Question 1

Compared to private goods, the free market would ________ public goods.

Accepted Answer

A)  overproduce 
B)  efficiently produce 
C)  underproduce 
D)  sometimes overproduce but most often underproduce 
A)  overproduce 
B)  efficiently produce 
C)  underproduce 
D)  sometimes overproduce but most often underproduce

Question 2

When a good is rival in consumption:

Accepted Answer

A)  people can be excluded from using the good. 
B)  one person's use of the good prevents another's ability to use it. 
C)  no more than one person can use the good at the same time. 
D)  people can be prevented from using the good. 
A)  people can be excluded from using the good. 
B)  one person's use of the good prevents another's ability to use it. 
C)  no more than one person can use the good at the same time. 
D)  people can be prevented from using the good.

Question 3

You can watch the show Spartacus on the premium cable television station Starz for about $10 a month.

Accepted Answer

A)  Spartacus is inefficiently provided because it is a public good. 
B)  Spartacus is inefficiently provided because some people who don't watch the show are willing to pay more than the marginal cost of broadcasting the show to one more viewer. 
C)  Spartacus is efficiently provided because it is a private good that is rival and excludable. 
D)  Spartacus is efficiently provided because it is a nonrival private good. 
A)  Spartacus is inefficiently provided because it is a public good. 
B)  Spartacus is inefficiently provided because some people who don't watch the show are willing to pay more than the marginal cost of broadcasting the show to one more viewer. 
C)  Spartacus is efficiently provided because it is a private good that is rival and excludable. 
D)  Spartacus is efficiently provided because it is a nonrival private good.

Question 4

Theoretically, when property rights are difficult to establish, multi-country agreements could help to solve the tragedy of the commons, but it has not been possible to establish any such agreement to date.

Accepted Answer

A) True 
 B)False

Question 5

Asteroid deflection is a good that would be profitable for an insurance company to provide.

Accepted Answer

A) True 
 B)False

Question 6

A good is nonexcludable if people who don't pay cannot be easily prevented from using the good.

Accepted Answer

A) True 
 B)False

Question 7

After Napster was introduced in 1999 as a peer-to-peer file-sharing Internet service, people could cheaply distribute music. Thanks to this and other innovations ("ripping" CDs, torrents, YouTube), music is becoming increasingly:

Accepted Answer

A)  private. 
B)  nonexcludable. 
C)  nonrival. 
D)  taxable. 
A)  private. 
B)  nonexcludable. 
C)  nonrival. 
D)  taxable.

Question 8

During the Middle Ages, many villages had areas reserved for families to take their cows or sheep to graze. All families were welcome to use this land without charge. The land for grazing can be characterized as a:

Accepted Answer

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

Question 9

Protection provided by the ozone layer is a:

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good. 
A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good.

Question 10

Which of the following has been the most typical way to solve tragedy of the commons problems?

Accepted Answer

A)  government command and control solutions, like limiting the number of fishing boats 
B)  government command and constraint solutions, like prohibiting any attempt to fish common areas 
C)  tradable allowances which make fish a tradable market 
D)  tradable allowances which result in "capital stuffing" 
A)  government command and control solutions, like limiting the number of fishing boats 
B)  government command and constraint solutions, like prohibiting any attempt to fish common areas 
C)  tradable allowances which make fish a tradable market 
D)  tradable allowances which result in "capital stuffing"

Question 11

Since people get to consume public goods regardless of whether they paid for them, the market will likely not produce enough public goods.

Accepted Answer

A) True 
 B)False

Question 12

Explain what aspect of the tragedy of the commons problem is similar to that of a negative externality.

Accepted Answer

The tragedy of the commons problem stems

Question 13

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of the following statements is TRUE?

Accepted Answer

A)  If a consumer spends more money on Good 1, she gets more Good 1. 
B)  If a consumer spends more money on Good 2, she gets more Good 2. 
C)  If a consumer spends less money on Good 1, she gets less Good 2. 
D)  If a consumer spends less money on Good 2, she gets less Good 1. 
A)  If a consumer spends more money on Good 1, she gets more Good 1. 
B)  If a consumer spends more money on Good 2, she gets more Good 2. 
C)  If a consumer spends less money on Good 1, she gets less Good 2. 
D)  If a consumer spends less money on Good 2, she gets less Good 1.

