Question 1

The free-rider problem

Accepted Answer

A)   forces the supply of a public good to exceed its demand.
B)   results in common resources becoming club goods.
C)   explains why many local governments supply public goods.
D)   results in public goods becoming private goods.E) None of the above
F) A) and B)

Question 2

The Tragedy of the Commons occurs because

Accepted Answer

A)   government property is most heavily used by the wealthy.
B)   everyone deserves an equal share of government property.
C)   social and private incentives differ.
D)   established property rights create competition.E) B) and C)
F) None of the above

Question 3

An example of a private good would be

Accepted Answer

A)   a local fire department.
B)   a pair of pants.
C)   a streetlight.
D)   a national park.E) None of the above
F) B) and C)

Question 4

Private companies will invest in medical research if

Accepted Answer

A)   they will produce general knowledge.
B)   they will produce a specific product for which they may receive a patent.
C)   there is no government intervention in the market for medical products.
D)   others will benefit from their discoveries.E) None of the above
F) A) and B)

Question 5

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 6

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Accepted Answer

A) True 
 B)False

Question 7

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) B) and C)

Question 8

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 $340 and the 4 homeowners have agreed to split all tree-planting costs equally.Which homeowner(s) would be in favor of planting at least 1 tree?

Accepted Answer

A)   only Benitez
B)   only Benitez and Chen
C)   only Benitez, Chen, and Davis
D)   Adams, Benitez, Chen, and DavisE) None of the above
F) A) and B)

Question 9

Advocates of antipoverty programs believe that fighting poverty

Accepted Answer

A)   can make everyone better off.
B)   is most successfully accomplished by charities.
C)   is most efficiently accomplished by the market.
D)   reduces the well-being of tax payers.E) A) and C)
F) A) and B)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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) None of the above
F) A) and B)

Question 12

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) A) and C)

Question 13

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Accepted Answer

A)   overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good.
B)   overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good.
C)   understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good.
D)   understate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to understate the costs they would incur from the public good.E) A) and B)
F) None of the above

Question 14

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 15

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 $33 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)   0 acres
B)   1 acre
C)   2 acres
D)   3 acresE) A) and B)
F) A) and C)

Question 16

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) A) and B)
F) B) and D)

Question 17

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 $24 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A)   3 units
B)   6 units
C)   13 units
D)   22 unitsE) A) and C)
F) A) and D)

Question 18

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 19

Each of the following explains why cost-benefit analysis is difficult except

Accepted Answer

A)   there is no price with which to judge the value of a public good.
B)   surveys are often biased and unreliable.
C)   it is difficult to identify all factors that influence costs and benefits of public goods.
D)   government projects rarely have sufficient funding to complete them on time.E) C) and D)
F) B) and D)

Question 20

The U.S.government protects fish,a common resource,by

Accepted Answer

A)   subsidizing the fishing industry.
B)   heavily taxing competing industries.
C)   selling fishing licenses and regulating fish lengths.
D)   None of the above is correct.E) A) and C)
F) A) and B)

Exam 11: Public Goods and Common Resources.

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct Answer
verified

An example of a private good would be

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
verified

Goods that are rival in consumption include both

Correct Answer
verified

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Advocates of antipoverty programs believe that fighting poverty

Correct Answer
verified

Each of the following explains why cost-benefit analysis is difficult except

Correct Answer
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Correct Answer
verified

Correct Answer
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The free-rider problem

Correct Answer
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The Tragedy of the Commons occurs because

Correct Answer
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Private companies will invest in medical research if

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Correct Answer
verified

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct Answer
verified

The U.S.government protects fish,a common resource,by

Correct Answer
verified

Correct Answer
verified

Exam 11: Public Goods and Common Resources.

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct AnswerverifiedShow Answer

An example of a private good would be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Goods that are rival in consumption include both

Correct AnswerverifiedShow Answer

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs believe that fighting poverty

Correct AnswerverifiedShow Answer

Each of the following explains why cost-benefit analysis is difficult except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The free-rider problem

Correct AnswerverifiedShow Answer

The Tragedy of the Commons occurs because

Correct AnswerverifiedShow Answer

Private companies will invest in medical research if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

Correct AnswerverifiedShow Answer

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct AnswerverifiedShow Answer

The U.S.government protects fish,a common resource,by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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