Question 1

Because national defense is potentially subject to free riding,a private sector market for national defense would lead to

Accepted Answer

A)  the efficient amount of national defense if there is free riding. 
B)  more than the efficient amount being produced if there is free riding. 
C)  less than the efficient amount being produced if there is free riding. 
D)  less than the efficient amount being produced if there is not free riding. 
E)  None of the above answers is correct. 
A)  the efficient amount of national defense if there is free riding. 
B)  more than the efficient amount being produced if there is free riding. 
C)  less than the efficient amount being produced if there is free riding. 
D)  less than the efficient amount being produced if there is not free riding. 
E)  None of the above answers is correct.

Question 2

Suppose the marginal cost of the fourth unit of a public good is $20.If Mark and Judy are the only members of society,and they are willing to pay $10 and $11,respectively,for the fourth unit of the good,then the efficient quantity is

Accepted Answer

A)  3 units. 
B)  4 or more units. 
C)  0 units. 
D)  More information is needed about the marginal benefits of the first, second, and third units of the public good. 
E)  None of the above answers is correct. 
A)  3 units. 
B)  4 or more units. 
C)  0 units. 
D)  More information is needed about the marginal benefits of the first, second, and third units of the public good. 
E)  None of the above answers is correct.

Question 3

Inefficient overproduction of a public good by the government is

Accepted Answer

A)  the only efficient method of producing public goods. 
B)  not likely to occur when voters choose rational ignorance. 
C)  the term used to describe a surplus of a public good. 
D)  one explanation of why government might be large. 
E)  not likely to occur if voters are rationally ignorant. 
A)  the only efficient method of producing public goods. 
B)  not likely to occur when voters choose rational ignorance. 
C)  the term used to describe a surplus of a public good. 
D)  one explanation of why government might be large. 
E)  not likely to occur if voters are rationally ignorant.

Question 4

How is the efficient quantity of public goods determined?

Accepted Answer

The efficient quantity of a public good

Question 5

Because fire protection is a ________ good,the free-rider problem is avoided by public provision and financing through ________.

Accepted Answer

A)  public; taxes 
B)  private; taxes 
C)  natural monopoly; taxes 
D)  public; grants 
E)  public; vouchers 
A)  public; taxes 
B)  private; taxes 
C)  natural monopoly; taxes 
D)  public; grants 
E)  public; vouchers

Question 6

For a common resource,efficiency requires that the ________ equals the ________.

Accepted Answer

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

Question 7

To hunters,deer in the woods are an example of a

Accepted Answer

A)  public good. 
B)  private good. 
C)  common resource. 
D)  public resource. 
E)  natural monopoly. 
A)  public good. 
B)  private good. 
C)  common resource. 
D)  public resource. 
E)  natural monopoly.

Question 8

Is a sailboat purchased in Victoria,British Columbia,a private good or a public good?

Accepted Answer

The sailboat is a private good.The sailb

Question 9

-In the figure above,a private market will most likely produce

Accepted Answer

A)  no satellites because of the free-rider problem. 
B)  200 satellites because at this point marginal benefit equals marginal cost. 
C)  less than 200 satellites because over this output range marginal benefit exceeds marginal cost. 
D)  more than 200 satellites because over this output range marginal benefit is below marginal cost. 
E)  200 satellites because at this point the market will be in equilibrium. 
A)  no satellites because of the free-rider problem. 
B)  200 satellites because at this point marginal benefit equals marginal cost. 
C)  less than 200 satellites because over this output range marginal benefit exceeds marginal cost. 
D)  more than 200 satellites because over this output range marginal benefit is below marginal cost. 
E)  200 satellites because at this point the market will be in equilibrium.

Question 10

A few years back,The Wall Street Journal reported that the government of Thailand "plans to launch a chain of more than 3,000 Thai restaurants world-wide over the next five years,with the largest number,more than 1,000,slated for the United States." The Thai government will have a 30 percent minority stake in the restaurants and the rest will be given to Thai owners.The country's deputy commerce minister explains that the government will play an active role in drawing up menus,making sure that genuine Thai food is served and ensuring that 70 percent of supplies for the restaurants are imported from Thailand.Because the Thai government will be part owner of these restaurants,are these restaurants public goods?