Question 14

The difference between private goods and common resources is that common resources are:

Accepted Answer

A)  more valuable than private goods. 
B)  excludable, and private goods are nonexcludable. 
C)  nonexcludable, and private goods are excludable. 
D)  nonrival. 
A)  more valuable than private goods. 
B)  excludable, and private goods are nonexcludable. 
C)  nonexcludable, and private goods are excludable. 
D)  nonrival.

Question 15

A person ________ be cheaply prevented from using national defense, a(n) ________ good.

Accepted Answer

A)  can; excludable 
B)  cannot; nonexcludable 
C)  cannot; excludable 
D)  can; nonexcludable 
A)  can; excludable 
B)  cannot; nonexcludable 
C)  cannot; excludable 
D)  can; nonexcludable

Question 16

Wealthy industrialist Henry Hawk fears an asteroid hitting Earth and is willing and able to pay $15 billion to develop an asteroid deflection system. Suppose asteroid deflection only costs $10 billion and Hawk makes asteroid deflection a reality. What type of good has Henry Hawk provided?

Accepted Answer

A)  public good 
B)  private good 
C)  nonrival private good 
D)  commons resource 
A)  public good 
B)  private good 
C)  nonrival private good 
D)  commons resource

Question 17

A good is excludable if one person's use of the good reduces the ability of another person to use the same good.

Accepted Answer

A) True 
 B)False

Question 18

Goods that are excludable include both:

Accepted Answer

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

Question 19

Explain what aspect of the tragedy of the commons problem is similar to that of a positive externality.

Accepted Answer

The tragedy of the commons problem stems

Question 20

Why have systems similar to New Zealand's "individual transfer quota" system NOT been able to protect all animal life that is in danger of being overexploited?

Accepted Answer

A)  At present the tuna fish is not the only fish in danger of being overfished. 
B)  Other countries do not have the backing of their governments the way that New Zealand does, 
C)  Property rights are difficult to establish in animals that migrate over borders. 
D)  None of these answers is correct. 
A)  At present the tuna fish is not the only fish in danger of being overfished. 
B)  Other countries do not have the backing of their governments the way that New Zealand does, 
C)  Property rights are difficult to establish in animals that migrate over borders. 
D)  None of these answers is correct.

Exam 19: Public Goods and the Tragedy of the Commons

Compared to private goods, the free market would ________ public goods.

When a good is rival in consumption:

You can watch the show Spartacus on the premium cable television station Starz for about $10 a month.

Theoretically, when property rights are difficult to establish, multi-country agreements could help to solve the tragedy of the commons, but it has not been possible to establish any such agreement to date.

Asteroid deflection is a good that would be profitable for an insurance company to provide.

A good is nonexcludable if people who don't pay cannot be easily prevented from using the good.

After Napster was introduced in 1999 as a peer-to-peer file-sharing Internet service, people could cheaply distribute music. Thanks to this and other innovations ("ripping" CDs, torrents, YouTube), music is becoming increasingly:

During the Middle Ages, many villages had areas reserved for families to take their cows or sheep to graze. All families were welcome to use this land without charge. The land for grazing can be characterized as a:

Protection provided by the ozone layer is a:

Which of the following has been the most typical way to solve tragedy of the commons problems?

Since people get to consume public goods regardless of whether they paid for them, the market will likely not produce enough public goods.

Explain what aspect of the tragedy of the commons problem is similar to that of a negative externality.

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of the following statements is TRUE?

The difference between private goods and common resources is that common resources are:

A person ________ be cheaply prevented from using national defense, a(n) ________ good.

Wealthy industrialist Henry Hawk fears an asteroid hitting Earth and is willing and able to pay $15 billion to develop an asteroid deflection system. Suppose asteroid deflection only costs $10 billion and Hawk makes asteroid deflection a reality. What type of good has Henry Hawk provided?

A good is excludable if one person's use of the good reduces the ability of another person to use the same good.

Goods that are excludable include both:

Explain what aspect of the tragedy of the commons problem is similar to that of a positive externality.

Why have systems similar to New Zealand's "individual transfer quota" system NOT been able to protect all animal life that is in danger of being overexploited?

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

A person be cheaply prevented from using national defense, a(n) good.