Question 1

An artificially scarce good is similar to a public good in that it is _____, but it is also similar to a private good in that it is _____.

Accepted Answer

A)  nonrival in consumption; nonexcludable 
B)  nonrival in consumption; excludable 
C)  excludable; nonrival in consumption 
D)  nonexcludable; rival in consumption 
A)  nonrival in consumption; nonexcludable 
B)  nonrival in consumption; excludable 
C)  excludable; nonrival in consumption 
D)  nonexcludable; rival in consumption

Question 2

An inefficient allocation of resources will occur when:

Accepted Answer

A)  decision makers are faced with the full costs and benefits of their actions. 
B)  there are clearly defined property rights. 
C)  no alternative would increase the welfare of society. 
D)  decision makers are not faced with the full benefits and costs of their choices. 
A)  decision makers are faced with the full costs and benefits of their actions. 
B)  there are clearly defined property rights. 
C)  no alternative would increase the welfare of society. 
D)  decision makers are not faced with the full benefits and costs of their choices.

Question 3

Which of the following is an example of an artificially scarce good?

Accepted Answer

A)  a candy bar 
B)  a free art exhibit in a city park 
C)  a pay-per-view boxing match on cable television 
D)  an interstate highway without tolls 
A)  a candy bar 
B)  a free art exhibit in a city park 
C)  a pay-per-view boxing match on cable television 
D)  an interstate highway without tolls

Question 4

The government can intervene to achieve the socially optimal quantity of a common resource by:

Accepted Answer

A)  assigning property rights. 
B)  imposing a tax on usage. 
C)  granting a limited number of tradable permits to use the good. 
D)  assigning property rights, imposing a tax on usage, and/or granting a limited number of tradable permits to use the good. 
A)  assigning property rights. 
B)  imposing a tax on usage. 
C)  granting a limited number of tradable permits to use the good. 
D)  assigning property rights, imposing a tax on usage, and/or granting a limited number of tradable permits to use the good.

Question 5

Use the following to answer questions:
Figure: Market Failure  
-(Figure: Market Failure) Look at the figure Market Failure. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. The demand curve represents the marginal benefit that Ann receives from the streetlights. Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to AC. If Ann is the only person to pay for the streetlights, how many lights will be provided?

Accepted Answer

A)  0 
B)  E 
C)  F 
D)  G 
A)  0 
B)  E 
C)  F 
D)  G

Question 6

A public good is a good:

Accepted Answer

A)  whose consumption is nonexcludable and nonrival. 
B)  for which the marginal cost of adding another consumer is high. 
C)  that the market will usually provide efficiently. 
D)  whose consumption is rival. 
A)  whose consumption is nonexcludable and nonrival. 
B)  for which the marginal cost of adding another consumer is high. 
C)  that the market will usually provide efficiently. 
D)  whose consumption is rival.

Question 7

In the United Kingdom, most public television programming is paid for by a yearly license fee assessed on every household. Television detection vans go through neighborhoods to detect unlicensed households and keep them from viewing without paying. This is a good example of the _____ provision of _____.

Accepted Answer

A)  public; private goods 
B)  public; goods that are made artificially excludable in consumption 
C)  public; common resources 
D)  private; artificially scarce goods 
A)  public; private goods 
B)  public; goods that are made artificially excludable in consumption 
C)  public; common resources 
D)  private; artificially scarce goods

Question 8

If at the quantity determined by private costs and benefits, the marginal social benefit of a public good is greater than the marginal social cost of providing the good:

Accepted Answer

A)  the private market will best determine how much of the good will be provided and to whom. 
B)  a community will best provide the good. 
C)  the community will not provide the good. 
D)  free riding will not occur, so the private market will provide the socially optimal amount. 
A)  the private market will best determine how much of the good will be provided and to whom. 
B)  a community will best provide the good. 
C)  the community will not provide the good. 
D)  free riding will not occur, so the private market will provide the socially optimal amount.

Question 9

Since the public safety that a police force provides is _____ in consumption, the efficient price _____.

