Question 1

The Tragedy of the Commons can be corrected by

Accepted Answer

A)   conducting a cost-benefit analysis.
B)   assigning property rights to individuals.
C)   providing government subsidies for the resource.
D)   making certain everyone in the economy has access to the resource.E) B) and D)
F) A) and B)

Question 2

You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

Accepted Answer

A) True 
 B)False

Question 3

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

Accepted Answer

A)   every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient.
B)   it would be more efficient if the electric company raised its rates for electricity at peak times.
C)   it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times.
D)   it would be more efficient to force everyone to cut their usage of electricity by the same amount.E) A) and B)
F) All of the above

Question 4

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

Accepted Answer

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

Question 5

Which of the following is not a common resource?

Accepted Answer

A)   elephants in the wild
B)   a narrow trail in a park
C)   a neighborhood garden
D)   Neither a nor b is a common resource.E) C) and D)
F) B) and D)

Question 6

To achieve the optimal provision of public goods, the

Accepted Answer

A)   market should be allowed to arrive at an equilibrium without government intervention.
B)   government must limit the provision of the goods.
C)   government must tax producers of the goods.
D)   government must either provide the goods or subsidize their production.E) All of the above
F) None of the above

Question 7

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free- ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?

Accepted Answer

The government assigns and protects the ...

Question 8

Why is cable TV reception regarded as a club good?

Accepted Answer

Cable TV reception is excludable, becaus...

Question 9

Knowledge that is patented is a

Accepted Answer

A)   public good, whereas knowledge that is not patented is a common resource.
B)   private good, whereas knowledge that is not patented is a club good.
C)   common resource, whereas knowledge that is not patented is a private good.
D)   club good, whereas knowledge that is not patented is a public good.E) A) and B)
F) A) and C)

Question 10

One economically efficient way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)   tax the owners of the resource.
B)   prevent anyone from using the resource.
C)   reduce the marginal social benefit of the resource.
D)   establish private ownership of the resource.E) All of the above
F) A) and B)

Question 11

When the absence of property rights causes a market failure, the government can potentially solve the problem

Accepted Answer

A)   by clearly defining property rights.
B)   through regulation.
C)   by supplying the good itself.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 12

Which of the following statements is not correct?

Accepted Answer

A)   Common resources are rival in consumption but are not excludable.
B)   Uncongested toll roads are examples of club goods.
C)   When African elephants were privatized, the survival of the species deteriorated.
D)   National defense is not rival in consumption, nor is it excludable.E) A) and B)
F) A) and C)

Question 13

Figure 11-1
 
-Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

Accepted Answer

A)   a mobile phone
B)   a garden of blooming flowers
C)   a candy bar
D)   a staplerE) All of the above
F) A) and D)

Question 14

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

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) None of the above
F) B) and C)

Question 15

A vacation home in Malibu is

Accepted Answer

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

Question 16

People can be prevented from using a good if the good is

Accepted Answer

A)   a private good or a club good.
B)   a private good or a common resource.
C)   a public good or a common resource.
D)   a private good or a public good.E) A) and B)
F) None of the above

Question 17

The Tragedy of the Commons describes

Accepted Answer

A)   government regulation that is necessary to combat externalities.
B)   overuse of a common resource relative to its economically efficient use.
C)   the nonrivalry feature of a common resource.
D)   an effective cost-benefit analysis.E) A) and B)
F) None of the above

Question 18

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

Question 19

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

Accepted Answer

A)   a fireworks display
B)   national defense
C)   a box of sparklers
D)   a paradeE) None of the above
F) A) and C)

Question 20

Simply asking people how much they value a highway is not a reliable way of measuring the benefits and costs because

Accepted Answer

A)   those who stand to gain have an incentive to tell the truth.
B)   those who stand to lose have an incentive to exaggerate their true costs.
C)   answers to the survey questions will always be downwardly biased.
D)   not everyone asked will be using the highway.E) B) and D)
F) None of the above

Exam 11: Public Goods and Common Resources

A vacation home in Malibu is

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

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One economically efficient way to eliminate the Tragedy of the Commons is to

Correct AnswerverifiedShow Answer

Knowledge that is patented is a

Correct AnswerverifiedShow Answer

To achieve the optimal provision of public goods, the

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

Correct AnswerverifiedShow Answer

People can be prevented from using a good if the good is

Correct AnswerverifiedShow Answer

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that

Correct AnswerverifiedShow Answer

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free- ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?

Correct AnswerverifiedThe government assigns and protects the ...View AnswerShow Answer

The Tragedy of the Commons can be corrected by

Correct AnswerverifiedShow Answer

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

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

When the absence of property rights causes a market failure, the government can potentially solve the problem

Correct AnswerverifiedShow Answer

The Tragedy of the Commons describes

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

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You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

Correct AnswerverifiedShow Answer

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

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Why is cable TV reception regarded as a club good?

Correct AnswerverifiedCable TV reception is excludable, becaus...View AnswerShow Answer

Simply asking people how much they value a highway is not a reliable way of measuring the benefits and costs because

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Which of the following is not a common resource?

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The government assigns and protects the ...
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Cable TV reception is excludable, becaus...
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