Question 1

Most goods in our economy are allocated in markets,where buyers pay for what they receive and sellers are paid for what they provide.

Accepted Answer

A) True 
 B)False

Question 2

Most goods in the economy are

Accepted Answer

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

Question 3

Basic research is a public good partly because it

Accepted Answer

A) is difficult to exclude those who might benefit from it. 
B) is used to develop public goods. 
C) always benefits developed countries at the expense of developing countries. 
D) is a good that is rival in consumption. 
A) is difficult to exclude those who might benefit from it. 
B) is used to develop public goods. 
C) always benefits developed countries at the expense of developing countries. 
D) is a good that is rival in consumption.

Question 4

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Accepted Answer

A) The aquifer is a public good which must be publicly owned to be used efficiently. 
B) The aquifer is a private good which must be privately owned to be used efficiently. 
C) The aquifer is a common property resource which will be overused if no one owns it. 
D) The aquifer is a natural monopoly which should be left as it is. 
A) The aquifer is a public good which must be publicly owned to be used efficiently. 
B) The aquifer is a private good which must be privately owned to be used efficiently. 
C) The aquifer is a common property resource which will be overused if no one owns it. 
D) The aquifer is a natural monopoly which should be left as it is.

Question 5

The Tragedy of the Commons can be corrected by

Accepted Answer

A) conducting a cost-benefit analysis. 
B) assigning property rights to individuals. 
C) providing government subsidies for the resource. 
D) making certain everyone in the economy has access to the resource. 
A) conducting a cost-benefit analysis. 
B) assigning property rights to individuals. 
C) providing government subsidies for the resource. 
D) making certain everyone in the economy has access to the resource.

Question 6

Using a toll to reduce traffic when congestion is greatest is an example of a

Accepted Answer

A) regulation solution. 
B) command-and-control policy. 
C) corrective tax. 
D) Coase theorem solution. 
A) regulation solution. 
B) command-and-control policy. 
C) corrective tax. 
D) Coase theorem solution.

Question 7

Goods that are not excludable include both

Accepted Answer

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

Question 8

Which of the following statements is correct?

Accepted Answer

A) A private good is not rival in consumption but is excludable. 
B) A public good is both rival in consumption and excludable. 
C) A common resource is rival in consumption but not excludable. 
D) A natural monopoly is neither rival in consumption nor excludable. 
A) A private good is not rival in consumption but is excludable. 
B) A public good is both rival in consumption and excludable. 
C) A common resource is rival in consumption but not excludable. 
D) A natural monopoly is neither rival in consumption nor excludable.

Question 9

Consider the following problems: Overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems have in common?

Accepted Answer

A) Private markets could easily solve them if governments left the markets alone. 
B) They would all go away if the government sponsored an intensive public-information campaign. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the result of a failure of corrective taxes. 
A) Private markets could easily solve them if governments left the markets alone. 
B) They would all go away if the government sponsored an intensive public-information campaign. 
C) They are all the result of a failure to establish clear property rights over something of value. 
D) They are all the result of a failure of corrective taxes.

Question 10

An example of a natural monopoly would be

Accepted Answer

A) cable TV service. 
B) a tornado siren. 
C) clothing. 
D) the environment. 
A) cable TV service. 
B) a tornado siren. 
C) clothing. 
D) the environment.

Question 11

The greatest difficulty with cost-benefit analysis of a public project is determining

Accepted Answer

A) whether government revenue is sufficient to cover the cost of the project. 
B) which contractor should be awarded the project. 
C) the cost of the project. 
D) the value or benefit of the project. 
A) whether government revenue is sufficient to cover the cost of the project. 
B) which contractor should be awarded the project. 
C) the cost of the project. 
D) the value or benefit of the project.

Question 12

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Accepted Answer

A) True 
 B)False

Question 13

Advocates of antipoverty programs claim that fighting poverty

Accepted Answer

A) is best accomplished by charities. 
B) is a public good. 
C) is more efficiently accomplished by the market. 
D) should not be attempted with tax dollars. 
A) is best accomplished by charities. 
B) is a public good. 
C) is more efficiently accomplished by the market. 
D) should not be attempted with tax dollars.

