Question 1

Which of the following would be an example of an external benefit?

Accepted Answer

A) More people start to ride the bus and as a result air pollution is reduced. 
B) Firms are able to reduce their costs of production by using a more efficient technology. 
C) The government requires polluting firms to pay a special tax. 
D) A firm has just gotten permission to open a landfill on property that is adjacent to your home. 
A) More people start to ride the bus and as a result air pollution is reduced. 
B) Firms are able to reduce their costs of production by using a more efficient technology. 
C) The government requires polluting firms to pay a special tax. 
D) A firm has just gotten permission to open a landfill on property that is adjacent to your home.

Question 2

In the absence of government involvement,the problem that public goods impose on a market system is that:

Accepted Answer

A) too little of the good is produced. 
B) too much of the good is produced. 
C) resources are wasted in the production of public goods. 
D) firms will earn large profits when producing these goods. 
A) too little of the good is produced. 
B) too much of the good is produced. 
C) resources are wasted in the production of public goods. 
D) firms will earn large profits when producing these goods.

Question 3

Due to the existence of external benefits associated with public goods:

Accepted Answer

A) private markets will lead to an efficient allocation of resources. 
B) government intervention can possibly improve on private market outcomes. 
C) private markets will correct for the underproduction of the good. 
D) the free-rider problem is eliminated. 
A) private markets will lead to an efficient allocation of resources. 
B) government intervention can possibly improve on private market outcomes. 
C) private markets will correct for the underproduction of the good. 
D) the free-rider problem is eliminated.

Question 4

Due to crime externalities,a more educated society tends to have a lower level of crime.

Accepted Answer

A) True 
 B)False

Question 5

During a volunteer program to rebuild a local play ground,a group of volunteers from a top corporation participate in the program.Among the 20 people that show up to help rebuild the play ground,there are two individuals that just talk to each other and do not do any work as the rest of the people.At the end of the day,the entire group takes credit for the renovated project.How do you best describe this situation with the volunteer program to rebuild a local play ground?

Accepted Answer

A) The incentive to help others is high. 
B) The free-ride of the two workers on the hard work of the others in the group who did work. 
C) The two individuals impose an external cost on other members of the group. 
D) none of the above 
A) The incentive to help others is high. 
B) The free-ride of the two workers on the hard work of the others in the group who did work. 
C) The two individuals impose an external cost on other members of the group. 
D) none of the above

Question 6

When there are external costs,the government can encourage people to take action that benefit other people.

Accepted Answer

A) True 
 B)False

Question 7

The free-rider problem arises:

Accepted Answer

A) when people feel their contribution is so small relative to the total amount needed that it won't make a difference whether they contribute or not. 
B) when people realize they will still receive the benefits of a good whether they pay for it or not. 
C) whenever the government produces a good or service. 
D) whenever there is a surplus of the product in the market. 
A) when people feel their contribution is so small relative to the total amount needed that it won't make a difference whether they contribute or not. 
B) when people realize they will still receive the benefits of a good whether they pay for it or not. 
C) whenever the government produces a good or service. 
D) whenever there is a surplus of the product in the market.

Question 8

Why might a politician start a costly spending program if its costs exceed its social benefits?

Accepted Answer

A) The politician is trying to find ways to raise more money for the next election. 
B) The politician gains prestige and voters are not well informed of the benefits and costs. 
C) Voters do not care about the costs of programs,as long as their taxes do not go up. 
D) The costs cannot be measured therefore the politicians focus on the benefits which are explicit. 
A) The politician is trying to find ways to raise more money for the next election. 
B) The politician gains prestige and voters are not well informed of the benefits and costs. 
C) Voters do not care about the costs of programs,as long as their taxes do not go up. 
D) The costs cannot be measured therefore the politicians focus on the benefits which are explicit.

Question 9

Giving contributors a small gift is one way to overcome the free-rider problem.

Accepted Answer

A) True 
 B)False

Question 10

Education produces only public benefits while costing society billions of dollars.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a way to overcome the free-rider problem?

Accepted Answer

A) offer contributors private goods in return 
B) arrange for matching contributions 
C) have the government "volunteer" a wealthy person to pay for it by lottery 
D) appeal to the individual's sense of civic or moral responsibility 
A) offer contributors private goods in return 
B) arrange for matching contributions 
C) have the government "volunteer" a wealthy person to pay for it by lottery 
D) appeal to the individual's sense of civic or moral responsibility

Question 12

When one person benefits from national defense,he or she reduces the benefit to others.

