Question 1

Growing voter income can lead to the growth of the government sector because

Accepted Answer

A) public goods are income elastic. 
B) public goods are income inelastic. 
C) richer voters are more likely to be rationally ignorant. 
D) richer voters do not care about overprovision of government goods. 
E) as income increases, more public goods become private goods. 
A) public goods are income elastic. 
B) public goods are income inelastic. 
C) richer voters are more likely to be rationally ignorant. 
D) richer voters do not care about overprovision of government goods. 
E) as income increases, more public goods become private goods. A

Question 2

Rational ignorance

Accepted Answer

A) results when the cost of acquiring information exceeds the benefit of acquiring the information. 
B) allows special interest groups to exert political influence. 
C) combined with special-interest groups can yield inefficient provision of public goods. 
D) results in all of the above. 
E) results in none of the above. 
A) results when the cost of acquiring information exceeds the benefit of acquiring the information. 
B) allows special interest groups to exert political influence. 
C) combined with special-interest groups can yield inefficient provision of public goods. 
D) results in all of the above. 
E) results in none of the above. D

Question 3

Use the figure below to answer the following question.
   
Figure 17.2.2
-Refer to Figure 17.2.2. The graph shows the marginal social benefit and marginal social cost of a garbage disposal system in a city of 1 million people. If voters are well informed about the costs and benefits of the garbage disposal system, the political equilibrium of garbage is

Accepted Answer

A) 2.0 million tonnes a day. 
B) 1.5 million tonnes a day. 
C) 2.5 million tonnes a day. 
D) 4.0 million tonnes a day. 
E) 0 million tonnes a day. 
A) 2.0 million tonnes a day. 
B) 1.5 million tonnes a day. 
C) 2.5 million tonnes a day. 
D) 4.0 million tonnes a day. 
E) 0 million tonnes a day. A

Question 4

Competitors who make themselves identical to appeal to the maximum number of voters illustrate the

Accepted Answer

A) principle of maximum differentiation. 
B) principle of minimum differentiation. 
C) principle of rational ignorance. 
D) principle of nonrivalry. 
E) principle of excludability. 
A) principle of maximum differentiation. 
B) principle of minimum differentiation. 
C) principle of rational ignorance. 
D) principle of nonrivalry. 
E) principle of excludability.

Question 5

A common resource is

Accepted Answer

A) regulated and excludable. 
B) rival and nonexcludable. 
C) nonrival and excludable. 
D) rival and excludable. 
E) nonrival and nonexcludable. 
A) regulated and excludable. 
B) rival and nonexcludable. 
C) nonrival and excludable. 
D) rival and excludable. 
E) nonrival and nonexcludable.

Question 6

Sustainable production is

Accepted Answer

A) the rate of production that can be maintained indefinitely. 
B) the production output with the lowest average total cost. 
C) the production output where MC = ATC. 
D) the rate of production that maximizes marginal private benefit. 
E) the rate of production where MB = MC. 
A) the rate of production that can be maintained indefinitely. 
B) the production output with the lowest average total cost. 
C) the production output where MC = ATC. 
D) the rate of production that maximizes marginal private benefit. 
E) the rate of production where MB = MC.

Question 7

If all voters are well informed about national defence, the quantity of national defence provided by the government will be

Accepted Answer

A) greater than the efficient quantity. 
B) less than the efficient quantity. 
C) the least costly quantity. 
D) the efficient quantity. 
E) the quantity that maximizes the budget of the Department of National Defence. 
A) greater than the efficient quantity. 
B) less than the efficient quantity. 
C) the least costly quantity. 
D) the efficient quantity. 
E) the quantity that maximizes the budget of the Department of National Defence.

Question 8

Minimum differentiation among the political parties suggests that

Accepted Answer

A) the parties will have few ideas in common on their platforms. 
B) the parties will offer few ideas on minimizing the size and scope of government. 
C) the platforms of the parties will tend to become similar as they try to appeal to a majority of voters. 
D) the platforms of the parties will tend to become dissimilar as they try to appeal to a loyal majority of voters. 
E) the platforms of the parties will tend to have few, if any, new ideas. 
A) the parties will have few ideas in common on their platforms. 
B) the parties will offer few ideas on minimizing the size and scope of government. 
C) the platforms of the parties will tend to become similar as they try to appeal to a majority of voters. 
D) the platforms of the parties will tend to become dissimilar as they try to appeal to a loyal majority of voters. 
E) the platforms of the parties will tend to have few, if any, new ideas.

Question 9

A natural monopoly good is

Accepted Answer

A) nonrival. 
B) excludable. 
C) rival. 
D) nonexcludable. 
E) both A and B. 
A) nonrival. 
B) excludable. 
C) rival. 
D) nonexcludable. 
E) both A and B.

Question 10

Use the figure below to answer the following questions.
   
Figure 17.3.2
-Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient quantity is

Accepted Answer

A) 0 goats. 
B) 40 goats. 
C) 50 goats. 
D) 55 goats. 
E) 35 goats. 
A) 0 goats. 
B) 40 goats. 
C) 50 goats. 
D) 55 goats. 
E) 35 goats.

Question 11

A Big Mac is

Accepted Answer

A) excludable and rival. 
B) nonexcludable and nonrival. 
C) nonexcludable and rival. 
D) excludable and nonrival. 
E) a private good in North America but a natural monopoly good in other countries. 
A) excludable and rival. 
B) nonexcludable and nonrival. 
C) nonexcludable and rival. 
D) excludable and nonrival. 
E) a private good in North America but a natural monopoly good in other countries.