Accepted Answer

Although the government of Thailand has

Question 11

The tendency of political parties to propose identical policies which appeal to the maximum number of voters is referred to as the principle of

Accepted Answer

A)  maximum differentiation. 
B)  minimum differentiation. 
C)  minimum marginal utility. 
D)  maximum returns. 
E)  agreement. 
A)  maximum differentiation. 
B)  minimum differentiation. 
C)  minimum marginal utility. 
D)  maximum returns. 
E)  agreement.

Question 12

Government bureaucracies over-provide public goods and grow larger because of their goal of ________ combined with ________ of the voters.

Accepted Answer

A)  budget maximization; rational ignorance 
B)  budget minimization; irrational intelligence 
C)  budget maximization; minimum differentiation 
D)  budget maximization; irrational exuberance 
E)  minimum differentiation; budget maximization 
A)  budget maximization; rational ignorance 
B)  budget minimization; irrational intelligence 
C)  budget maximization; minimum differentiation 
D)  budget maximization; irrational exuberance 
E)  minimum differentiation; budget maximization

Question 13

-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.The efficient outcome is raising ________.

Accepted Answer

A)  0 goats 
B)  40 goats 
C)  50 goats 
D)  55 goats 
E)  None of the above answers is correct. 
A)  0 goats 
B)  40 goats 
C)  50 goats 
D)  55 goats 
E)  None of the above answers is correct.

Question 14

Suppose that satellites are publicly provided.The voters are rationally ignorant,while the Defense Ministry is well informed.Using the figure above,which of the following quantities of satellites is most likely to be provided?

Accepted Answer

A)  300 
B)  200 
C)  150 
D)  100 
E)  zero 
A)  300 
B)  200 
C)  150 
D)  100 
E)  zero

Question 15

What is rational ignorance?

Accepted Answer

Rational ignorance is the voter's decisi

Question 16

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo,Oklahoma.Police protection is a public good.The efficient number of officers that should be hired by the city of Hugo is

Accepted Answer

A)  15. 
B)  25. 
C)  10. 
D)  0. 
E)  More than 25 because MB > $0 when 25 officers are hired. 
A)  15. 
B)  25. 
C)  10. 
D)  0. 
E)  More than 25 because MB > $0 when 25 officers are hired.

Question 17

A library is a public good.The marginal cost curve for libraries in Lafayette,California

Accepted Answer

A)  has a negative slope. 
B)  is definitely a horizontal line. 
C)  has a positive slope. 
D)  is a vertical line. 
E)  is identical to the marginal benefit curve because libraries are nonrival. 
A)  has a negative slope. 
B)  is definitely a horizontal line. 
C)  has a positive slope. 
D)  is a vertical line. 
E)  is identical to the marginal benefit curve because libraries are nonrival.

Question 18

Sue and Mark are the only two members of a community.Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000.If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good,then for efficiency the lighthouse should

Accepted Answer

A)  be built but only Sue should be allowed to use it. 
B)  be built but only Mark should be allowed to use it. 
C)  be built and both Sue and Mark should be allowed to use it. 
D)  not be built because its marginal cost exceeds Sue's marginal benefit. 
E)  not be built because its marginal cost exceeds both Sue's and Mark's marginal benefit. 
A)  be built but only Sue should be allowed to use it. 
B)  be built but only Mark should be allowed to use it. 
C)  be built and both Sue and Mark should be allowed to use it. 
D)  not be built because its marginal cost exceeds Sue's marginal benefit. 
E)  not be built because its marginal cost exceeds both Sue's and Mark's marginal benefit.

Question 19

$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Tons of } \
\text { fish }
\end{array} & \begin{array} { c } 
\text { Marginal social } \
\text { benefit } \
\text { (dollars per hour) }
\end{array} \
\hline 100 & 700 \
\hline 200 & 600 \
\hline 300 & 500 \
\hline 400 & 400 \
\hline 500 & 300 \
\hline 600 & 200 \
\hline
\end{array}$$
-The table above shows the marginal social benefit of fishing in Mediterranean Sea.The marginal private cost of operating a fishing boat is the same for all producers,$300 per hour.The marginal social cost is twice the marginal private cost.If the government sets a production quota,the profit on the last ton of fish caught is ________ per ton.

