Question 1

Both public goods and common resources are

Accepted Answer

A)   rival in consumption.
B)   nonrival in consumption.
C)   excludable.
D)   nonexcludable.E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A)   The government lacks information about what people are willing to pay for the good.
B)   The government does not provide enough of any public good.
C)   The private sector can provide all public goods at a lower cost.
D)   None of the above is a disadvantage.E) C) and D)
F) A) and D)

Question 3

Goods that are not excludable are usually

Accepted Answer

A)   higher priced than excludable goods.
B)   higher priced than rival goods.
C)   in short supply.
D)   free of charge.E) C) and D)
F) All of the above

Question 4

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A)   subsidizing basic research
B)   building lighthouses
C)   toll charges on congested roads
D)   cost-benefit analysisE) B) and D)
F) All of the above

Question 5

For private goods allocated in markets,

Accepted Answer

A)   prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
B)   prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.
C)   the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
D)   the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.E) B) and C)
F) None of the above

Question 6

The idea of requiring motorists to pay to use the busiest streets in a city

Accepted Answer

A)   has been proposed by many public officials,but to date the idea never has been tried in a major city anywhere in the world.
B)   was tried in New York City in the 1990s,but the result was more - not less - congestion on busy streets,and the experiment was short-lived.
C)   reflects the fact that a congested road is a public good.
D)   reflects the fact that a congested road is a common resource.E) All of the above
F) A) and D)

Question 7

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 8

The greatest difficulty with cost-benefit analysis of a public project is determining

Accepted Answer

A)   whether government revenue is sufficient to cover the cost of the project.
B)   which contractor should be awarded the project.
C)   the cost of the project.
D)   the value or benefit of the project.E) A) and C)
F) C) and D)

Question 9

What causes the Tragedy of the Commons? (i) Social and private incentives differ.
(ii) Common resources are not rival in consumption and are not excludable.
(iii) Common resources are not excludable but are rival in consumption.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (ii) only
D)   (i) and (iii) onlyE) A) and B)
F) None of the above

Question 10

Figure 11-1
 
-Refer to Figure 11-1.Which of the following statements is correct?

Accepted Answer

A)   A congested toll road is an example of the type of good represented by Box B.
B)   An uncongested toll road is an example of the type of good represented by Box D.
C)   A congested nontoll road is an example of the type of good represented by Box C.
D)   An uncongested nontoll road is an example of the type of good represented by Box A.E) All of the above
F) A) and B)

Question 11

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

A)   Cattle are a valuable source of income for many people,while elephants have no market value.
B)   There is a high demand for products that come from cows,whereas there is no demand for products that come from elephants.
C)   There are still lots of cattle that roam free,while all elephants live in zoos.
D)   Cattle are owned by ranchers,while elephants are owned by no one.E) None of the above
F) All of the above

Question 12

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 $180 and the families have agreed to split the cost of the streetlights equally.If the families vote to determine the number of streetlights to install,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) ,what is the greatest number of streetlights for which the majority of families would vote "yes?"

Accepted Answer

A)   1 streetlight
B)   2 streetlights
C)   3 streetlights
D)   4 streetlightsE) C) and D)
F) B) and D)

Question 13

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Accepted Answer

A) True 
 B)False

Question 14

A good is excludable if

Accepted Answer

A)   one person's use of the good diminishes another person's enjoyment of it.
B)   the government can regulate its availability.
C)   it is not a normal good.
D)   people can be prevented from using it.E) A) and C)
F) B) and C)

Question 15

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Accepted Answer

A) True 
 B)False

Question 16

In deciding whether a good is a public good,one must determine the

Accepted Answer

A)   incomes of those who benefit from the good.
B)   value of the external benefits that accrue to resource owners.
C)   excludability of the good.
D)   All of the above are correct.E) B) and C)
F) None of the above

Question 17

Markets do not ensure that the air we breathe is clean because

Accepted Answer

A)   clean air has no value.
B)   the government prevents markets from doing so.
C)   property rights are not well established for clean air.
D)   clean air is impossible to produce .E) A) and B)
F) A) and C)

Question 18

Because public goods are

Accepted Answer

A)   excludable,people have an incentive to be free riders.
B)   excludable,people do not have an incentive to be free riders.
C)   not excludable,people have an incentive to be free riders.
D)   not excludable,people do not have an incentive to be free riders.E) A) and D)
F) A) and C)

Question 19

Table 11-1
Consider the town of Anywhere with only three residents,Mary,Bill,and Tricia.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 $15 per acre and that the residents have agreed to split the cost of building the park equally.If the residents vote to determine the size of park to build,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) ,what is the largest park size for which the majority of residents would vote "yes?"

Accepted Answer

A)   1 acre
B)   2 acres
C)   3 acres
D)   4 acresE) A) and B)
F) None of the above

Question 20

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Accepted Answer

A)   private good.
B)   club good.
C)   common resource.
D)   public good.E) C) and D)
F) A) and B)

Exam 11: Public Goods and Common Resources

A good is excludable if

Correct Answer
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One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Correct Answer
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For private goods allocated in markets,

Correct Answer
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Because public goods are

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The greatest difficulty with cost-benefit analysis of a public project is determining

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Figure 11-1 -Refer to Figure 11-1.Which of the following statements is correct?

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In deciding whether a good is a public good,one must determine the

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Markets do not ensure that the air we breathe is clean because

Correct Answer
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What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption.

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Why do elephants face the threat of extinction while cows do not?

Correct Answer
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Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Correct Answer
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Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

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

Correct Answer
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A free-rider is someone who receives the benefit of a good but avoids paying for it.

Correct Answer
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Both public goods and common resources are

Correct Answer
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Goods that are not excludable are usually

Correct Answer
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The idea of requiring motorists to pay to use the busiest streets in a city

Correct Answer
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Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Correct Answer
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Exam 11: Public Goods and Common Resources

A good is excludable if

Correct AnswerverifiedShow Answer

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Correct AnswerverifiedShow Answer

For private goods allocated in markets,

Correct AnswerverifiedShow Answer

Because public goods are

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The greatest difficulty with cost-benefit analysis of a public project is determining

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Figure 11-1 -Refer to Figure 11-1.Which of the following statements is correct?

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In deciding whether a good is a public good,one must determine the

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Markets do not ensure that the air we breathe is clean because

Correct AnswerverifiedShow Answer

What causes the Tragedy of the Commons? (i) Social and private incentives differ. (ii) Common resources are not rival in consumption and are not excludable. (iii) Common resources are not excludable but are rival in consumption.

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Why do elephants face the threat of extinction while cows do not?

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Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Correct AnswerverifiedShow Answer

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

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

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A free-rider is someone who receives the benefit of a good but avoids paying for it.

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Both public goods and common resources are

Correct AnswerverifiedShow Answer

Goods that are not excludable are usually

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The idea of requiring motorists to pay to use the busiest streets in a city

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Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Correct AnswerverifiedShow Answer

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