Accepted Answer

A) True 
 B)False

Question 13

List three ways in which an organization can overcome the free-rider problem.

Accepted Answer

(1)Give contributors private g

Question 14

Self-interest theory of government allows politicians to get re-elected and make a career of politics.

Accepted Answer

A) True 
 B)False

Question 15

The government is able to use its taxing power to provide a good that would otherwise not be provided.

Accepted Answer

A) True 
 B)False

Question 16

Activities that provide external benefits:

Accepted Answer

A) should be taxed so that the recipients of the benefits pay for them;otherwise inefficiency will result. 
B) may be subsidized by the government to give decision makers an incentive to consider increasing their consumption. 
C) will not result in inefficiency if those benefits are not considered. 
D) all of the above 
A) should be taxed so that the recipients of the benefits pay for them;otherwise inefficiency will result. 
B) may be subsidized by the government to give decision makers an incentive to consider increasing their consumption. 
C) will not result in inefficiency if those benefits are not considered. 
D) all of the above

Question 17

Public goods are:

Accepted Answer

A) rival in consumption and their benefits are excludable. 
B) nonrival in consumption and their benefits are excludable. 
C) nonrival in consumption and their benefits are nonexcludable. 
D) rival in consumption and their benefits are nonexcludable. 
A) rival in consumption and their benefits are excludable. 
B) nonrival in consumption and their benefits are excludable. 
C) nonrival in consumption and their benefits are nonexcludable. 
D) rival in consumption and their benefits are nonexcludable.

Question 18

What is a public good?

Accepted Answer

A public good is a g

Question 19

List four different theories of how the government operates.

Accepted Answer

(1)Governments take actions to promote e

Question 20

Because people can enjoy the benefits of public goods whether they pay for them or not,they are usually unwilling to pay for them.This is known as the:

Accepted Answer

A) drop-in-the-bucket problem. 
B) nonexcludable problem. 
C) nonrival problem. 
D) free-rider problem. 
A) drop-in-the-bucket problem. 
B) nonexcludable problem. 
C) nonrival problem. 
D) free-rider problem.

Which of the following would be an example of an external benefit?

In the absence of government involvement,the problem that public goods impose on a market system is that:

Due to the existence of external benefits associated with public goods:

Due to crime externalities,a more educated society tends to have a lower level of crime.

When there are external costs,the government can encourage people to take action that benefit other people.

The free-rider problem arises:

Why might a politician start a costly spending program if its costs exceed its social benefits?

Giving contributors a small gift is one way to overcome the free-rider problem.

Education produces only public benefits while costing society billions of dollars.

Which of the following is NOT a way to overcome the free-rider problem?

When one person benefits from national defense,he or she reduces the benefit to others.

List three ways in which an organization can overcome the free-rider problem.

Self-interest theory of government allows politicians to get re-elected and make a career of politics.

The government is able to use its taxing power to provide a good that would otherwise not be provided.

Activities that provide external benefits:

Public goods are:

What is a public good?

List four different theories of how the government operates.

Because people can enjoy the benefits of public goods whether they pay for them or not,they are usually unwilling to pay for them.This is known as the:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 15: Public Goods and Public Choice

Which of the following would be an example of an external benefit?

In the absence of government involvement,the problem that public goods impose on a market system is that:

Due to the existence of external benefits associated with public goods:

Due to crime externalities,a more educated society tends to have a lower level of crime.

When there are external costs,the government can encourage people to take action that benefit other people.

The free-rider problem arises:

Why might a politician start a costly spending program if its costs exceed its social benefits?

Giving contributors a small gift is one way to overcome the free-rider problem.

Education produces only public benefits while costing society billions of dollars.

Which of the following is NOT a way to overcome the free-rider problem?

When one person benefits from national defense,he or she reduces the benefit to others.

List three ways in which an organization can overcome the free-rider problem.

Self-interest theory of government allows politicians to get re-elected and make a career of politics.

The government is able to use its taxing power to provide a good that would otherwise not be provided.

Activities that provide external benefits:

Public goods are:

What is a public good?

List four different theories of how the government operates.

Because people can enjoy the benefits of public goods whether they pay for them or not,they are usually unwilling to pay for them.This is known as the:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters