Question 1

Economists think that the best way to determine the value of a human life is to

Accepted Answer

A)   evaluate the value of a person's expected earnings in the labor market.
B)   evaluate the risks people are willing to take and what they would have to be paid to take them.
C)   determine a person's accumulated wealth at the time of death.
D)   do nothing; human life is priceless.E) B) and C)
F) A) and D)

Question 2

A streetlight is a

Accepted Answer

A)   private good.
B)   club good.
C)   common resource.
D)   public good.E) A) and D)
F) All of the above

Question 3

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Accepted Answer

A)   Coase theorem
B)   Tragedy of the Commons
C)   Cost-benefit analysis
D)   Clean Air ActE) A) and B)
F) None of the above

Question 4

When a good is excludable,

Accepted Answer

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

Question 5

Depending on congestion,national parks can be either a common resource or a public good.

Accepted Answer

A) True 
 B)False

Question 6

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False

Question 7

Nontoll roads can be either public goods or common resources,depending upon the degree of congestion.

Accepted Answer

A) True 
 B)False

Question 8

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 club good which should be left as it is.E) A) and B)
F) B) and D)

Question 9

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 10

A common theme among examples of market failure is

Accepted Answer

A)   the good being provided harms society in some systematic way.
B)   some item of value does not have an owner with the legal authority to control it.
C)   cost-benefit analysis will show that private markets should provide the goods and services.
D)   government intervention decreases the social benefits.E) A) and B)
F) A) and C)

Question 11

The government provides public goods because

Accepted Answer

A)   private markets are incapable of producing these types of goods.
B)   free-riders make it difficult for private markets to supply the socially optimal quantity.
C)   markets are always better off with some government oversight.
D)   external benefits will accrue to private producers.E) All of the above
F) B) and C)

Question 12

On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Accepted Answer

A)   a private good.
B)   a club good.
C)   a Tragedy of the Commons.
D)   public good.E) B) and C)
F) A) and D)

Question 13

Figure 11-1
 
-Refer to Figure 11-1.The more Jane uses good x,the less of that good there is for other people to use.Neither Jane nor anyone else can be prevented from using the good.Good x is an example of the type of good that belongs in

Accepted Answer

A)   Box A,which represents private goods.
B)   Box B,which represents common resources.
C)   Box C,which represents common resources.
D)   Box D,which represents public goods.E) A) and B)
F) B) and D)

Question 14

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Accepted Answer

A)   Without prices,it is difficult to be sure how much people really value a good.
B)   Analysts can't be sure that the respondents to surveys are telling the truth.
C)   Analysis must include not only the cost of building the project but also the cost of maintenance,if any.
D)   People value goods differently if they are publicly provided rather than privately provided.E) C) and D)
F) None of the above

Question 15

Figure 11-1
 
-Refer to Figure 11-1.For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Accepted Answer

A)   Box A and Box B
B)   Box A and Box C
C)   Box B and Box D
D)   Box C and Box DE) B) and D)
F) All of the above

Question 16

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Accepted Answer

A)   Washington,D.C.
B)   Sydney
C)   Tokyo
D)   LondonE) C) and D)
F) A) and C)

Question 17

National defense is a classic example of a public good because

Accepted Answer

A)   there is no market for private security services.
B)   it is difficult to exclude people from receiving the benefits from national defense once it is provided.
C)   everyone agrees that some level of national defense is important,but only the government knows the optimal amount.
D)   there are no private firms willing to supply defense goods such as tanks and weapons.E) A) and B)
F) B) and C)

Question 18

The goal of requiring licenses for hunting and fishing is

Accepted Answer

A)   to reduce the use of a common resource.
B)   to ensure that the people hunting and fishing are qualified.
C)   to generate revenue for the government.
D)   to monitor compliance with federal gun laws.E) C) and D)
F) None of the above

Question 19

Under which of the following scenarios would a park be considered a club good?

Accepted Answer

A)   Visitors to the park must pay an admittance fee,but there are always plenty of empty picnic tables.
B)   Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C)   Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D)   Visitors can enter the park free of charge,but frequently all of the picnic tables are in use.E) B) and D)
F) C) and D)

Question 20

Figure 11-1
 
-Refer to Figure 11-1.The box labeled D represents

Accepted Answer

A)   private goods.
B)   club goods.
C)   common resources.
D)   public goods.E) None of the above
F) A) and D)

Exam 11: Public Goods and Common Resources

Nontoll roads can be either public goods or common resources,depending upon the degree of congestion.

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The government provides public goods because

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Economists think that the best way to determine the value of a human life is to

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A common theme among examples of market failure is

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Under which of the following scenarios would a park be considered a club good?

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Figure 11-1 -Refer to Figure 11-1.The box labeled D represents

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Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

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Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

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When a good is excludable,

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Figure 11-1 -Refer to Figure 11-1.For which two boxes is it the case that externalities arise because something of value has no price attached to it?

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A streetlight is a

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The goal of requiring licenses for hunting and fishing is

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National defense is a classic example of a public good because

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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?

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Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

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Which parable describes the problem of wild animals that are hunted to the point of extinction?

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On holiday weekends thousands of people picnic in state parks.Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero.An overcrowded picnic area is an example of

Correct AnswerverifiedShow Answer

Depending on congestion,national parks can be either a common resource or a public good.

Correct AnswerverifiedShow Answer

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

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Figure 11-1 -Refer to Figure 11-1.The more Jane uses good x,the less of that good there is for other people to use.Neither Jane nor anyone else can be prevented from using the good.Good x is an example of the type of good that belongs in

Correct AnswerverifiedShow Answer

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