Question 1

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 2

Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef?

Accepted Answer

A)   Cows reproduce at a high rate and have adapted well to their environment.
B)   Public policies protect cows from predators and diseases.
C)   Cows are privately owned, whereas many endangered species are owned by no one.
D)   There is a natural ecological balance between the birth rate of cows and human consumption.E) None of the above
F) B) and D)

Question 3

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an example of the Tragedy of the Commons?

Accepted Answer

A)   The number of professional football teams increases to the point where the quality of the games decreases, as does television viewership.
B)   The number of satellites increases to the point where they begin running into each other.
C)   Disney World becomes so crowded that it institutes a lottery for admissions.
D)   A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.E) A) and B)
F) All of the above

Question 5

Private goods are both

Accepted Answer

A)   excludable and nonrival in consumption.
B)   nonexcludable and rival in consumption.
C)   excludable and rival in consumption.
D)   nonexcludable and nonrival consumption.E) C) and D)
F) None of the above

Question 6

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Accepted Answer

Eliminating poverty is not a good that t...

Question 7

Suppose the cost to erect a tornado siren in a small town is $15,000. In addition, suppose the value of a human life is $10 million. By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

Accepted Answer

A)   By at least 0.015 percentage points.
B)   By at least 0.15 percentage points.
C)   By at least 1.5 percentage points.
D)   By at least 5 percentage points.E) A) and B)
F) A) and C)

Question 8

Scenario 11-1
Becky is a single mother of two young children who spend their days at a daycare center while Becky goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late.
-Refer to Scenario 11-1. Due to traffic, Becky expects to be 20 minutes late to pick up her children. How much would she be willing to pay for a variable toll road that would get her to the daycare center on time?

Accepted Answer

A)   any price less than $5
B)   any price less than $10
C)   any price less than $20
D)   Becky would not be willing to pay out of pocket to avoid traffid.E) A) and B)
F) A) and C)

Question 9

The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.

Accepted Answer

A) True 
 B)False

Question 10

When a good is excludable,

Accepted Answer

A)   one person's use of the good diminishes another person's ability to use it.
B)   people can be prevented from using the good.
C)   no more than one person can use the good at the same time.
D)   everyone will be excluded from using the good.E) A) and D)
F) All of the above

Question 11

A good is excludable if

Accepted Answer

A)   one person's use of the good diminishes another person's enjoyment of it.
B)   the government can regulate its availability.
C)   it is not a normal good.
D)   people can be prevented from using it.E) B) and D)
F) B) and C)

Question 12

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black 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 $360 and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) , what is the greatest number of streetlights for which the majority of families would vote "yes?"

Accepted Answer

A)   1 streetlight
B)   2 streetlights
C)   3 streetlights
D)   4 streetlightsE) All of the above
F) C) and D)

Question 13

National defense is provided by the government because

Accepted Answer

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

Question 14

When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.

Accepted Answer

A) True 
 B)False

Question 15

Goods that are excludable 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) None of the above
F) C) and D)

Question 16

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Accepted Answer

A) True 
 B)False

Question 17

A common theme among examples of market failure is

Accepted Answer

A)   the good being provided harms society in some systematic way.
B)   some item of value does not have an owner with the legal authority to control it.
C)   cost-benefit analysis will show that private markets should provide the goods and services.
D)   government intervention decreases the social benefits.E) A) and D)
F) All of the above

Question 18

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) All of the above

Question 19

Figure 11-1
Rival in Consumption?
  
-Refer to Figure 11-1. In which box - A, B, C, or D - does each of the following types of roads belong? (Consider each type of road separately.)
-an uncongested toll road
-an uncongested nontoll road
-a congested toll road
-a congested nontoll road

Accepted Answer

An uncongested toll road belon...

Question 20

By driving onto a congested road for which no toll is charged, a driver

Accepted Answer

A)   contributes to the overuse of a common resource.
B)   contributes to a negative-externality problem.
C)   is inflicting additional time cost on all of the other drivers.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Exam 11: Public Goods and Common Resources

Figure 11-1 Rival in Consumption? -Refer to Figure 11-1. In which box - A, B, C, or D - does each of the following types of roads belong? (Consider each type of road separately.) -an uncongested toll road -an uncongested nontoll road -a congested toll road -a congested nontoll road

Correct Answer
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An uncongested toll road belon...
View Answer

A common theme among examples of market failure is

Correct Answer
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A good is excludable if

Correct Answer
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National defense is provided by the government because

Correct Answer
verified

Correct Answer
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Suppose the cost to erect a tornado siren in a small town is $15,000. In addition, suppose the value of a human life is $10 million. By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

Correct Answer
verified

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct Answer
verified

Advocates of antipoverty programs believe that fighting poverty

Correct Answer
verified

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Correct Answer
verified

Private goods are both

Correct Answer
verified

When a good is excludable,

Correct Answer
verified

Which of the following is an example of the Tragedy of the Commons?

Correct Answer
verified

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Correct Answer
verified
Eliminating poverty is not a good that t...
View Answer

When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.

Correct Answer
verified

Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef?

Correct Answer
verified

Correct Answer
verified

Goods that are excludable include both

Correct Answer
verified

The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.

Correct Answer
verified

By driving onto a congested road for which no toll is charged, a driver

Correct Answer
verified

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

Figure 11-1 Rival in Consumption? -Refer to Figure 11-1. In which box - A, B, C, or D - does each of the following types of roads belong? (Consider each type of road separately.) -an uncongested toll road -an uncongested nontoll road -a congested toll road -a congested nontoll road

Correct AnswerverifiedAn uncongested toll road belon...View AnswerShow Answer

A common theme among examples of market failure is

Correct AnswerverifiedShow Answer

A good is excludable if

Correct AnswerverifiedShow Answer

National defense is provided by the government because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the cost to erect a tornado siren in a small town is $15,000. In addition, suppose the value of a human life is $10 million. By what percentage would the siren need to reduce the risk of a fatality for the benefits of the siren to exceed the costs of the siren?

Correct AnswerverifiedShow Answer

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs believe that fighting poverty

Correct AnswerverifiedShow Answer

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Correct AnswerverifiedShow Answer

Private goods are both

Correct AnswerverifiedShow Answer

When a good is excludable,

Correct AnswerverifiedShow Answer

Which of the following is an example of the Tragedy of the Commons?

Correct AnswerverifiedShow Answer

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

Correct AnswerverifiedEliminating poverty is not a good that t...View AnswerShow Answer

When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.

Correct AnswerverifiedShow Answer

Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goods that are excludable include both

Correct AnswerverifiedShow Answer

The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.

Correct AnswerverifiedShow Answer

By driving onto a congested road for which no toll is charged, a driver

Correct AnswerverifiedShow Answer

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Correct AnswerverifiedShow Answer

Correct Answer
verified
An uncongested toll road belon...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Eliminating poverty is not a good that t...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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