Question 1

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 B)
F) B) and C)

Question 2

A city street is

Accepted Answer

A)   always a public good,whether or not it is congested.
B)   a public good when it is congested,but it is a common resource when it is not congested.
C)   a common resource when it is congested,but it is a public good when it is not congested.
D)   always a common resource,whether or not it is congested.E) C) and D)
F) B) and C)

Question 3

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Accepted Answer

A)   The aquifer is a public good which must be publicly owned to be used efficiently.
B)   The aquifer is a private good which must be privately owned to be used efficiently.
C)   The aquifer is a common property resource which will be overused if no one owns it.
D)   The aquifer is a club good which should be left as it is.E) All of the above
F) None of the above

Question 4

Table 11-3
This table describes the defense demands for three equal sized groups of people in Nirvanaville.The second,third,and fourth column shows the quantity that a group will demand for a given price (the first column) .
 
-Refer to Table 11-3.If the marginal cost of national defense is constant at $12 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A)   3 units
B)   13 units
C)   22 units
D)   33 unitsE) A) and D)
F) B) and C)

Question 5

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 D)

Question 6

The Tragedy of the Commons results when a good is

Accepted Answer

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

Question 7

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

Question 8

One of the least regulated common resources today is

Accepted Answer

A)   state parks.
B)   the ocean.
C)   forest preserves.
D)   the Great Lakes.E) C) and D)
F) A) and D)

Question 9

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Accepted Answer

A)   fiscal analysis.
B)   monetary analysis.
C)   welfare analysis.
D)   cost-benefit analysis.E) A) and B)
F) A) and C)

Question 10

One benefit of the patent system is that it encourages the production of technical knowledge.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that a small county is considering adding a guard rail to a dangerous curve by a river.The guard rail will cost $70,000.The average damage done to vehicles that slide off the road at the curve is $10,000.It is expected that the guard rail will prevent 5 vehicles from sliding off the road during its usable life.What should the county do?

Accepted Answer

A)   Install the guard rail because safety is priceless.
B)   Install the guard rail because the benefits exceed the costs.
C)   Do not install the guard rail because the costs exceed the benefits.
D)   Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles.E) B) and D)
F) B) and C)

Question 12

Goods that are rival in consumption include both

Accepted Answer

A)   club goods and public goods.
B)   public goods and common resources.
C)   common resources and private goods.
D)   private goods and club goods.E) B) and D)
F) All of the above

Question 13

A pair of jeans is rival but non-excludable.

Accepted Answer

A) True 
 B)False

Question 14

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Accepted Answer

A)   undervalue knowledge in their pursuit of revenues.
B)   overuse their patents.
C)   tend to free-ride on the knowledge that others have developed.
D)   tend to rely on existing employee knowledge.E) B) and C)
F) B) and D)

Question 15

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Accepted Answer

A)   allow individual shepherds to chose their own flock sizes.
B)   internalize the externality by subsidizing the production of sheep's wool.
C)   auction off a limited number of sheep-grazing permits.
D)   wait until the market corrects the problem.E) None of the above
F) A) and B)

Question 16

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Accepted Answer

A)   Cows are a common resource,whereas elephants are owned by governments.
B)   Elephants are larger than cows,requiring more economic resources.
C)   Elephants live in Africa,where economic resources are scarce.
D)   Elephants are a common resource,whereas cows are privately owned.E) C) and D)
F) B) and D)

Question 17

The value and cost of goods are easiest to determine when the goods are

Accepted Answer

A)   private goods.
B)   public goods.
C)   common resources.
D)   club goods.E) All of the above
F) A) and B)

Question 18

Pete is a non-union employee at The Electric Co.The majority of the employees at The Electric Co.are unionized.The union at The Electric Co.has negotiated very good benefits.Even though he is not a union member and he does not have to pay union dues,Pete receives all the benefits that the union has negotiated.Pete's behavior is an example of

Accepted Answer

A)   rivalry.
B)   a barrier to entry.
C)   free riding.
D)   Taft-Hartley opposition.E) A) and D)
F) All of the above

Question 19

Under which of the following scenarios would a park be considered a public good?

Accepted Answer

A)   Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables.
B)   Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C)   Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D)   Visitors can enter the park free of charge,but frequently all of the picnic tables are in use.E) C) and D)
F) B) and D)

Question 20

The free-rider problem exists with

Accepted Answer

A)   apples.
B)   knowledge.
C)   cable TV service.
D)   congested toll roads.E) All of the above
F) A) and D)

Exam 11: Public Goods and Common Resources

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Correct Answer
verified

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

One of the least regulated common resources today is

Correct Answer
verified

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Correct Answer
verified

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Correct Answer
verified

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Correct Answer
verified

Goods that are rival in consumption include both

Correct Answer
verified

The free-rider problem exists with

Correct Answer
verified

Elephants are endangered,but cows are not because

Correct Answer
verified

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct Answer
verified

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct Answer
verified

Correct Answer
verified

Under which of the following scenarios would a park be considered a public good?

Correct Answer
verified

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

Correct Answer
verified

A pair of jeans is rival but non-excludable.

Correct Answer
verified

Correct Answer
verified

The value and cost of goods are easiest to determine when the goods are

Correct Answer
verified

Correct Answer
verified

The Tragedy of the Commons results when a good is

Correct Answer
verified

A city street is

Correct Answer
verified

Exam 11: Public Goods and Common Resources

If the government decides to build a new highway,the first step would be to conduct a study to determine the value of the project.The study is called a

Correct AnswerverifiedShow Answer

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

One of the least regulated common resources today is

Correct AnswerverifiedShow Answer

Too few resources are devoted to the creation of knowledge because profit-seeking firms

Correct AnswerverifiedShow Answer

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Correct AnswerverifiedShow Answer

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Correct AnswerverifiedShow Answer

Goods that are rival in consumption include both

Correct AnswerverifiedShow Answer

The free-rider problem exists with

Correct AnswerverifiedShow Answer

Elephants are endangered,but cows are not because

Correct AnswerverifiedShow Answer

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct AnswerverifiedShow Answer

One benefit of the patent system is that it encourages the production of technical knowledge.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under which of the following scenarios would a park be considered a public good?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A pair of jeans is rival but non-excludable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The value and cost of goods are easiest to determine when the goods are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Tragedy of the Commons results when a good is

Correct AnswerverifiedShow Answer

A city street is

Correct AnswerverifiedShow Answer

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