Accepted Answer

A)  rival; is zero 
B)  nonrival; is zero 
C)  rival; equals marginal social benefit 
D)  nonrival; equals marginal social benefit 
A)  rival; is zero 
B)  nonrival; is zero 
C)  rival; equals marginal social benefit 
D)  nonrival; equals marginal social benefit

Question 10

Which of the following is an example of an artificially scarce good?

Accepted Answer

A)  diamonds, because their supply is artificially restricted by monopoly producers 
B)  music that is downloadable from the Internet for a fee 
C)  a daily newspaper 
D)  hot dogs in a sports stadium, because the number of suppliers is restricted 
A)  diamonds, because their supply is artificially restricted by monopoly producers 
B)  music that is downloadable from the Internet for a fee 
C)  a daily newspaper 
D)  hot dogs in a sports stadium, because the number of suppliers is restricted

Question 11

An individual will continue to use a common resource until his or her:

Accepted Answer

A)  marginal benefit is zero. 
B)  marginal cost is zero. 
C)  marginal benefit exceeds marginal cost. 
D)  marginal benefit equals the marginal social cost. 
A)  marginal benefit is zero. 
B)  marginal cost is zero. 
C)  marginal benefit exceeds marginal cost. 
D)  marginal benefit equals the marginal social cost.

Question 12

Use the following to answer questions:
Figure: An Individual's Marginal Benefit from a Public Good  
-(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. What is the marginal social benefit from four units of the public good?

Accepted Answer

A)  $0 
B)  $8 
C)  $16 
D)  $32 
A)  $0 
B)  $8 
C)  $16 
D)  $32

Question 13

After many years, a small community builds a toll road but discovers it is little used. If it wishes the road to be used at the socially optimal level, the community should:

Accepted Answer

A)  set the toll higher. 
B)  set the toll equal to $1. 
C)  set the toll lower. 
D)  build another toll road. 
A)  set the toll higher. 
B)  set the toll equal to $1. 
C)  set the toll lower. 
D)  build another toll road.

Question 14

For a public good, the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

Accepted Answer

A) True 
 B)False

Question 15

If the marginal social benefit received from a good is greater than the marginal social cost of production:

Accepted Answer

A)  an increase in production will improve society's well-being. 
B)  a decrease in production will improve society's well-being. 
C)  no change in production can improve society's well-being. 
D)  the market is producing too much of the good. 
A)  an increase in production will improve society's well-being. 
B)  a decrease in production will improve society's well-being. 
C)  no change in production can improve society's well-being. 
D)  the market is producing too much of the good.

Question 16

Common resources tend to be overused because:

Accepted Answer

A)  individuals tend to ignore the cost to others of their use of the resource. 
B)  the individual marginal cost is greater than the marginal social cost. 
C)  common resources are nonrival and nonexcludable. 
D)  the marginal cost of allowing one more unit of consumption is zero. 
A)  individuals tend to ignore the cost to others of their use of the resource. 
B)  the individual marginal cost is greater than the marginal social cost. 
C)  common resources are nonrival and nonexcludable. 
D)  the marginal cost of allowing one more unit of consumption is zero.

Question 17

The fish in the local river are considered a common resource, but the city's sanitation work, which keeps the river clean enough for people to fish and keep their catch, is considered a public good. How are they similar and what makes them different?

Accepted Answer

Both the fish and public sanitation are

Question 18

A characteristic of public goods is that:

Accepted Answer

A)  people pay for them in proportion to the benefits received. 
B)  the costs of producing them are less than if they were private goods. 
C)  their benefits cannot be withheld from anyone, regardless of whether a person pays for them. 
D)  they are produced only by the private sector, not by the public sector. 
A)  people pay for them in proportion to the benefits received. 
B)  the costs of producing them are less than if they were private goods. 
C)  their benefits cannot be withheld from anyone, regardless of whether a person pays for them. 
D)  they are produced only by the private sector, not by the public sector.

