Question 1

Which of the following can be rival and excludable?
i.a good
ii.a service
iii.a resource

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii and iii 
E)  only i 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  i, ii and iii 
E)  only i

Question 2

The tragedy of the commons arises because ________ exceeds ________ when the resource is used.

Accepted Answer

A)  marginal social benefit; marginal private benefit 
B)  marginal social cost; marginal private cost 
C)  marginal social benefit; marginal private cost 
D)  marginal private cost; marginal private benefit 
E)  marginal private cost; marginal social cost 
A)  marginal social benefit; marginal private benefit 
B)  marginal social cost; marginal private cost 
C)  marginal social benefit; marginal private cost 
D)  marginal private cost; marginal private benefit 
E)  marginal private cost; marginal social cost

Question 3

-Using the figure above,suppose there are two political parties,the Hawks and the Doves,which agree on all issues except for the quantity of defense satellites.The Hawks want 300 satellites and the Doves want 100 satellites.The voters are well informed and know what is best for them.The parties run a voter survey and discover the marginal benefit curve (MB).They also know the marginal cost curve (MC).What quantity of satellites will most likely result from this political process?

Accepted Answer

A)  200, because unless each party proposes 200 satellites, the other party can beat it in an election 
B)  300, because the Hawks are more likely to win 
C)  100, because the Doves are more likely to win 
D)  200, because the parties will strike a deal: each will agree to give up 100 satellites 
E)  Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided. 
A)  200, because unless each party proposes 200 satellites, the other party can beat it in an election 
B)  300, because the Hawks are more likely to win 
C)  100, because the Doves are more likely to win 
D)  200, because the parties will strike a deal: each will agree to give up 100 satellites 
E)  Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided.

Question 4

To find the economy's marginal benefit curve of a public good,we

Accepted Answer

A)  sum the marginal benefits of each individual at each quantity. 
B)  sum the costs of the inputs used to produce the good. 
C)  sum the quantities demanded at each individual price. 
D)  sum the prices consumers are willing to pay for different quantities of the good. 
E)  average the prices consumers are willing to pay for the same quantity of the good. 
A)  sum the marginal benefits of each individual at each quantity. 
B)  sum the costs of the inputs used to produce the good. 
C)  sum the quantities demanded at each individual price. 
D)  sum the prices consumers are willing to pay for different quantities of the good. 
E)  average the prices consumers are willing to pay for the same quantity of the good.

Question 5

It is rational for a voter to be ignorant about an issue unless the

Accepted Answer

A)  voter is maximizing his or her well-being. 
B)  voter is a member of a political party. 
C)  issue is on the ballot. 
D)  issue has a perceptible effect on the voter's well-being. 
E)  voter worries about the tragedy of the free rider. 
A)  voter is maximizing his or her well-being. 
B)  voter is a member of a political party. 
C)  issue is on the ballot. 
D)  issue has a perceptible effect on the voter's well-being. 
E)  voter worries about the tragedy of the free rider.

Question 6

If no one can be excluded from receiving the benefits of a good or service and the consumption of the good or service does not decrease the amount available to someone else from consuming it,then the good

Accepted Answer

A)  is a private good. 
B)  is a common resource. 
C)  is a public good. 
D)  is a natural monopoly. 
E)  Both answers B and C are correct. 
A)  is a private good. 
B)  is a common resource. 
C)  is a public good. 
D)  is a natural monopoly. 
E)  Both answers B and C are correct.

Question 7

-The above figure shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.Suppose the government assigns individual transferable quotas (ITQ)set to achieve the efficient outcome.The market price of an ITQ is ________ per pound.

Accepted Answer

A)  $4.20 
B)  $2.00 
C)  $6.00 
D)  $4.00 
E)  $0.00 
A)  $4.20 
B)  $2.00 
C)  $6.00 
D)  $4.00 
E)  $0.00

Question 8

Marginal cost curves for public goods are usually

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
E)  U-shaped. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
E)  U-shaped.

Question 9

The free-rider problem for a public good means that

Accepted Answer

A)  a private market would provide less than the efficient amount of the good. 
B)  a private market would provide more than the efficient amount of the good. 
C)  the good is rival. 
D)  the good is excludable. 
E)  a private market would provide the efficient amount of the good. 
A)  a private market would provide less than the efficient amount of the good. 
B)  a private market would provide more than the efficient amount of the good. 
C)  the good is rival. 
D)  the good is excludable. 
E)  a private market would provide the efficient amount of the good.

Question 10

The market price of an individual transferable quota is equal to the

Accepted Answer

A)  marginal private benefit. 
B)  marginal social benefit. 
C)  marginal private benefit minus the marginal cost. 
D)  marginal social benefit minus the marginal cost. 
E)  marginal private benefit plus the marginal cost. 
A)  marginal private benefit. 
B)  marginal social benefit. 
C)  marginal private benefit minus the marginal cost. 
D)  marginal social benefit minus the marginal cost. 
E)  marginal private benefit plus the marginal cost.

Question 11

A good or resource that is both nonrival and nonexcludable is

Accepted Answer

A)  a good that is impossible to produce. 
B)  a private good. 
C)  a common resource. 
D)  a public good. 
E)  nonexistent because it is impossible for a good or resource to be both nonrival and nonexcludable. 
A)  a good that is impossible to produce. 
B)  a private good. 
C)  a common resource. 
D)  a public good. 
E)  nonexistent because it is impossible for a good or resource to be both nonrival and nonexcludable.

Question 12

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { (number of missile } \
\text { gun boats) }
\end{array} & \begin{array} { c } 
\text { Paul's marginal } \
\text { benefit } \
\text { (millions of dollars) }
\end{array} & \begin{array} { c } 
\text { Paula's marginal } \
\text { benefit } \
\text { (millions of dollars) }
\end{array} \
\hline 1 & 6 & 10 \
2 & 4 & 8 \
3 & 2 & 6 \
4 & 1 & 3 \
\hline
\end{array}$$
-Paul and Paula are the only members of society.The table above gives their marginal benefits from missile gunboats,a public good.Suppose the marginal cost of a missile gunboat is $8 million.What is the efficient quantity of missile gunboats?

Accepted Answer

A)  1 boat 
B)  2 boats 
C)  3 boats 
D)  4 boats 
E)  More information about whether the services provided by missile gunboats are rival or not is needed. 
A)  1 boat 
B)  2 boats 
C)  3 boats 
D)  4 boats 
E)  More information about whether the services provided by missile gunboats are rival or not is needed.

Question 13

The efficient quantity of a public good can't be produced by private firms because

Accepted Answer

A)  only the government has the necessary resources. 
B)  it is impossible to determine the efficient amount. 
C)  consumers have an incentive to free ride and not pay for their share of the good. 
D)  private firms aren't large enough. 
E)  the price would be too high if private firms produced the goods. 
A)  only the government has the necessary resources. 
B)  it is impossible to determine the efficient amount. 
C)  consumers have an incentive to free ride and not pay for their share of the good. 
D)  private firms aren't large enough. 
E)  the price would be too high if private firms produced the goods.

Question 14

Rational ignorance is the decision  NOT   to

Accepted Answer

A)  vote in elections. 
B)  acquire information because the marginal benefit of doing so exceeds the marginal cost. 
C)  acquire information because the marginal cost of doing so exceeds the expected marginal benefit. 
D)  acquire information because the marginal cost of doing so equals the expected marginal benefit. 
E)  follow the principle of minimum differentiation. 
A)  vote in elections. 
B)  acquire information because the marginal benefit of doing so exceeds the marginal cost. 
C)  acquire information because the marginal cost of doing so exceeds the expected marginal benefit. 
D)  acquire information because the marginal cost of doing so equals the expected marginal benefit. 
E)  follow the principle of minimum differentiation.

Question 15

For which type of good is it necessary to sum the marginal benefit curves vertically in order to obtain the economy's marginal benefit curve?

Accepted Answer

A)  public goods 
B)  mixed goods 
C)  private goods 
D)  goods that are subject to the exclusion principle 
E)  common resources 
A)  public goods 
B)  mixed goods 
C)  private goods 
D)  goods that are subject to the exclusion principle 
E)  common resources

Question 16

What does it mean for a good to be "nonexcludable"? Are private goods nonexcludable? Are public goods nonexcludable? Are common resources nonexcludable?

Accepted Answer

A good is nonexcludable if it is impossi

Question 17

A mother notices that when she divides brownies equally between her two children and gives each child her share on a separate plate,the brownies last a long time.But when she gives her children a plate to share,the brownies are gone pretty quickly.The mother concludes from this that brownies given on a single plate are

Accepted Answer

A)  excludable but they might either be rival or nonrival. 
B)  nonexcludable and nonrival. 
C)  excludable and rival. 
D)  excludable and nonrival. 
E)  nonexcludable and rival. 
A)  excludable but they might either be rival or nonrival. 
B)  nonexcludable and nonrival. 
C)  excludable and rival. 
D)  excludable and nonrival. 
E)  nonexcludable and rival.

Question 18

A common resource is used efficiently if

Accepted Answer

A)  the output is maximized. 
B)  marginal social benefit equals marginal social cost. 
C)  marginal private benefit equals marginal cost. 
D)  marginal social benefit is maximized. 
E)  only the excess of the resource is utilized. 
A)  the output is maximized. 
B)  marginal social benefit equals marginal social cost. 
C)  marginal private benefit equals marginal cost. 
D)  marginal social benefit is maximized. 
E)  only the excess of the resource is utilized.

Question 19

Public goods create a free-rider problem because

Accepted Answer

A)  only people who pay for the good or service can enjoy the good or service. 
B)  people do not want to consume public goods. 
C)  the good or service is rival in nature. 
D)  the good or service is excludable. 
E)  people can enjoy the good or service no matter whether or not they pay for it. 
A)  only people who pay for the good or service can enjoy the good or service. 
B)  people do not want to consume public goods. 
C)  the good or service is rival in nature. 
D)  the good or service is excludable. 
E)  people can enjoy the good or service no matter whether or not they pay for it.

Question 20

Which of the following is an example of the free-rider problem?

Accepted Answer

A)  John attends a lecture on investing in high-tech companies for which he paid $100 to hear. 
B)  Tom watches Mystery on his local PBS television station, but Tom does not contribute anything to PBS. 
C)  Sarah works overtime while her co-workers opt for a traditional schedule. 
D)  Jethro buys a skunk-hunting permit that he refuses to share with his sister. 
E)  Katie catches a swordfish in the ocean. 
A)  John attends a lecture on investing in high-tech companies for which he paid $100 to hear. 
B)  Tom watches Mystery on his local PBS television station, but Tom does not contribute anything to PBS. 
C)  Sarah works overtime while her co-workers opt for a traditional schedule. 
D)  Jethro buys a skunk-hunting permit that he refuses to share with his sister. 
E)  Katie catches a swordfish in the ocean.

Which of the following can be rival and excludable? i.a good ii.a service iii.a resource

The tragedy of the commons arises because exceeds when the resource is used.

To find the economy's marginal benefit curve of a public good,we

It is rational for a voter to be ignorant about an issue unless the

If no one can be excluded from receiving the benefits of a good or service and the consumption of the good or service does not decrease the amount available to someone else from consuming it,then the good

Marginal cost curves for public goods are usually

The free-rider problem for a public good means that

The market price of an individual transferable quota is equal to the

A good or resource that is both nonrival and nonexcludable is

The efficient quantity of a public good can't be produced by private firms because

Rational ignorance is the decision NOT to

For which type of good is it necessary to sum the marginal benefit curves vertically in order to obtain the economy's marginal benefit curve?

What does it mean for a good to be "nonexcludable"? Are private goods nonexcludable? Are public goods nonexcludable? Are common resources nonexcludable?

A common resource is used efficiently if

Public goods create a free-rider problem because

Which of the following is an example of the free-rider problem?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 11: Public Goods and Common Resources

Which of the following can be rival and excludable? i.a good ii.a service iii.a resource

The tragedy of the commons arises because ________ exceeds ________ when the resource is used.

To find the economy's marginal benefit curve of a public good,we

It is rational for a voter to be ignorant about an issue unless the

If no one can be excluded from receiving the benefits of a good or service and the consumption of the good or service does not decrease the amount available to someone else from consuming it,then the good

Marginal cost curves for public goods are usually

The free-rider problem for a public good means that

The market price of an individual transferable quota is equal to the

A good or resource that is both nonrival and nonexcludable is

The efficient quantity of a public good can't be produced by private firms because

Rational ignorance is the decision NOT to

For which type of good is it necessary to sum the marginal benefit curves vertically in order to obtain the economy's marginal benefit curve?

What does it mean for a good to be "nonexcludable"? Are private goods nonexcludable? Are public goods nonexcludable? Are common resources nonexcludable?

A common resource is used efficiently if

Public goods create a free-rider problem because

Which of the following is an example of the free-rider problem?

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The tragedy of the commons arises because exceeds when the resource is used.