Question 1

The distinguishing characteristic of a public good is

Accepted Answer

A)  noncompetitive production. 
B)  durability. 
C)  exclusivity. 
D)  nonrival consumption. 
A)  noncompetitive production. 
B)  durability. 
C)  exclusivity. 
D)  nonrival consumption.

Question 2

Which of the following is NOT a consequence of the introduction of the Medicare program?

Accepted Answer

A)  an increased quantity of medical services demanded 
B)  an increased ability for the elderly to obtain medical services 
C)  an increased ability for the poor to obtain medical services 
D)  a reduced demand for medical services 
A)  an increased quantity of medical services demanded 
B)  an increased ability for the elderly to obtain medical services 
C)  an increased ability for the poor to obtain medical services 
D)  a reduced demand for medical services

Question 3

Which of the following is an example of a negative externality?

Accepted Answer

A)  There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B)  The opening of a new shopping mall increases the business of nearby restaurants. 
C)  A consumer pays a higher price than another consumer does for the same product. 
D)  Consumers pay a sales tax in addition to the price of a product. 
A)  There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. 
B)  The opening of a new shopping mall increases the business of nearby restaurants. 
C)  A consumer pays a higher price than another consumer does for the same product. 
D)  Consumers pay a sales tax in addition to the price of a product.

Question 4

What are the key characteristics of a public good?

Accepted Answer

A public good is not subject to the prin

Question 5

Examples of transfers-in-kind include

Accepted Answer

A)  tax rebates on both the federal and state levels. 
B)  taxes on alcohol and tobacco. 
C)  food stamps and public housing. 
D)  political advertising. 
A)  tax rebates on both the federal and state levels. 
B)  taxes on alcohol and tobacco. 
C)  food stamps and public housing. 
D)  political advertising.

Question 6

The funding of public education is

Accepted Answer

A)  a private program. 
B)  a subsidy program. 
C)  done by voluntary contributions. 
D)  provided by Social Security. 
A)  a private program. 
B)  a subsidy program. 
C)  done by voluntary contributions. 
D)  provided by Social Security.

Question 7

My brother decides to leave his empty soda can on someone's lawn. This is an example of a

Accepted Answer

A)  public good. 
B)  positive externality. 
C)  neutral externality. 
D)  negative externality. 
A)  public good. 
B)  positive externality. 
C)  neutral externality. 
D)  negative externality.

Question 8

The difference between a private good and a public good is that

Accepted Answer

A)  private goods are government-sponsored goods while public goods are government-inhibited goods. 
B)  externalities are always created in the production process but not in the production of public goods. 
C)  private goods make us happy while public goods do not. 
D)  the exclusion principle applies to a private good but not to a public good. 
A)  private goods are government-sponsored goods while public goods are government-inhibited goods. 
B)  externalities are always created in the production process but not in the production of public goods. 
C)  private goods make us happy while public goods do not. 
D)  the exclusion principle applies to a private good but not to a public good.

Question 9

A possible solution to the problems of external benefits is

Accepted Answer

A)  to tax those receiving the extra benefits. 
B)  production of the good by government. 
C)  effluent fees. 
D)  to restrict the amount of the good through direct government regulation. 
A)  to tax those receiving the extra benefits. 
B)  production of the good by government. 
C)  effluent fees. 
D)  to restrict the amount of the good through direct government regulation.

Question 10

Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of

Accepted Answer

A)  the principle of rival consumption. 
B)  the free-rider problem. 
C)  the negative externality problem. 
D)  the property rights problem. 
A)  the principle of rival consumption. 
B)  the free-rider problem. 
C)  the negative externality problem. 
D)  the property rights problem.

Question 11

Costs that spill over to third parties are called

Accepted Answer

A)  opportunity costs. 
B)  external costs. 
C)  variable costs. 
D)  public costs. 
A)  opportunity costs. 
B)  external costs. 
C)  variable costs. 
D)  public costs.

Question 12

Which of the following is a government-inhibited good?