Question 19

Suppose the Alaskan king crab harvest is unregulated, and any person with a boat can go offshore, lower a crab pot, and harvest king crab. This common resource will likely be _____ because the marginal social cost of harvesting crabs _____ the market price of crab.

Accepted Answer

A)  overfished; is equal to 
B)  overfished; is less than 
C)  efficiently fished; is equal to 
D)  overfished; exceeds 
A)  overfished; is equal to 
B)  overfished; is less than 
C)  efficiently fished; is equal to 
D)  overfished; exceeds

Question 20

A common resource is _____ in consumption.

Accepted Answer

A)  excludable and rival 
B)  nonexcludable and rival 
C)  excludable and nonrival 
D)  nonexcludable and nonrival 
A)  excludable and rival 
B)  nonexcludable and rival 
C)  excludable and nonrival 
D)  nonexcludable and nonrival

An artificially scarce good is similar to a public good in that it is _, but it is also similar to a private good in that it is _.

An inefficient allocation of resources will occur when:

Which of the following is an example of an artificially scarce good?

The government can intervene to achieve the socially optimal quantity of a common resource by:

A public good is a good:

In the United Kingdom, most public television programming is paid for by a yearly license fee assessed on every household. Television detection vans go through neighborhoods to detect unlicensed households and keep them from viewing without paying. This is a good example of the _ provision of _.

If at the quantity determined by private costs and benefits, the marginal social benefit of a public good is greater than the marginal social cost of providing the good:

Since the public safety that a police force provides is _ in consumption, the efficient price _.

Which of the following is an example of an artificially scarce good?

An individual will continue to use a common resource until his or her:

After many years, a small community builds a toll road but discovers it is little used. If it wishes the road to be used at the socially optimal level, the community should:

For a public good, the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

If the marginal social benefit received from a good is greater than the marginal social cost of production:

Common resources tend to be overused because:

The fish in the local river are considered a common resource, but the city's sanitation work, which keeps the river clean enough for people to fish and keep their catch, is considered a public good. How are they similar and what makes them different?

A characteristic of public goods is that:

Suppose the Alaskan king crab harvest is unregulated, and any person with a boat can go offshore, lower a crab pot, and harvest king crab. This common resource will likely be _ because the marginal social cost of harvesting crabs _ the market price of crab.

A common resource is _____ in consumption.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 17: Public Goods Common Resources

An artificially scarce good is similar to a public good in that it is _____, but it is also similar to a private good in that it is _____.

An inefficient allocation of resources will occur when:

Which of the following is an example of an artificially scarce good?

The government can intervene to achieve the socially optimal quantity of a common resource by:

A public good is a good:

If at the quantity determined by private costs and benefits, the marginal social benefit of a public good is greater than the marginal social cost of providing the good:

Since the public safety that a police force provides is _____ in consumption, the efficient price _____.

Which of the following is an example of an artificially scarce good?

An individual will continue to use a common resource until his or her:

After many years, a small community builds a toll road but discovers it is little used. If it wishes the road to be used at the socially optimal level, the community should:

For a public good, the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.

If the marginal social benefit received from a good is greater than the marginal social cost of production:

Common resources tend to be overused because:

The fish in the local river are considered a common resource, but the city's sanitation work, which keeps the river clean enough for people to fish and keep their catch, is considered a public good. How are they similar and what makes them different?

A characteristic of public goods is that:

Suppose the Alaskan king crab harvest is unregulated, and any person with a boat can go offshore, lower a crab pot, and harvest king crab. This common resource will likely be _____ because the marginal social cost of harvesting crabs _____ the market price of crab.

A common resource is _____ in consumption.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

An artificially scarce good is similar to a public good in that it is _, but it is also similar to a private good in that it is _.

Since the public safety that a police force provides is _ in consumption, the efficient price _.

Suppose the Alaskan king crab harvest is unregulated, and any person with a boat can go offshore, lower a crab pot, and harvest king crab. This common resource will likely be _ because the marginal social cost of harvesting crabs _ the market price of crab.