Question 1

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Accepted Answer

In the absence of government interventio...

Question 2

Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible. In this case, the market for this good will likely

Accepted Answer

A)   be provided by a private firm rather than the government.
B)   have a free-rider problem.
C)   not exist.
D)   be limited to a small number of units of production.E) All of the above
F) A) and B)

Question 3

An example of a private good would be

Accepted Answer

A)   a library book.
B)   a rose garden.
C)   an internet radio subscription.
D)   a sleeping bag.E) None of the above
F) All of the above

Question 4

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Accepted Answer

A)   The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot.
B)   The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year.
C)   The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce.
D)   Both a and b are possible solutions to this example of the Tragedy of the CommonsE) B) and C)
F) A) and D)

Question 5

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 6

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates

Accepted Answer

A)   a free rider problem.
B)   an externality.
C)   a nonrenewable resource.
D)   general knowledge.E) All of the above
F) B) and C)

Question 7

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

Accepted Answer

A)   patents correct for an unknown portion of the externality.
B)   benefits are hard to measure.
C)   members of Congress are often experts in the sciences.
D)   the costs always exceed the benefits.E) None of the above
F) C) and D)

Question 8

A lighthouse is typically considered to be a public good because

Accepted Answer

A)   the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.
B)   there is rarely another lighthouse nearby to provide competition.
C)   a nearby port authority cannot avoid paying fees to the lighthouse owner.
D)   all passing ships are able to enjoy the benefits of the lighthouse without paying.E) B) and C)
F) None of the above

Question 9

A pizza is

Accepted Answer

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

Question 10

Table 11-3
This table describes the police protection demands for three equal sized groups of people in Safetyville. The second, third, and fourth columns show the number of person-hours of police protection per day that a group will demand for a given price the first column) .
 
-Refer to Table 11-3. If the marginal cost of police protection is constant at $36 per person-hour, what is the efficient level of police protection to provide?

Accepted Answer

A)   9 units
B)   39 units
C)   66 units
D)   99 unitsE) A) and B)
F) A) and C)

Question 11

The phenomenon of free riding is most closely associated with which type of good?

Accepted Answer

A)   private goods
B)   club goods
C)   common resources
D)   public goodsE) A) and D)
F) A) and B)

Question 12

The old lyric "the best things in life are free"

Accepted Answer

A)   is not true for any goods.
B)   is even true for some goods that have a price.
C)   refers to goods provided by nature or the government.
D)   refers to goods provided by the market.E) None of the above
F) All of the above

Question 13

Governments can improve market outcomes for

Accepted Answer

A)   public goods but not common resources.
B)   common resources but not public goods.
C)   both public goods and common resources.
D)   neither public goods nor common resources.E) C) and D)
F) A) and D)

Question 14

Which of the following is an example of the free-rider problem?

Accepted Answer

A)   Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care.
B)   Alfred receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch.
C)   Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking.
D)   Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale.E) B) and C)
F) A) and D)

Question 15

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 $120 and the 4 homeowners have agreed to split all tree-planting costs equally. How many trees would Adams prefer to plant?

Accepted Answer

A)   0
B)   1
C)   2
D)   3E) None of the above
F) A) and B)

Question 16

Which of the following is an example of the Tragedy of the Commons?

Accepted Answer

A)   The number of professional football teams increases to the point where the quality of the games decreases, as does television viewership.
B)   The number of satellites increases to the point where they begin running into each other.
C)   Disney World becomes so crowded that it institutes a lottery for admissions.
D)   A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.E) A) and C)
F) None of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 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)   install 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) B) and C)
F) C) and D)

Question 19

Is a tornado siren excludable? Is it rival in consumption? How do we classify a tornado siren in terms of the four types of goods?

Accepted Answer

A tornado siren is n...

Question 20

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?

Accepted Answer

A)   The benefits are usually easier to measure than the costs.
B)   Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs.
C)   Estimating the value of a human life is difficult but necessary to evaluate the proposal.
D)   Both a and b are correct.E) A) and D)
F) B) and D)

Exam 11: Public Goods and Common Resources

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

Correct Answer
verified

Is a tornado siren excludable? Is it rival in consumption? How do we classify a tornado siren in terms of the four types of goods?

Correct Answer
verified
A tornado siren is n...
View Answer

A lighthouse is typically considered to be a public good because

Correct Answer
verified

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Correct Answer
verified

Which of the following is an example of the free-rider problem?

Correct Answer
verified

Correct Answer
verified

An example of a private good would be

Correct Answer
verified

Correct Answer
verified

The old lyric "the best things in life are free"

Correct Answer
verified

Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible. In this case, the market for this good will likely

Correct Answer
verified

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Correct Answer
verified
In the absence of government interventio...
View Answer

The phenomenon of free riding is most closely associated with which type of good?

Correct Answer
verified

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates

Correct Answer
verified

Which of the following is an example of the Tragedy of the Commons?

Correct Answer
verified

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?

Correct Answer
verified

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Correct Answer
verified

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

Correct Answer
verified

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

Correct Answer
verified

A pizza is

Correct Answer
verified

Governments can improve market outcomes for

Correct Answer
verified

Exam 11: Public Goods and Common Resources

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

Correct AnswerverifiedShow Answer

Is a tornado siren excludable? Is it rival in consumption? How do we classify a tornado siren in terms of the four types of goods?

Correct AnswerverifiedA tornado siren is n...View AnswerShow Answer

A lighthouse is typically considered to be a public good because

Correct AnswerverifiedShow Answer

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Correct AnswerverifiedShow Answer

Which of the following is an example of the free-rider problem?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of a private good would be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The old lyric "the best things in life are free"

Correct AnswerverifiedShow Answer

Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible. In this case, the market for this good will likely

Correct AnswerverifiedShow Answer

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Correct AnswerverifiedIn the absence of government interventio...View AnswerShow Answer

The phenomenon of free riding is most closely associated with which type of good?

Correct AnswerverifiedShow Answer

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates

Correct AnswerverifiedShow Answer

Which of the following is an example of the Tragedy of the Commons?

Correct AnswerverifiedShow Answer

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

Correct AnswerverifiedShow Answer

A pizza is

Correct AnswerverifiedShow Answer

Governments can improve market outcomes for

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A tornado siren is n...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the absence of government interventio...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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