Question 1

Use the following to answer questions: 
-(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay for one iTunes download. If the marginal social cost is constant at _____, then _____ consumers will purchase this good and consumer surplus is _____.

Accepted Answer

A)  $4; four; $34 
B)  $2; five; $36 
C)  $5; five; $30 
D)  $2; five; $26

Question 2

Use the following to answer questions: 
-(Table: Total Cost and Total Individual Benefit) Look at the table Total Cost and Total Individual Benefit. If there are 1,000 residents and they all have the same total individual benefit, as shown in the table, what is the marginal social benefit of the fourth animal control officer?

Accepted Answer

A)  $10 
B)  $9,000 
C)  $10,000 
D)  $90,000

Question 3

Economic policy is _____ in consumption and _____.

Accepted Answer

A)  rival; nonexcludable 
B)  nonrival; nonexcludable 
C)  nonrival; excludable 
D)  rival; excludable

Question 4

Although most citizens have access to police protection, they also take measures, such as putting locks on their doors, to protect themselves. For most citizens police protection is a(n) _____ good, while self-protection is a(n) _____ good.

Accepted Answer

A)  public; private 
B)  public; artificially scarce good 
C)  common resource; private 
D)  artificially scarce good; common resource

Question 5

For a nonexcludable good like national defense, the private market will lead to _____ of the good.

Accepted Answer

A)  too much production 
B)  too much consumption 
C)  too little production 
D)  the efficient level of consumption

Question 6

When the allocation of resources is such that a different allocation would increase society's welfare, economists say:

Accepted Answer

A)  market failure has occurred. 
B)  the efficiency condition is met. 
C)  decision makers have faced the full marginal benefits and marginal costs of their decisions. 
D)  producers have maximized total cost.

Question 7

Which of the following goods best fits the characteristics of a private good?

Accepted Answer

A)  national defense 
B)  clean water 
C)  a pizza 
D)  police protection

Question 8

In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120. The congestion fee is:

Accepted Answer

A)  a Pigouvian tax aimed at regulating the use of city streets, a common resource. 
B)  an attempt to internalize the costs of traffic delays and congestion. 
C)  the wrong policy tool for solving the problem of congestion; instead, motorists should be allowed to make deals to determine when and where they are permitted to drive. 
D)  a Pigouvian tax aimed at regulating the use of city streets, a common resource, and an attempt to internalize the costs of traffic delays and congestion.

Question 9

Most neighborhood streets are illuminated at night by streetlights. The streetlights are _____ and _____. Therefore, they are likely to be _____ by the competitive market.

Accepted Answer

A)  nonrival; nonexcludable; underprovided 
B)  nonrival; nonexcludable; overprovided 
C)  rival; excludable; efficiently provided 
D)  nonrival; excludable; underprovided

Question 10

Common resources tend to be _____ in private markets.

Accepted Answer

A)  priced too high 
B)  efficiently priced 
C)  overconsumed 
D)  underconsumed

Question 11

A very large museum could accommodate many more visitors than it does without reducing the enjoyment of the visitors if it did not charge such a high price for admission. Visits to the museum are a(n):

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  artificially scarce good.

Question 12

Pay-per-view movies are an example of a common resource.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an example of a nonexcludable good?

Accepted Answer

A)  health care 
B)  national defense 
C)  education 
D)  ice cream

Question 14

Use the following to answer questions:
Figure: An Individual's Marginal Benefit from a Public Good 
-(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $8, how many units of this public good will maximize society's welfare?

Accepted Answer

A)  0 
B)  8 
C)  12 
D)  16

Question 15

Josh has an iPhone, and he frequently downloads songs from the iTunes website. He pays a small fee for each download, but downloading a song does not remove it from the iTunes inventory. Other consumers can also pay the fee and download a song that Josh might have already accessed. The iTunes service is best described as(n):

Accepted Answer

A)  private good. 
B)  public good. 
C)  artificially scarce good. 
D)  common resource.

Question 16

Use the following to answer questions: 
-(Table: Total Cost and Total Individual Benefit) Look at the table Total Cost and Total Individual Benefit. If an individual resident were to decide about hiring and paying for animal control officers on his or her own, how many officers would that resident hire?

Accepted Answer

A)  0 
B)  1 
C)  3 
D)  5

Question 17

_____ are a good that is rival in consumption and nonexcludable.

Accepted Answer

A)  Public parks 
B)  Public policy, such as national economic policy, 
C)  Private beaches 
D)  National defense

Question 18

A private good is a good or service for which exclusion is _____ and which is _____ in consumption.

Accepted Answer

A)  possible; rival 
B)  possible; nonrival 
C)  not possible; rival 
D)  not possible; nonrival

Question 19

A movie DVD is a private good, but a pay-per-view movie from your cable company is considered an artificially scarce good. How are they similar, and what makes them different?

Accepted Answer

The answer of A movie DVD is a private good,...

Question 20

Use the following to answer questions:
Figure: Market Failure 
-(Figure: Market Failure) Look at the figure Market Failure. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. The demand curve represents the marginal benefit that Ann receives from the streetlights. Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to AC. How much is Ann willing to pay for E streetlights?

Accepted Answer

A)  0 
B)  A 
C)  B 
D)  C

Exam 17: Public Goods Common Resources

Economic policy is _ in consumption and _.

Although most citizens have access to police protection, they also take measures, such as putting locks on their doors, to protect themselves. For most citizens police protection is a(n) _ good, while self-protection is a(n) _ good.