Accepted Answer

A)  A lighthouse 
B)  National defense 
C)  Public education 
D)  Cocaine 
A)  A lighthouse 
B)  National defense 
C)  Public education 
D)  Cocaine

Question 13

Why are public goods provided by the government, rather than by the private sector?

Accepted Answer

A)  because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds 
B)  because it would be difficult for a private sector firm to make a profit providing a public good, since consumers who benefit would not have to pay for it 
C)  because no one really benefits from public goods 
D)  because private sector firms do not have the foresight to plan for public goods 
A)  because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds 
B)  because it would be difficult for a private sector firm to make a profit providing a public good, since consumers who benefit would not have to pay for it 
C)  because no one really benefits from public goods 
D)  because private sector firms do not have the foresight to plan for public goods

Question 14

The incentive structure is a

Accepted Answer

A)  system of rewards and punishments that individuals consider when making decisions. 
B)  system determined by the federal government that gives certain states more federal funds. 
C)  system of infrastructure in the United States that improves commerce. 
D)  system of checks and balances in the government. 
A)  system of rewards and punishments that individuals consider when making decisions. 
B)  system determined by the federal government that gives certain states more federal funds. 
C)  system of infrastructure in the United States that improves commerce. 
D)  system of checks and balances in the government.

Question 15

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a ________ price to health care providers and charges a ________ price to consumers.

Accepted Answer

A)  lower, lower 
B)  lower, higher 
C)  higher, lower 
D)  higher, higher 
A)  lower, lower 
B)  lower, higher 
C)  higher, lower 
D)  higher, higher

Question 16

A government-inhibited good is a good which

Accepted Answer

A)  is not subject to the principle of mutual exclusivity. 
B)  the political process has deemed socially undesirable. 
C)  can be consumed by one individual without affecting the consumption of another individual. 
D)  the political process has deemed socially desirable. 
A)  is not subject to the principle of mutual exclusivity. 
B)  the political process has deemed socially undesirable. 
C)  can be consumed by one individual without affecting the consumption of another individual. 
D)  the political process has deemed socially desirable.

Question 17

Private schools are able to exclude students from attending classes they offer unless students have been accepted and paid tuition and fees. This suggests that education is

Accepted Answer

A)  subject to the principle of rival consumption. 
B)  subject to the free-rider problem. 
C)  not subject to the exclusion principle. 
D)  a public good. 
A)  subject to the principle of rival consumption. 
B)  subject to the free-rider problem. 
C)  not subject to the exclusion principle. 
D)  a public good.

Question 18

Which of the following is best characterized as a public good?

Accepted Answer

A)  A public library 
B)  A church 
C)  Primary education 
D)  Police protection 
A)  A public library 
B)  A church 
C)  Primary education 
D)  Police protection

Question 19

A public museum is an example of a

Accepted Answer

A)  government-sponsored good. 
B)  public good. 
C)  good which generates a positive externality. 
D)  good which generates a negative externality. 
A)  government-sponsored good. 
B)  public good. 
C)  good which generates a positive externality. 
D)  good which generates a negative externality.

Question 20

How does a government-sponsored good differ from a public good?

Accepted Answer

A public good is characterized by the fa

Exam 5: Public Spending and Public Choice

The distinguishing characteristic of a public good is

Which of the following is NOT a consequence of the introduction of the Medicare program?

Which of the following is an example of a negative externality?

What are the key characteristics of a public good?

Examples of transfers-in-kind include

The funding of public education is

My brother decides to leave his empty soda can on someone's lawn. This is an example of a

The difference between a private good and a public good is that

A possible solution to the problems of external benefits is

Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of

Costs that spill over to third parties are called

Which of the following is a government-inhibited good?

Why are public goods provided by the government, rather than by the private sector?

The incentive structure is a

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a ________ price to health care providers and charges a ________ price to consumers.

A government-inhibited good is a good which

Private schools are able to exclude students from attending classes they offer unless students have been accepted and paid tuition and fees. This suggests that education is

Which of the following is best characterized as a public good?

A public museum is an example of a

How does a government-sponsored good differ from a public good?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Compared with the market clearing price of a health care service covered by Medicare, the Medicare program pays a price to health care providers and charges a price to consumers.