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A textbook is a


A) private good and the knowledge that one gains from reading the book is a common resource.
B) private good and the knowledge that one gains from reading the book is a public good.
C) common resource and the knowledge that one gains from reading the book is a public good.
D) common resource and the knowledge that one gains from reading the book is a private good.

E) B) and C)
F) A) and B)

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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?


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

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The Tragedy of the Commons describes


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) None of the above
F) All of the above

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Table 11-2 Consider a small town with only three families, the Johnson family, the Marshall family, and the Walker family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight. Table 11-2 Consider a small town with only three families, the Johnson family, the Marshall family, and the Walker family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight. -Refer to Table 11-2.Suppose the cost to install each streetlight is $450 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Walker's like the town to install? A) 0 streetlights B) 1 streetlight C) 2 streetlights D) 3 streetlights -Refer to Table 11-2.Suppose the cost to install each streetlight is $450 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Walker's like the town to install?


A) 0 streetlights
B) 1 streetlight
C) 2 streetlights
D) 3 streetlights

E) C) and D)
F) All of the above

Correct Answer

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

A) True
B) False

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Government agencies,such as the National Science Foundation,subsidize basic research because in the absence of a subsidy too little research would be conducted.

A) True
B) False

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Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $110 per day and the 4 store owners have agreed to split the costs of hiring guards equally.Which of the following statements is correct? A) The owner of Store A would prefer to hire 2 guards. B) The owner of Store C would prefer to hire 1 guard. C) The owners of Stores B and D would prefer to hire 3 guards. D) All of the above are correct. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $110 per day and the 4 store owners have agreed to split the costs of hiring guards equally.Which of the following statements is correct?


A) The owner of Store A would prefer to hire 2 guards.
B) The owner of Store C would prefer to hire 1 guard.
C) The owners of Stores B and D would prefer to hire 3 guards.
D) All of the above are correct.

E) A) and B)
F) C) and D)

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Aristotle writes,"What is common to many is taken least care of,for all men have greater regard for what is their own than for what they possess in common with others." In this statement,Aristotle is referring to the free-rider problem that occurs when a person receives the benefit of a good without paying for it.

A) True
B) False

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Who among the following is a free rider?


A) Mickey buys groceries from the store where he works.
B) Donald rides to work with Betsey, but he pays Betsey for gasoline and other travel-related expenses.
C) Fred drives 20,000 miles a year on public streets, but he pays no more in property taxes than Barney, who only drives 1,000 miles.
D) Wilma watches many public television programs, but she has never sent in a contribution to the station.

E) None of the above
F) C) and D)

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A study that compares the costs and benefits to society of providing a public good is called externality analysis.

A) True
B) False

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Which of the following is not a public good?


A) national defense
B) patented technological knowledge
C) general knowledge
D) the elimination of poverty

E) B) and C)
F) A) and C)

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For private goods allocated in markets,


A) prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
B) prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.
C) the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
D) the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

E) All of the above
F) A) and D)

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An economics professor,upset about the rising cost of textbooks,proposed that his department purchase 50 copies of a statistics book so the students in the statistics class would not have to purchase their own books but rather could borrow a book for the semester and then return it for the next class to use.Which of the following strategies would not prevent a common resource problem with the textbooks?


A) Students will be required to pay a deposit for the textbook, which is refundable at the end of the semester when the book is returned in good condition.
B) The textbooks are placed in a common area of the department so students can borrow and return them as needed.
C) Students must sign a form agreeing to return the book or pay a fine equal to the replacement cost of the book.
D) The textbooks are placed in the professor's office and will only be given to students who are registered members of the class. These students will not receive their final course grades until the books are returned.

E) B) and C)
F) A) and C)

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A free rider is a person who


A) will only purchase a product on sale.
B) receives the benefit of a good but avoids paying for it.
C) can produce a good at no cost.
D) rides public transit regularly.

E) B) and C)
F) A) and D)

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National defense is provided by the government because


A) it is impossible for private markets to produce public goods.
B) products provided by the government are produced more efficiently.
C) free-riders make it difficult for private markets to supply the socially optimal quantity.
D) public goods increase government revenues.

E) All of the above
F) A) and B)

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The commercial value of ivory is a threat to the elephant,but the commercial value of beef is a guardian of the cow.This is because


A) the cow is raised in developed countries, while the elephant lives primarily in less-developed countries.
B) cows are private goods, while elephants tend to roam freely without owners.
C) cows and elephants are public goods, but ivory is nonrival.
D) ivory is nonrival and nonexclusive, but beef is rival and exclusive.

E) A) and B)
F) A) and C)

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All goods that are excludable are also rival in consumption,but not all goods that are rival in consumption are excludable.

A) True
B) False

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The provision of public goods gives rise to


A) no externalities.
B) positive externalities.
C) negative externalities.
D) rivalries in consumption.

E) B) and C)
F) A) and D)

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Markets do not ensure that the air we breathe is clean because


A) clean air has no value.
B) the government prevents markets from doing so.
C) property rights are not well established for clean air.
D) clean air is impossible to produce .

E) A) and B)
F) A) and C)

Correct Answer

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Goods that are rival in consumption and excludable would be considered


A) club goods.
B) common resources.
C) public goods.
D) private goods.

E) A) and C)
F) All of the above

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Showing 61 - 80 of 349

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