Question 1

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 D)
F) B) and C)

Question 2

Which of the following is a disadvantage of government provision of a public good such as national defense? (i) 
The government does not know the exact willingness of consumers to pay for the public good.(ii) 
The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good.(iii) 
Taxpayers do not agree on the optimal quantity of the public good that the government should provide.

Accepted Answer

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

Question 3

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Accepted Answer

A)  install the light because the expected benefit of $400,000 is greater than the cost.
B)  install the light because the expected benefit of $45,000 is greater than the cost.
C)  not install the light because the expected benefit of $45,000 is only equal to the cost.
D)  not install the light because the expected benefit of $40,000 is less than the cost.E) B) and D)
F) A) and B)

Question 4

Recall the four types of goods. Are national defense and a patented invention the same type of good? Briefly explain.

Accepted Answer

No. National defense...

Question 5

Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Alta, Utah. Suppose that the lift lines at the ski resort become more congested when the ten additional people start to ski. Which of the following statements is not correct?

Accepted Answer

A)  Use of the ski resort by the ten new skiers will yield a negative externality.
B)  The ski resort can reduce the congestion externality by raising lift ticket prices.
C)  An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion.
D)  Each of the ten friends would have been better off staying at home.E) A) and B)
F) B) and C)

Question 6

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

Accepted Answer

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

Question 7

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Accepted Answer

As described, good x is rival ...

Question 8

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach that anyone may use without paying any fees. This state beach

Accepted Answer

A)  will tend to be overused because it is nonexcludable.
B)  is a common resource when it becomes crowded on sunny summer weekends.
C)  is rival in consumption when it becomes crowded on sunny summer weekends.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 9

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1)  not toss cigarette butts onto public streets and sidewalks, and (2)  pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a

Accepted Answer

A)  private goods problem.
B)  Nash equilibrium.
C)  Tragedy of the Commons.
D)  cost-benefit equilibrium.E) A) and D)
F) B) and D)

Question 10

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
-Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly explain.

Accepted Answer

The beautiful mural is the bes...

Question 11

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 12

Which of the following statements about private goods and public goods is correct?

Accepted Answer

A)  Private goods and public goods are both excludable.
B)  Private goods and public goods are both rival in consumption.
C)  Private goods are not excludable and public goods are excludable.
D)  Private goods are rival in consumption and public goods are not excludable.E) A) and B)
F) B) and D)

Question 13

Variable tolls on roads

Accepted Answer

A)  are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly.
B)  rise when traffic volume increases to ensure the speed on the road is kept high.
C)  are an effective way of correcting the common resource problem on roads.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 14

Which of the following statements is correct?

Accepted Answer

A)  The establishment of property rights sometimes gives rise to market failure.
B)  The absence of property rights sometimes gives rise to market failure.
C)  In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights.
D)  Government regulation of private behavior, in response to market failure, can never improve social well-being.E) B) and C)
F) C) and D)

Question 15

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents

Accepted Answer

A)  a common resource problem.
B)  a public good.
C)  a club good.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 16

When a free-rider problem exists,

Accepted Answer

A)  the market will devote too few resources to the production of the good.
B)  the cost of the good will always be more than the benefit of the good.
C)  the good will not be produced.
D)  entrepreneurs will eventually find a way to make free-riders pay their share.E) None of the above
F) A) and C)

Question 17

A mobile phone is a

Accepted Answer

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

Question 18

The degradation of the environment from litter is a

Accepted Answer

A)  a negative externality.
B)  free rider problem.
C)  Tragedy of the Commons.
D)  Both a and c are correct.E) A) and D)
F) B) and D)

Question 19

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Accepted Answer

The answer of Drivers have to pay a toll to...

Question 20

An internet radio broadcast 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) A) and B)
F) A) and C)

Exam 11: Public Goods and Common Resources

Correct Answer
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Scenario 11-2 Consider the following goods: • fire-protection services provided by a fire department • a beautiful mural on the outside wall of a fire station • a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly explain.

Correct Answer
verified
The beautiful mural is the bes...
View Answer

Correct Answer
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Which of the following statements about private goods and public goods is correct?

Correct Answer
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Variable tolls on roads

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
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Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach that anyone may use without paying any fees. This state beach

Correct Answer
verified

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct Answer
verified

A mobile phone is a

Correct Answer
verified

The degradation of the environment from litter is a

Correct Answer
verified

Recall the four types of goods. Are national defense and a patented invention the same type of good? Briefly explain.

Correct Answer
verified
No. National defense...
View Answer

An internet radio broadcast is

Correct Answer
verified

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Correct Answer
verified
As described, good x is rival ...
View Answer

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents

Correct Answer
verified

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

Correct Answer
verified

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Correct Answer
verified

When a free-rider problem exists,

Correct Answer
verified

A vacation home in Malibu is

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Exam 11: Public Goods and Common Resources

Correct AnswerverifiedShow Answer

Scenario 11-2 Consider the following goods: • fire-protection services provided by a fire department • a beautiful mural on the outside wall of a fire station • a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly explain.

Correct AnswerverifiedThe beautiful mural is the bes...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements about private goods and public goods is correct?

Correct AnswerverifiedShow Answer

Variable tolls on roads

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach that anyone may use without paying any fees. This state beach

Correct AnswerverifiedShow Answer

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct AnswerverifiedShow Answer

A mobile phone is a

Correct AnswerverifiedShow Answer

The degradation of the environment from litter is a

Correct AnswerverifiedShow Answer

Recall the four types of goods. Are national defense and a patented invention the same type of good? Briefly explain.

Correct AnswerverifiedNo. National defense...View AnswerShow Answer

An internet radio broadcast is

Correct AnswerverifiedShow Answer

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Correct AnswerverifiedAs described, good x is rival ...View AnswerShow Answer

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents

Correct AnswerverifiedShow Answer

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is

Correct AnswerverifiedShow Answer

Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the externality of __________.

Correct AnswerverifiedShow Answer

When a free-rider problem exists,

Correct AnswerverifiedShow Answer

A vacation home in Malibu is

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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The beautiful mural is the bes...
View Answer

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No. National defense...
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As described, good x is rival ...
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