Question 1

When one person enjoys the benefit of national defense,she reduces the benefit to others.

Accepted Answer

A) True 
 B)False

Question 2

Goods that are not rival in consumption include both

Accepted Answer

A) private goods and common resources. 
B) natural monopolies and public goods. 
C) common resources and public goods. 
D) private goods and natural monopolies. 
A) private goods and common resources. 
B) natural monopolies and public goods. 
C) common resources and public goods. 
D) private goods and natural monopolies.

Question 3

People have little incentive to produce a public good because

Accepted Answer

A) the social benefit is less than the private benefit. 
B) the social benefit is less than the social cost. 
C) there is a free-rider problem. 
D) there is a Tragedy of the Commons. 
A) the social benefit is less than the private benefit. 
B) the social benefit is less than the social cost. 
C) there is a free-rider problem. 
D) there is a Tragedy of the Commons.

Question 4

To increase safety at a bad intersection,you must decide whether to install a traffic light in your hometown at a cost of $10,000.If the traffic light reduces the risk of fatality by 0.5 percent,and the value of a human life is estimated to be $10 million,you should

Accepted Answer

A) install the light because the expected benefit of $50,000 is greater than the cost. 
B) install the light because the expected benefit of $20,000 is greater than the cost. 
C) not install the light because the expected benefit of $10,000 is only equal to the cost. 
D) not install the light because the expected benefit of $5,000 is less than the cost. 
A) install the light because the expected benefit of $50,000 is greater than the cost. 
B) install the light because the expected benefit of $20,000 is greater than the cost. 
C) not install the light because the expected benefit of $10,000 is only equal to the cost. 
D) not install the light because the expected benefit of $5,000 is less than the cost.

Question 5

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

Accepted Answer

A) the local government should put on the display, but you should not. 
B) you should still put on the display, but the local government should not. 
C) neither you nor the local government should put on the display. 
D) either you or the local government should put on the display. 
A) the local government should put on the display, but you should not. 
B) you should still put on the display, but the local government should not. 
C) neither you nor the local government should put on the display. 
D) either you or the local government should put on the display.

Question 6

One way to eliminate the Tragedy of the Commons is to

Accepted Answer

A) increase law enforcement in public areas. 
B) limit access to the commons. 
C) increase access to the commons. 
D) decrease taxes. 
A) increase law enforcement in public areas. 
B) limit access to the commons. 
C) increase access to the commons. 
D) decrease taxes.

Question 7

Place each of the following in the correct location in the table.
   
a.Congested toll roads
b.Knowledge
c.Fish in the ocean
d.National defense
e.Congested nontoll roads
f.Cable TV
g.The environment
h.Fire protection
i.Ice-cream cones
j.Uncongested toll roads
k.Clothing
l.Uncongested nontoll roads

Accepted Answer

The answer of Place each of the following in the...

Question 8

When goods are available in an economy free of charge,

Accepted Answer

A) market forces cannot be used to allocate resources. 
B) too many of these goods will be produced since there is no cost of production. 
C) the product will have no value for the majority of the population. 
D) the goods can only be luxury goods. 
A) market forces cannot be used to allocate resources. 
B) too many of these goods will be produced since there is no cost of production. 
C) the product will have no value for the majority of the population. 
D) the goods can only be luxury goods.

Question 9

Which of the following represents the most efficient solution to the Tragedy of the Commons?

Accepted Answer

A) quotas 
B) taxes 
C) privatizing public lands 
D) environmental regulation 
A) quotas 
B) taxes 
C) privatizing public lands 
D) environmental regulation

Question 10

Tom is a non-union employee at General Power.Eight-five percent of the employees at General Power are unionized.The union at General Power has negotiated very good benefits.Even though he is not a union member and he does not have to pay union dues,Tom receives all the benefits that the union has negotiated.Tom's behavior is an example of

Accepted Answer

A) rivalry. 
B) a barrier to entry. 
C) free riding. 
D) Taft-Hartley opposition. 
A) rivalry. 
B) a barrier to entry. 
C) free riding. 
D) Taft-Hartley opposition.

Question 11

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.Which of the following statements is correct?

Accepted Answer

A) The benefits are usually easier to measure than the costs. 
B) Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs. 
C) Estimating the value of a human life is difficult but necessary in order to evaluate the proposal. 
D) Both a and b are correct. 
A) The benefits are usually easier to measure than the costs. 
B) Because human life is priceless, any measure to increase traffic safety would generate benefits that outweigh the costs. 
C) Estimating the value of a human life is difficult but necessary in order to evaluate the proposal. 
D) Both a and b are correct.

Question 12

You are the mayor of a small town with 2,000 residents.The head of your economic development agency recently conducted a survey in which the 2,000 residents said that a public concert in the center of town would be worth $20 to each of them.Since the concert cost only $5,000 to hold,you organized and held the concert,which everyone in town enjoyed.But when you asked for donations to pay for the concert,you only collected $300.You are convinced that

Accepted Answer

A) the survey must have overstated how much the concert was worth to each resident; otherwise, you would have collected $40,000 in donations. 
B) the cost of the concert exceeded the social benefits. 
C) the concert was an example of the Tragedy of the Commons. 
D) residents of the town were probably free-riders at the concert. 
A) the survey must have overstated how much the concert was worth to each resident; otherwise, you would have collected $40,000 in donations. 
B) the cost of the concert exceeded the social benefits. 
C) the concert was an example of the Tragedy of the Commons. 
D) residents of the town were probably free-riders at the concert.