Question 14

When the absence of property rights causes a market failure,the government can potentially solve the problem

Accepted Answer

A) by clearly defining property rights. 
B) through regulation. 
C) by supplying the good itself. 
D) All of the above are correct. 
A) by clearly defining property rights. 
B) through regulation. 
C) by supplying the good itself. 
D) All of the above are correct.

Question 15

When a free-rider problem exists,

Accepted Answer

A) the market will devote too few resources to the production of the good. 
B) the cost of the good will always be more than the benefit of the good. 
C) the good will not be produced. 
D) entrepreneurs will eventually find a way to make free-riders pay their share. 
A) the market will devote too few resources to the production of the good. 
B) the cost of the good will always be more than the benefit of the good. 
C) the good will not be produced. 
D) entrepreneurs will eventually find a way to make free-riders pay their share.

Question 16

Which of the following statements is correct?

Accepted Answer

A) Common resources are excludable but nonrival in consumption. 
B) National defense is an example of the Tragedy of the Commons. 
C) When African elephants were privatized, the survival of the species improved. 
D) Well established property rights are unnecessary because government can provide goods more efficiently than private markets. 
A) Common resources are excludable but nonrival in consumption. 
B) National defense is an example of the Tragedy of the Commons. 
C) When African elephants were privatized, the survival of the species improved. 
D) Well established property rights are unnecessary because government can provide goods more efficiently than private markets.

Question 17

Congestion charging zones are

Accepted Answer

A) areas in Singapore where motorists pay tolls to use busy roads. 
B) areas in London where motorists pay tolls to use busy roads. 
C) areas in Moscow where motorists pay tolls to use busy roads. 
D) environmentally friendly rest stops where motors using hybrid and electric cars can recharge the cars' batteries. 
A) areas in Singapore where motorists pay tolls to use busy roads. 
B) areas in London where motorists pay tolls to use busy roads. 
C) areas in Moscow where motorists pay tolls to use busy roads. 
D) environmentally friendly rest stops where motors using hybrid and electric cars can recharge the cars' batteries.

Question 18

When goods do not have a price,which of the following primarily ensures that the good is produced?

Accepted Answer

A) entrepreneurs 
B) the government 
C) charities 
D) the market 
A) entrepreneurs 
B) the government 
C) charities 
D) the market

Question 19

On holiday weekends thousands of people hike on national park hiking trails.Some trails become so overcrowded the benefit or value of hiking diminishes to zero.An overcrowded hiking trail is an example of

Accepted Answer

A) a private good. 
B) a natural monopoly. 
C) a Tragedy of the Commons. 
D) public good. 
A) a private good. 
B) a natural monopoly. 
C) a Tragedy of the Commons. 
D) public good.

Question 20

The national defense of the United States is not rival because

Accepted Answer

A) my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B) my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C) my enjoyment of the national defense excludes you from enjoying the national defense of the United States. 
D) Both b and c are correct. 
A) my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States. 
B) my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States. 
C) my enjoyment of the national defense excludes you from enjoying the national defense of the United States. 
D) Both b and c are correct.

Exam 11: Public Goods and Common Resources

Most goods in our economy are allocated in markets,where buyers pay for what they receive and sellers are paid for what they provide.

Most goods in the economy are

Basic research is a public good partly because it

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

The Tragedy of the Commons can be corrected by

Using a toll to reduce traffic when congestion is greatest is an example of a

Goods that are not excludable include both

Which of the following statements is correct?

Consider the following problems: Overcrowded public highways,overfishing in the ocean,polluted air,and the near-extinction of the wild rhinoceros.What do these problems have in common?

An example of a natural monopoly would be

The greatest difficulty with cost-benefit analysis of a public project is determining

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Advocates of antipoverty programs claim that fighting poverty

When the absence of property rights causes a market failure,the government can potentially solve the problem

When a free-rider problem exists,

Which of the following statements is correct?

Congestion charging zones are

When goods do not have a price,which of the following primarily ensures that the good is produced?

On holiday weekends thousands of people hike on national park hiking trails.Some trails become so overcrowded the benefit or value of hiking diminishes to zero.An overcrowded hiking trail is an example of

The national defense of the United States is not rival because

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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