Question 1

The U.S.patent system

Accepted Answer

A)   makes general knowledge excludable.
B)   makes specific,technical knowledge excludable.
C)   creates a disincentive to invent.
D)   Both a and b are correct.E) All of the above
F) A) and C)

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) None of the above
F) All of the above

Question 3

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential) ,the troubling implication is that

Accepted Answer

A)   it is possible for a retired or disabled person to have no value to society.
B)   economists are more valuable than entrepreneurs.
C)   retired people who volunteer in their communities are more valuable than physicians.
D)   all workers have equal value.E) B) and C)
F) A) and D)

Question 4

Government policy can potentially raise economic well-being

Accepted Answer

A)   in all markets for goods and services.
B)   in economic models,but not in reality.
C)   when a good does not have a price attached to it.
D)   never.E) B) and C)
F) A) and D)

Question 5

A lighthouse might be considered a private good if

Accepted Answer

A)   there is a second lighthouse nearby,thus preventing a monopoly.
B)   the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse.
C)   ships are able to enjoy the benefits of the lighthouse without paying for the benefit.
D)   a nearby port authority is able to avoid paying any fees to the lighthouse owner.E) None of the above
F) A) and B)

Question 6

Cost-benefit analysis is important to determine the role of government in our economy because

Accepted Answer

A)   the government should provide all goods for which the benefits exceed the costs.
B)   cost-benefit analysis identifies the possible gains to society from government provision of a particular good.
C)   markets for private goods cannot effectively assign costs and benefits.
D)   cost-benefit analysis is the best tool to identify market failures.E) A) and D)
F) A) and B)

Question 7

Market failure associated with the free-rider problem is a result of

Accepted Answer

A)   a problem associated with pollution.
B)   benefits that accrue to those who don't pay.
C)   losses that accrue to providers of the product.
D)   market power.E) B) and C)
F) B) and D)

Question 8

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False

Question 9

In which of the following examples are property rights not well established?

Accepted Answer

A)   Bill chooses to ride his bike to work rather than drive his car.
B)   Groups of students play loud music in the open area between the dorms.
C)   Sue reads a book on her patio.
D)   Executives discuss corporate strategy in the company boardroom.E) B) and C)
F) A) and D)

Question 10

National Public Radio would be considered a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 11

Bill owns 3 acres of beautiful wooded land.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees.This state park

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) None of the above

Question 12

Table 11-2
Consider a small town with only three families,the Jones family,the Harris family,and the Wong 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 $300 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Harris's like the town to install?

Accepted Answer

A)   0 streetlights
B)   1 streetlight
C)   2 streetlights
D)   3 streetlightsE) A) and B)
F) B) and C)

Question 13

Without government intervention,public goods tend to be

Accepted Answer

A)   overproduced and common resources tend to be overconsumed.
B)   overproduced and common resources tend to be underconsumed.
C)   underproduced and common resources tend to be overconsumed.
D)   underproduced and common resources tend to be underconsumed.E) B) and C)
F) A) and C)

Question 14

When goods are available free of charge,the market forces that normally allocate resources in our economy are absent.

Accepted Answer

A) True 
 B)False

Question 15

For private goods allocated in markets,

Accepted Answer

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

Question 16

Roads can be considered either public goods or common resources,depending on how congested they are.

Accepted Answer

A) True 
 B)False

Question 17

Goods that are rival in consumption and excludable would be considered

Accepted Answer

A)   natural monopolies.
B)   common resources.
C)   public goods.
D)   private goods.E) B) and C)
F) B) and D)

Question 18

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Accepted Answer

A)   private good.
B)   natural monopoly.
C)   common resource.
D)   public good.E) All of the above
F) B) and C)

Question 19

A view of a spectacular sunset along a private beach is an example of a

Accepted Answer

A)   private good.
B)   public good.
C)   nonrival but excludable good.
D)   rival but nonexcludable good.E) A) and B)
F) All of the above

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

A lighthouse might be considered a private good if

Correct Answer
verified

Market failure associated with the free-rider problem is a result of

Correct Answer
verified

When goods are available free of charge,the market forces that normally allocate resources in our economy are absent.

Correct Answer
verified

Goods that are rival in consumption and excludable would be considered

Correct Answer
verified

A view of a spectacular sunset along a private beach is an example of a

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
verified

National Public Radio would be considered a natural monopoly.

Correct Answer
verified

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct Answer
verified

Without government intervention,public goods tend to be

Correct Answer
verified

Roads can be considered either public goods or common resources,depending on how congested they are.

Correct Answer
verified

For private goods allocated in markets,

Correct Answer
verified

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential) ,the troubling implication is that

Correct Answer
verified

In which of the following examples are property rights not well established?

Correct Answer
verified

Cost-benefit analysis is important to determine the role of government in our economy because

Correct Answer
verified

Bill owns 3 acres of beautiful wooded land.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees.This state park

Correct Answer
verified

The U.S.patent system

Correct Answer
verified

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct Answer
verified

The Tragedy of the Commons occurs because

Correct Answer
verified

Government policy can potentially raise economic well-being

Correct Answer
verified

Exam 11: Public Goods and Common Resources

A lighthouse might be considered a private good if

Correct AnswerverifiedShow Answer

Market failure associated with the free-rider problem is a result of

Correct AnswerverifiedShow Answer

When goods are available free of charge,the market forces that normally allocate resources in our economy are absent.

Correct AnswerverifiedShow Answer

Goods that are rival in consumption and excludable would be considered

Correct AnswerverifiedShow Answer

A view of a spectacular sunset along a private beach is an example of a

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

National Public Radio would be considered a natural monopoly.

Correct AnswerverifiedShow Answer

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct AnswerverifiedShow Answer

Without government intervention,public goods tend to be

Correct AnswerverifiedShow Answer

Roads can be considered either public goods or common resources,depending on how congested they are.

Correct AnswerverifiedShow Answer

For private goods allocated in markets,

Correct AnswerverifiedShow Answer

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential) ,the troubling implication is that

Correct AnswerverifiedShow Answer

In which of the following examples are property rights not well established?

Correct AnswerverifiedShow Answer

Cost-benefit analysis is important to determine the role of government in our economy because

Correct AnswerverifiedShow Answer

Bill owns 3 acres of beautiful wooded land.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees.This state park

Correct AnswerverifiedShow Answer

The U.S.patent system

Correct AnswerverifiedShow Answer

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct AnswerverifiedShow Answer

The Tragedy of the Commons occurs because

Correct AnswerverifiedShow Answer

Government policy can potentially raise economic well-being

Correct AnswerverifiedShow Answer

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