Accepted Answer

A)  $0 
B)  $100 
C)  $200 
D)  $300 
E)  $400 
A)  $0 
B)  $100 
C)  $200 
D)  $300 
E)  $400

Question 20

If we know everyone's individual marginal benefit curve for a public good,then the economy's marginal benefit curve for that public good can be found by

Accepted Answer

A)  finding the average of everyone's marginal benefit. 
B)  summing horizontally the amount of everyone's marginal benefit. 
C)  summing vertically the amount of everyone's marginal benefit. 
D)  averaging either horizontally or vertically the amount of everyone's marginal benefit. 
E)  none of the above; it is impossible to find this value. 
A)  finding the average of everyone's marginal benefit. 
B)  summing horizontally the amount of everyone's marginal benefit. 
C)  summing vertically the amount of everyone's marginal benefit. 
D)  averaging either horizontally or vertically the amount of everyone's marginal benefit. 
E)  none of the above; it is impossible to find this value.

Because national defense is potentially subject to free riding,a private sector market for national defense would lead to

Suppose the marginal cost of the fourth unit of a public good is $20.If Mark and Judy are the only members of society,and they are willing to pay $10 and $11,respectively,for the fourth unit of the good,then the efficient quantity is

Inefficient overproduction of a public good by the government is

How is the efficient quantity of public goods determined?

Because fire protection is a good,the free-rider problem is avoided by public provision and financing through .

For a common resource,efficiency requires that the equals the .

To hunters,deer in the woods are an example of a

Is a sailboat purchased in Victoria,British Columbia,a private good or a public good?

-In the figure above,a private market will most likely produce

The tendency of political parties to propose identical policies which appeal to the maximum number of voters is referred to as the principle of

Government bureaucracies over-provide public goods and grow larger because of their goal of combined with of the voters.

-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.The efficient outcome is raising ________.

Suppose that satellites are publicly provided.The voters are rationally ignorant,while the Defense Ministry is well informed.Using the figure above,which of the following quantities of satellites is most likely to be provided?

What is rational ignorance?

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo,Oklahoma.Police protection is a public good.The efficient number of officers that should be hired by the city of Hugo is

A library is a public good.The marginal cost curve for libraries in Lafayette,California

Sue and Mark are the only two members of a community.Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000.If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good,then for efficiency the lighthouse should

If we know everyone's individual marginal benefit curve for a public good,then the economy's marginal benefit curve for that public good can be found by

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

Because national defense is potentially subject to free riding,a private sector market for national defense would lead to

Suppose the marginal cost of the fourth unit of a public good is $20.If Mark and Judy are the only members of society,and they are willing to pay $10 and $11,respectively,for the fourth unit of the good,then the efficient quantity is

Inefficient overproduction of a public good by the government is

How is the efficient quantity of public goods determined?

Because fire protection is a ________ good,the free-rider problem is avoided by public provision and financing through ________.

For a common resource,efficiency requires that the ________ equals the ________.

To hunters,deer in the woods are an example of a

Is a sailboat purchased in Victoria,British Columbia,a private good or a public good?

-In the figure above,a private market will most likely produce

The tendency of political parties to propose identical policies which appeal to the maximum number of voters is referred to as the principle of

Government bureaucracies over-provide public goods and grow larger because of their goal of ________ combined with ________ of the voters.

-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.The efficient outcome is raising ________.

Suppose that satellites are publicly provided.The voters are rationally ignorant,while the Defense Ministry is well informed.Using the figure above,which of the following quantities of satellites is most likely to be provided?

What is rational ignorance?

-The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo,Oklahoma.Police protection is a public good.The efficient number of officers that should be hired by the city of Hugo is

A library is a public good.The marginal cost curve for libraries in Lafayette,California

Sue and Mark are the only two members of a community.Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000.If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good,then for efficiency the lighthouse should

If we know everyone's individual marginal benefit curve for a public good,then the economy's marginal benefit curve for that public good can be found by

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

Because fire protection is a good,the free-rider problem is avoided by public provision and financing through .

For a common resource,efficiency requires that the equals the .

Government bureaucracies over-provide public goods and grow larger because of their goal of combined with of the voters.