Question 12

Which one of the following goods is excludable?

Accepted Answer

A) a city bus 
B) a bridge that does not charge a toll 
C) the atmosphere 
D) protection from the police force 
E) air traffic control 
A) a city bus 
B) a bridge that does not charge a toll 
C) the atmosphere 
D) protection from the police force 
E) air traffic control

Question 13

Public goods are provided by government because

Accepted Answer

A) governments are more efficient than private firms at producing public goods. 
B) free-rider problems result in underproduction by private markets. 
C) people value national defence very highly. 
D) private firms will make an economic profit. 
E) private firms do not take into account the impact of external costs. 
A) governments are more efficient than private firms at producing public goods. 
B) free-rider problems result in underproduction by private markets. 
C) people value national defence very highly. 
D) private firms will make an economic profit. 
E) private firms do not take into account the impact of external costs.

Question 14

The tragedy of the commons is the absence of incentives to

Accepted Answer

A) reduce marginal cost of common resources. 
B) prevent underuse of common resources. 
C) prevent overuse of common resources. 
D) discover new common resources. 
E) export wool in sixteenth-century England. 
A) reduce marginal cost of common resources. 
B) prevent underuse of common resources. 
C) prevent overuse of common resources. 
D) discover new common resources. 
E) export wool in sixteenth-century England.

Question 15

Suppose in a country there are only two persons. Person A is willing to pay $50 to have one unit of a public good produced; person B is willing to pay $60 to have one unit of a public good produced and $50 to have two units produced. A point on the country's marginal social benefit curve for this public good is a price of ________ and quantity demanded of ________.

Accepted Answer

A) $50; 1 unit 
B) $60; 1 unit 
C) $110; 2 units 
D) $110; 1 unit 
E) $55; 1 unit 
A) $50; 1 unit 
B) $60; 1 unit 
C) $110; 2 units 
D) $110; 1 unit 
E) $55; 1 unit

Question 16

Common resources are overused because

Accepted Answer

A) the marginal private benefit of operating a boat is the quantity of fish a boat can catch. 
B) the social benefits outweigh the private benefits. 
C) the marginal private benefit will always exceed the marginal social cost. 
D) external costs are not considered. 
E) social costs are controlled by production quotas. 
A) the marginal private benefit of operating a boat is the quantity of fish a boat can catch. 
B) the social benefits outweigh the private benefits. 
C) the marginal private benefit will always exceed the marginal social cost. 
D) external costs are not considered. 
E) social costs are controlled by production quotas.

Question 17

Rational ignorance suggests that voters will

Accepted Answer

A) understand defence technology before voting for defence policy. 
B) understand the auditing procedures of the Canada Revenue Agency before voting for tax reform. 
C) understand the chemistry of the atmosphere before voting for a clean-air act. 
D) vote without complete information on many issues. 
E) vote based on their complete trust in politicians and bureaucrats. 
A) understand defence technology before voting for defence policy. 
B) understand the auditing procedures of the Canada Revenue Agency before voting for tax reform. 
C) understand the chemistry of the atmosphere before voting for a clean-air act. 
D) vote without complete information on many issues. 
E) vote based on their complete trust in politicians and bureaucrats.

Question 18

If property rights are assigned to a common resource, then the

Accepted Answer

A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost. 
A) government needs to set an ITQ to achieve efficiency. 
B) government needs to set a production quota to achieve efficiency. 
C) more than the efficient quantity is produced. 
D) marginal social benefit increases. 
E) marginal private cost becomes equal to the marginal social cost.

Question 19

The efficient use of a common resource requires that the ________ equals the ________.

Accepted Answer

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

Question 20

Use the figure below to answer the following questions.
   
Figure 17.3.1
-Figure 17.3.1 shows the marginal private cost cure, marginal social cost curve, and marginal social benefit curve for cod, a common resource. To achieve an efficient quantity, the price of an ITQ is set at

Accepted Answer

A) $3 a kilogram. 
B) $6 a kilogram. 
C) $4 a kilogram. 
D) $5 a kilogram. 
E) $1 a kilogram. 
A) $3 a kilogram. 
B) $6 a kilogram. 
C) $4 a kilogram. 
D) $5 a kilogram. 
E) $1 a kilogram.

Exam 17: Public Goods and Common Resources

Growing voter income can lead to the growth of the government sector because

Rational ignorance

Competitors who make themselves identical to appeal to the maximum number of voters illustrate the

A common resource is

Sustainable production is

If all voters are well informed about national defence, the quantity of national defence provided by the government will be

Minimum differentiation among the political parties suggests that

A natural monopoly good is

Use the figure below to answer the following questions. Figure 17.3.2 -Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient quantity is

A Big Mac is

Which one of the following goods is excludable?

Public goods are provided by government because

The tragedy of the commons is the absence of incentives to

Common resources are overused because

Rational ignorance suggests that voters will

If property rights are assigned to a common resource, then the

The efficient use of a common resource requires that the ________ equals the ________.

Use the figure below to answer the following questions. Figure 17.3.1 -Figure 17.3.1 shows the marginal private cost cure, marginal social cost curve, and marginal social benefit curve for cod, a common resource. To achieve an efficient quantity, the price of an ITQ is set at

What Is Economics

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The efficient use of a common resource requires that the equals the .