Question 1

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 2

Imagine a 2,000-acre park with picnic benches,trees,and a pond.Suppose it is publicly owned,and people are invited to enjoy its beauty.When the weather is nice,it is difficult to find parking,and the trash cans overflow with food wrappers on summer afternoons.Otherwise,it is a great place.The park is a common resource because

Accepted Answer

A)  trash cans produce a negative externality, while good weather produces a positive externality.
B)  access is limited due to driving distances.
C)  if too many people use it, one person's use can prevent others from using it.
D)  it is easy to fence in the park to control access.E) B) and C)
F) All of the above

Question 3

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Accepted Answer

A) True 
 B)False

Question 4

Most lighthouses are operated by the government because

Accepted Answer

A)  of the free-rider problem.
B)  lighthouses are no longer valued by society.
C)  most lighthouses are only tourist attractions in state and national parks.
D)  shipping companies would not be able to afford maintenance fees for lighthouses.E) A) and C)
F) B) and C)

Question 5

The value and cost of goods are easiest to determine when the goods are

Accepted Answer

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

Question 6

Before considering any public project,the government should (i) 	compare the total cost and total benefits of the project.
(ii) 	conduct a cost-benefit analysis.
(iii) 	infer that citizens who vote for a project are willing to pay equally for it.

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) B) and D)
F) All of the above

Question 7

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

Accepted Answer

A)  patents correct for an unknown portion of the externality.
B)  benefits are hard to measure.
C)  members of Congress are often experts in the sciences.
D)  the costs always exceed the benefits.E) A) and B)
F) A) and C)

Question 8

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

Accepted Answer

A)  regulating the use or consumption of the common resource.
B)  taxing the use or consumption of the common resource.
C)  selling the common resource to a private entity.
D)  asking individuals to voluntarily reduce their use of the resource.E) A) and B)
F) B) and D)

Question 9

Suppose that installing an overhead pedestrian walkway would cost a college town $100,000.The walkway is expected to reduce the risk of fatality by 2 percent,and the cost of a human life is estimated at $10 million.The town should

Accepted Answer

A)  install the walkway because the estimated benefit is twice the cost.
B)  install the walkway because the estimated benefit equals the cost.
C)  not install the walkway, since the cost is twice the estimated benefit.
D)  install the walkway, since the cost of even a single life is too great not to take action.E) B) and C)
F) A) and D)

Question 10

An example of a private good would be

Accepted Answer

A)  cable TV service.
B)  a tornado siren.
C)  clothing.
D)  a sunset.E) A) and B)
F) None of the above

Question 11

If the use of a common resource is not regulated,

Accepted Answer

A)  it cannot be used by anyone.
B)  the economy will end up with too much of a good thing.
C)  it becomes a private good.
D)  it will be overused.E) A) and B)
F) A) and C)

Question 12

The free-rider problem exists with

Accepted Answer

A)  fire protection.
B)  knowledge.
C)  cable TV service.
D)  congested toll roads.E) C) and D)
F) None of the above

Question 13

A cost-benefit analysis of a highway is difficult to conduct because analysts

Accepted Answer

A)  cannot estimate the explicit cost of a project that has not been completed.
B)  are unlikely to have access to costs on similar projects.
C)  are not able to consider the opportunity cost of resources.
D)  will have difficulty estimating the value of the highway.E) B) and C)
F) A) and D)

Question 14

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Accepted Answer

A)  assigning land property rights.
B)  auctioning off sheep-grazing permits.
C)  taxing sheep flocks.
D)  subsidizing sheep flocks.E) A) and B)
F) A) and C)

Question 15

Which of the following goods is excludable and not rival in consumption?

Accepted Answer

A)  a can of soda
B)  New England lobsters in the ocean
C)  street lights
D)  fire protectionE) A) and B)
F) A) and C)

Question 16

The best way of determining the value of a human life is to

Accepted Answer

A)  evaluate the value of their expected earnings in the labor market.
B)  evaluate the risks people are willing to take and what they would have to be paid to take them.
C)  determine a person's accumulated wealth at the time of death.
D)  do nothing; human life is priceless.E) A) and B)
F) B) and C)

Question 17

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

A)  Cattle are a valuable source of income for many people, while elephants have no market value.
B)  There is a high demand for products that come from cows, whereas there is no demand for products that come from elephants.
C)  There are still lots of cattle that roam free, while all elephants live in zoos.
D)  Cattle are owned by ranchers, while elephants are owned by no one.E) B) and D)
F) None of the above

Question 18

Goods that are both nonexcludable and rival in consumption would be considered

Accepted Answer

A)  natural monopolies.
B)  common resources.
C)  public goods.
D)  private goods.E) None of the above
F) A) and C)

Question 19

Uncongested,nontoll roads are a good example of a

Accepted Answer

A)  public good.
B)  private good.
C)  common resource.
D)  Pigovian good.E) B) and C)
F) B) and D)

Question 20

Once a common resource is available for consumption,policymakers need to be concerned with

Accepted Answer

A)  making sure everyone gets a fair chance to consume it.
B)  determining the total quantity that will be consumed.
C)  finding a private firm to take over the production of the good.
D)  implementing a natural monopoly tax to pay for the good.E) A) and C)
F) A) and B)

Exam 11: Public Goods and Common Resources

The best way of determining the value of a human life is to

Correct Answer
verified

Uncongested,nontoll roads are a good example of a

Correct Answer
verified

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

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

Why do elephants face the threat of extinction while cows do not?

Correct Answer
verified

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Correct Answer
verified

The free-rider problem exists with

Correct Answer
verified

Suppose that installing an overhead pedestrian walkway would cost a college town $100,000.The walkway is expected to reduce the risk of fatality by 2 percent,and the cost of a human life is estimated at $10 million.The town should

Correct Answer
verified

Most lighthouses are operated by the government because

Correct Answer
verified

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

Correct Answer
verified

If the use of a common resource is not regulated,

Correct Answer
verified

Once a common resource is available for consumption,policymakers need to be concerned with

Correct Answer
verified

The value and cost of goods are easiest to determine when the goods are

Correct Answer
verified

A cost-benefit analysis of a highway is difficult to conduct because analysts

Correct Answer
verified

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Correct Answer
verified

Which of the following goods is excludable and not rival in consumption?

Correct Answer
verified

Correct Answer
verified

An example of a private good would be

Correct Answer
verified

Goods that are both nonexcludable and rival in consumption would be considered

Correct Answer
verified

Before considering any public project,the government should (i) compare the total cost and total benefits of the project. (ii) conduct a cost-benefit analysis. (iii) infer that citizens who vote for a project are willing to pay equally for it.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

The best way of determining the value of a human life is to

Correct AnswerverifiedShow Answer

Uncongested,nontoll roads are a good example of a

Correct AnswerverifiedShow Answer

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

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

Why do elephants face the threat of extinction while cows do not?

Correct AnswerverifiedShow Answer

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Correct AnswerverifiedShow Answer

The free-rider problem exists with

Correct AnswerverifiedShow Answer

Suppose that installing an overhead pedestrian walkway would cost a college town $100,000.The walkway is expected to reduce the risk of fatality by 2 percent,and the cost of a human life is estimated at $10 million.The town should

Correct AnswerverifiedShow Answer

Most lighthouses are operated by the government because

Correct AnswerverifiedShow Answer

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

Correct AnswerverifiedShow Answer

If the use of a common resource is not regulated,

Correct AnswerverifiedShow Answer

Once a common resource is available for consumption,policymakers need to be concerned with

Correct AnswerverifiedShow Answer

The value and cost of goods are easiest to determine when the goods are

Correct AnswerverifiedShow Answer

A cost-benefit analysis of a highway is difficult to conduct because analysts

Correct AnswerverifiedShow Answer

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

Correct AnswerverifiedShow Answer

Which of the following goods is excludable and not rival in consumption?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An example of a private good would be

Correct AnswerverifiedShow Answer

Goods that are both nonexcludable and rival in consumption would be considered

Correct AnswerverifiedShow Answer

Before considering any public project,the government should (i) compare the total cost and total benefits of the project. (ii) conduct a cost-benefit analysis. (iii) infer that citizens who vote for a project are willing to pay equally for it.

Correct AnswerverifiedShow Answer

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