Question 1

One way the government of Alaska could prevent an inefficiently large production of crab fishing would be to:

Accepted Answer

A)  subsidize fishermen to encourage competition. 
B)  sell exclusive licenses for the right to fish. 
C)  offer tax breaks for more efficient boats. 
D)  allow competition from foreign fishermen. 
A)  subsidize fishermen to encourage competition. 
B)  sell exclusive licenses for the right to fish. 
C)  offer tax breaks for more efficient boats. 
D)  allow competition from foreign fishermen.

Question 2

Every few months, public radio announces a call for pledge support. During this time, it asks listeners to contribute to their local public radio station. Although they raise money during this time, it often falls short of the amount they wish to raise because:

Accepted Answer

A)  they do not make the pledge period long enough. 
B)  listeners know they will be able to hear public radio even if they don't contribute. 
C)  public radio free-rides on the listeners. 
D)  the marginal social cost equals the marginal social benefit of public radio listening. 
A)  they do not make the pledge period long enough. 
B)  listeners know they will be able to hear public radio even if they don't contribute. 
C)  public radio free-rides on the listeners. 
D)  the marginal social cost equals the marginal social benefit of public radio listening.

Question 3

Whether or not they pay for them, people cannot be excluded from receiving the benefits of:

Accepted Answer

A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  either public goods or common resources. 
A)  private goods. 
B)  public goods. 
C)  common resources. 
D)  either public goods or common resources.

Question 4

The federal government provides national defense. Why would it be unlikely for national defense to be provided by a private entrepreneur?

Accepted Answer

National defense is a public good. It is

Question 5

The marginal social cost of a common resource is _____ than an individual's marginal cost, and without government intervention the market will allow provision of _____ of the common resource than is socially optimal.

Accepted Answer

A)  less; more 
B)  less; less 
C)  greater; more 
D)  greater; less 
A)  less; more 
B)  less; less 
C)  greater; more 
D)  greater; less

Question 6

Which of the following is a common resource?

Accepted Answer

A)  fish 
B)  forests 
C)  a dorm kitchen 
D)  fish, forests, and a dorm kitchen 
A)  fish 
B)  forests 
C)  a dorm kitchen 
D)  fish, forests, and a dorm kitchen

Question 7

No individual is willing to pay for the efficient quantity of a public good, because the marginal benefit to an individual _____ the marginal social benefit.

Accepted Answer

A)  equals 
B)  exceeds 
C)  is less than 
D)  may be equal to or greater than 
A)  equals 
B)  exceeds 
C)  is less than 
D)  may be equal to or greater than

Question 8

Which of the following activities is a public good?

Accepted Answer

A)  going to school 
B)  voting 
C)  smoking 
D)  getting a flu shot 
A)  going to school 
B)  voting 
C)  smoking 
D)  getting a flu shot

Question 9

Use the following to answer questions:  
-(Table: Security in a Residential Community) Look at the table Security in a Residential Community. The marginal cost of hiring the fourth security guard is _____, and the marginal social benefit is _____.

Accepted Answer

A)  $150; $200 
B)  $150; $100 
C)  $150; $600 
D)  $600; $1,900 
A)  $150; $200 
B)  $150; $100 
C)  $150; $600 
D)  $600; $1,900

Question 10

Use the following to answer questions:  
-(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay for one iTunes download. If the marginal social cost is constant at _____, then _____ consumers will purchase this good and consumer surplus is _____.

Accepted Answer

A)  $5; three; $15 
B)  $5; three; $30 
C)  $5; two; $15 
D)  $4; four; $34 
A)  $5; three; $15 
B)  $5; three; $30 
C)  $5; two; $15 
D)  $4; four; $34

Question 11

Use the following to answer questions:
Figure: Market Failure  
-(Figure: Market Failure) Look at the figure Market Failure. Suppose it represents the demand for and marginal cost per pound of shrimp in the bay. The additional cost of the shrimp due to the depletion of the common resource is equal to AC. At output F _____ is being produced.

Accepted Answer

A)  too much shrimp 
B)  not enough shrimp 
C)  the efficient amount of shrimp 
D)  the socially optimum amount of shrimp 
A)  too much shrimp 
B)  not enough shrimp 
C)  the efficient amount of shrimp 
D)  the socially optimum amount of shrimp

Question 12

A(n) _____ is excludable and rival in consumption.

Accepted Answer

A)  private good 
B)  artificially scarce good 
C)  public good 
D)  common resource 
A)  private good 
B)  artificially scarce good 
C)  public good 
D)  common resource

Question 13

Suppose you live in a community that relies on clean drinking water from a nearby lake. Lately you have noticed that the quality of the water has deteriorated as pollution washed into the lake. An editorial in the local newspaper suggests that all residents donate money to clean up the lake. Why would this suggestion be unlikely to succeed?

Accepted Answer

Water from the lake and the voluntary ef

Question 14

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. If the marginal cost of the good is $24, what is the total benefit of the level of the public good that maximizes society's welfare?

Accepted Answer

A)  $0 
B)  $24 
C)  $124 
D)  $256 
A)  $0 
B)  $24 
C)  $124 
D)  $256

Question 15

A private good is _____ in consumption.