Question 13

A common theme among examples of market failure is

Accepted Answer

A) the good being provided harms society in some systematic way. 
B) some item of value does not have an owner with the legal authority to control it. 
C) cost-benefit analysis will show that private markets should provide the goods and services. 
D) government intervention decreases the social benefits. 
A) the good being provided harms society in some systematic way. 
B) some item of value does not have an owner with the legal authority to control it. 
C) cost-benefit analysis will show that private markets should provide the goods and services. 
D) government intervention decreases the social benefits.

Question 14

Suppose that a small county is considering adding a guard rail to a dangerous curve by a river.The guard rail will cost $70,000.The average damage done to vehicles that slide off the road at the curve is $10,000.It is expected that the guard rail will prevent 5 vehicles from sliding off the road during its usable life.What should the county do?

Accepted Answer

A) Install the guard rail because safety is priceless. 
B) Install the guard rail because the benefits exceed the costs. 
C) Do not install the guard rail because the costs exceed the benefits. 
D) Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles. 
A) Install the guard rail because safety is priceless. 
B) Install the guard rail because the benefits exceed the costs. 
C) Do not install the guard rail because the costs exceed the benefits. 
D) Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles.

Question 15

Table 11-2
There are no lobstering restrictions on Point Judith Sound, RI. A lobsterman on Point Judith Sound can catch 100 lobsters per day, provided he has the sound to himself. Two lobstermen can catch 95 lobsters apiece per day, and three can catch 90 apiece per day. Other numbers are given by the table:
   
The opportunity cost of a day on Point Judith Sound is 25 lobsters per lobsterman. That is, the alternative activity is as valuable as 25 lobsters.
-Refer to Table 11-2.In terms of lobsters,what is the total cost of lobstering per day?

Accepted Answer

A) 25 lobsters 
B) 125 lobsters 
C) 225 lobsters 
D) 250 lobsters 
A) 25 lobsters 
B) 125 lobsters 
C) 225 lobsters 
D) 250 lobsters

Question 16

For both public goods and common resources,an externality arises because

Accepted Answer

A) something of value has no price attached to it. 
B) supply exceeds demand. 
C) cost-benefit analysis can only measure the cost of the free-rider problem. 
D) Both a and b are correct. 
A) something of value has no price attached to it. 
B) supply exceeds demand. 
C) cost-benefit analysis can only measure the cost of the free-rider problem. 
D) Both a and b are correct.

Question 17

Goods that are not excludable are usually

Accepted Answer

A) higher priced than excludable goods. 
B) higher priced than rival goods. 
C) in short supply. 
D) free of charge. 
A) higher priced than excludable goods. 
B) higher priced than rival goods. 
C) in short supply. 
D) free of charge.

Question 18

A good solution to saving the tiger from extinction would be to

Accepted Answer

A) outlaw the sale of tiger livers and bones. 
B) tax the sale of tiger hides. 
C) privatize ownership of tigers by giving or selling their habitat to someone who enjoys tigers. 
D) regulate the traditional use of Asian medicines that use tiger livers and bones. 
A) outlaw the sale of tiger livers and bones. 
B) tax the sale of tiger hides. 
C) privatize ownership of tigers by giving or selling their habitat to someone who enjoys tigers. 
D) regulate the traditional use of Asian medicines that use tiger livers and bones.

Question 19

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Accepted Answer

A) antipoverty programs 
B) national defense 
C) toll charges on congested roads 
D) agricultural subsidies 
A) antipoverty programs 
B) national defense 
C) toll charges on congested roads 
D) agricultural subsidies

Question 20

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Accepted Answer

A) Cows are a common resource, whereas elephants are owned by governments. 
B) Elephants are larger than cows, requiring more economic resources. 
C) Elephants live in Africa, where economic resources are scarce. 
D) Elephants are a common resource, whereas cows are privately owned. 
A) Cows are a common resource, whereas elephants are owned by governments. 
B) Elephants are larger than cows, requiring more economic resources. 
C) Elephants live in Africa, where economic resources are scarce. 
D) Elephants are a common resource, whereas cows are privately owned.

Exam 11: Public Goods and Common Resources

When one person enjoys the benefit of national defense,she reduces the benefit to others.

Goods that are not rival in consumption include both

People have little incentive to produce a public good because

To increase safety at a bad intersection,you must decide whether to install a traffic light in your hometown at a cost of $10,000.If the traffic light reduces the risk of fatality by 0.5 percent,and the value of a human life is estimated to be $10 million,you should

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

One way to eliminate the Tragedy of the Commons is to

Place each of the following in the correct location in the table. a.Congested toll roads b.Knowledge c.Fish in the ocean d.National defense e.Congested nontoll roads f.Cable TV g.The environment h.Fire protection i.Ice-cream cones j.Uncongested toll roads k.Clothing l.Uncongested nontoll roads

When goods are available in an economy free of charge,

Which of the following represents the most efficient solution to the Tragedy of the Commons?

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.Which of the following statements is correct?

A common theme among examples of market failure is

For both public goods and common resources,an externality arises because

Goods that are not excludable are usually

A good solution to saving the tiger from extinction would be to

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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