officer.The reduction in crime is estimated to be worth $10 for each of Podunk's 4,500 residents.What should the city do?

Correct AnswerverifiedShow Answer

When a good is excludable,

Correct AnswerverifiedShow Answer

Elephants are endangered,but cows are not because

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct AnswerverifiedShow Answer

Who among the following is a free rider?

Correct AnswerverifiedShow Answer

Markets may fail to allocate resources efficiently when property rights are not well established.

Correct AnswerverifiedShow Answer

Excludability is the property of a good whereby

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Correct AnswerverifiedShow Answer

Pay-per-view broadcasts are

Correct AnswerverifiedShow Answer

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