Accepted Answer

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

Question 16

Use the following to answer questions:
Figure: Market Failure  
-(Figure: Market Failure) In the figure Market Failure, if production in this competitive market is at quantity G:

Accepted Answer

A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit. 
A)  marginal benefit is less than marginal cost. 
B)  marginal benefit is equal to marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and less than marginal benefit.

Question 17

Use the following to answer questions:
Scenario: Ben and Nick
Ben and Nick are the only members of a community. They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known. In addition, the marginal social cost (MSC) of the public good is known and is constant.  
-(Scenario: Ben and Nick) Look at the figure and scenario Ben and Nick. At Q2, the marginal social benefit from the last unit of the public good:

Accepted Answer

A)  is equal to the marginal social cost. 
B)  is equal to P4 + P3. 
C)  is the optimal level of provision of the public good. 
D)  does not benefit Nick very much. 
A)  is equal to the marginal social cost. 
B)  is equal to P4 + P3. 
C)  is the optimal level of provision of the public good. 
D)  does not benefit Nick very much.

Question 18

Use the following to answer questions:
Figure: Correcting for Market Failure  
-(Figure: Correcting for Market Failure) There is an external cost in the market illustrated in the figure Correcting for Market Failure. When the government intervenes to correct for the external cost, the output will _____ from _____ to _____.

Accepted Answer

A)  fall; W; R 
B)  increase; W; R 
C)  fall; R; W 
D)  fall; W; 0 
A)  fall; W; R 
B)  increase; W; R 
C)  fall; R; W 
D)  fall; W; 0

Question 19

The government can intervene to avoid overfishing by:

Accepted Answer

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

Question 20

When comparing the characteristics of common resources and artificially scarce goods, we find that:

Accepted Answer

A)  they are both nonrival in consumption. 
B)  they are both excludable. 
C)  common resources are nonrival in consumption (while artificially scarce goods are not), and artificially scarce goods are nonexcludable (while common resources are not). 
D)  artificially scarce goods are nonrival in consumption (while common resources are not), and common resources are nonexcludable (while artificially scarce goods are not). 
A)  they are both nonrival in consumption. 
B)  they are both excludable. 
C)  common resources are nonrival in consumption (while artificially scarce goods are not), and artificially scarce goods are nonexcludable (while common resources are not). 
D)  artificially scarce goods are nonrival in consumption (while common resources are not), and common resources are nonexcludable (while artificially scarce goods are not).

One way the government of Alaska could prevent an inefficiently large production of crab fishing would be to:

Every few months, public radio announces a call for pledge support. During this time, it asks listeners to contribute to their local public radio station. Although they raise money during this time, it often falls short of the amount they wish to raise because:

Whether or not they pay for them, people cannot be excluded from receiving the benefits of:

The federal government provides national defense. Why would it be unlikely for national defense to be provided by a private entrepreneur?

The marginal social cost of a common resource is _ than an individual's marginal cost, and without government intervention the market will allow provision of _ of the common resource than is socially optimal.

Which of the following is a common resource?

No individual is willing to pay for the efficient quantity of a public good, because the marginal benefit to an individual _____ the marginal social benefit.

Which of the following activities is a public good?

Use the following to answer questions: -(Table: Security in a Residential Community) Look at the table Security in a Residential Community. The marginal cost of hiring the fourth security guard is _, and the marginal social benefit is _.

A(n) _____ is excludable and rival in consumption.

A private good is _____ in consumption.

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) In the figure Market Failure, if production in this competitive market is at quantity G:

The government can intervene to avoid overfishing by:

When comparing the characteristics of common resources and artificially scarce goods, we find that:

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

One way the government of Alaska could prevent an inefficiently large production of crab fishing would be to:

Every few months, public radio announces a call for pledge support. During this time, it asks listeners to contribute to their local public radio station. Although they raise money during this time, it often falls short of the amount they wish to raise because:

Whether or not they pay for them, people cannot be excluded from receiving the benefits of:

The federal government provides national defense. Why would it be unlikely for national defense to be provided by a private entrepreneur?

The marginal social cost of a common resource is _____ than an individual's marginal cost, and without government intervention the market will allow provision of _____ of the common resource than is socially optimal.

Which of the following is a common resource?

No individual is willing to pay for the efficient quantity of a public good, because the marginal benefit to an individual _____ the marginal social benefit.

Which of the following activities is a public good?

Use the following to answer questions: -(Table: Security in a Residential Community) Look at the table Security in a Residential Community. The marginal cost of hiring the fourth security guard is _____, and the marginal social benefit is _____.

A(n) _____ is excludable and rival in consumption.

A private good is _____ in consumption.

Use the following to answer questions: Figure: Market Failure -(Figure: Market Failure) In the figure Market Failure, if production in this competitive market is at quantity G:

The government can intervene to avoid overfishing by:

When comparing the characteristics of common resources and artificially scarce goods, we find that:

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

The marginal social cost of a common resource is _ than an individual's marginal cost, and without government intervention the market will allow provision of _ of the common resource than is socially optimal.

Use the following to answer questions: -(Table: Security in a Residential Community) Look at the table Security in a Residential Community. The marginal cost of hiring the fourth security guard is _, and the marginal social benefit is _.