Question 1

Markets may fail to allocate resources efficiently when property rights are not well established.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A)   subsidizing basic research
B)   building lighthouses
C)   toll charges on congested roads
D)   cost-benefit analysis

Question 3

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.

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.

Question 5

The provision of public goods gives rise to

Accepted Answer

A)   positive externalities, as does the use of common resources.
B)   positive externalities, whereas the use of common resources gives rise to negative externalities.
C)   negative externalities, whereas the use of common resources gives rise to positive externalities.
D)   negative externalities, as does the use of common resources.

Question 6

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.

Question 7

Highway engineers want to improve a dangerous stretch of highway. They expect that it will reduce the risk of someone dying in an accident from 5.3 percent to 2.1 percent over the life of the highway. If a human life is worth $10 million, then the project is worth doing as long as it does not cost more than

Accepted Answer

A)   $53,000.
B)   $210,000.
C)   $320,000.
D)   $2.1 million.

Question 8

A free rider is a person who

Accepted Answer

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.

Question 9

Which of the following is not a reason why government agencies subsidize basic research?

Accepted Answer

A)   The private market devotes too few resources to basic research.
B)   The general knowledge developed through basic research can be used without charge.
C)   The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies.
D)   The government wants to attract the brightest researchers away from private research firms.

Question 10

Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes   No
-Refer to Figure 11-1. The box labeled A represents what type of good?

Accepted Answer

Box A repr...

Question 11

The pollution market failure is an example of the free rider problem.

Accepted Answer

A) True 
 B)False

Question 12

Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes Yes     No -Refer to Figure 11-1. The box labeled A represents A)  private goods. B)  club goods. C)  common resources. D)  public goods." class="answers-bank-image d-inline" rel="preload" > Yes     No -Refer to Figure 11-1. The box labeled A represents A)  private goods. B)  club goods. C)  common resources. D)  public goods." class="answers-bank-image d-inline" rel="preload" > No
-Refer to Figure 11-1. The box labeled A represents

Accepted Answer

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

Question 13

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Accepted Answer

A)   a private good.
B)   a public good.
C)   a club good.
D)   a common resource.

Question 14

What particular characteristic do public goods and club goods have in common?

Accepted Answer

Public goods and club goods ar...

Question 15

Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes Yes     No -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A? A)  a mobile phone B)  a garden of blooming flowers C)  a candy bar D)  a stapler" class="answers-bank-image d-inline" rel="preload" > Yes     No -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A? A)  a mobile phone B)  a garden of blooming flowers C)  a candy bar D)  a stapler" class="answers-bank-image d-inline" rel="preload" > No
-Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

Accepted Answer

A)   a mobile phone
B)   a garden of blooming flowers
C)   a candy bar
D)   a stapler

Question 16

Which of the following is a disadvantage of government provision of a public good?

Accepted Answer

A)   The government lacks information about what people are willing to pay for the good.
B)   The government does not provide enough of any public good.
C)   The private sector can provide all public goods at a lower cost.
D)   None of the above is a disadvantage.

Question 17

Which of the following goods is the best example of a public good?

Accepted Answer

A)   garbage-collection services that are provided by a municipal government
B)   music that is broadcast over the airwaves by a privately-owned FM radio station
C)   electricity that is provided to farmhouses by a rural electric cooperative
D)   cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates

Question 18

A cheeseburger is a

Accepted Answer

A)   common resource, because it is rival in consumption but not excludable.
B)   public good, because it is rival in consumption but not excludable.
C)   public good, because it is excludable and rival in consumption.
D)   private good, because it is excludable and rival in consumption.

Question 19

What do we mean when we say that a good is rival in consumption?

Accepted Answer

A good is rival in consumption...

Question 20

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Accepted Answer

A)   regulation
B)   taxes
C)   turning the common resource into a public good
D)   turning the common resource into a private good

Exam 11: Public Goods and Common Resources

Correct Answer
verified

Which of the following goods is the best example of a public good?

Correct Answer
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The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Correct Answer
verified

What particular characteristic do public goods and club goods have in common?

Correct Answer
verified
Public goods and club goods ar...
View Answer

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. The box labeled A represents what type of good?

Correct Answer
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Box A repr...
View Answer

A cheeseburger is a

Correct Answer
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Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. The box labeled A represents

Correct Answer
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A free rider is a person who

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

Which of the following is a disadvantage of government provision of a public good?

Correct Answer
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Markets may fail to allocate resources efficiently when property rights are not well established.

Correct Answer
verified

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Correct Answer
verified

What do we mean when we say that a good is rival in consumption?

Correct Answer
verified
A good is rival in consumption...
View Answer

Which of the following is not a reason why government agencies subsidize basic research?

Correct Answer
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Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

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

Correct Answer
verified

The pollution market failure is an example of the free rider problem.

Correct Answer
verified

Private companies will invest in medical research if

Correct Answer
verified

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Correct Answer
verified

The provision of public goods gives rise to

Correct Answer
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Exam 11: Public Goods and Common Resources

Correct AnswerverifiedShow Answer

Which of the following goods is the best example of a public good?

Correct AnswerverifiedShow Answer

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

Correct AnswerverifiedShow Answer

What particular characteristic do public goods and club goods have in common?

Correct AnswerverifiedPublic goods and club goods ar...View AnswerShow Answer

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. The box labeled A represents what type of good?

Correct AnswerverifiedBox A repr...View AnswerShow Answer

A cheeseburger is a

Correct AnswerverifiedShow Answer

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. The box labeled A represents

Correct AnswerverifiedShow Answer

A free rider is a person who

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

Which of the following is a disadvantage of government provision of a public good?

Correct AnswerverifiedShow Answer

Markets may fail to allocate resources efficiently when property rights are not well established.

Correct AnswerverifiedShow Answer

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Correct AnswerverifiedShow Answer

What do we mean when we say that a good is rival in consumption?

Correct AnswerverifiedA good is rival in consumption...View AnswerShow Answer

Which of the following is not a reason why government agencies subsidize basic research?

Correct AnswerverifiedShow Answer

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The pollution market failure is an example of the free rider problem.

Correct AnswerverifiedShow Answer

Private companies will invest in medical research if

Correct AnswerverifiedShow Answer

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Correct AnswerverifiedShow Answer

The provision of public goods gives rise to

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Public goods and club goods ar...
View Answer

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Box A repr...
View Answer

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Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. The box labeled A represents

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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A good is rival in consumption...
View Answer

Correct Answer
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Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. Which of the following items is not a clear-cut example of the type of good represented by Box A?

Correct Answer
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Correct Answer
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Correct Answer
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