Question 1

Studies that compare the wages of more risky and less risky occupations estimate the value of a human life to be about

Accepted Answer

A)   $1 million.
B)   $5 million.
C)   $10 million.
D)   $20 million.E) None of the above
F) A) and B)

Question 2

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

Accepted Answer

A)   people can be prevented from using it.
B)   access is limited due to driving distances.
C)   if too many people use it, one person's use diminishes other peoples' use.
D)   anyone can use it without affecting anyone else.E) C) and D)
F) All of the above

Question 3

Variable tolls on roads

Accepted Answer

A)   are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly.
B)   rise when traffic volume increases to ensure the speed on the road is kept high.
C)   are an effective way of correcting the common resource problem on roads.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 4

Which of the following quotations illustrates the Tragedy of the Commons?

Accepted Answer

A)   "A bird in the hand is worth two in the bush."
B)   "The only difference between the rich and other people is that the rich have more money."
C)   "What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others."
D)   "Anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no head."E) B) and C)
F) A) and D)

Question 5

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Accepted Answer

A)   install the light because the expected benefit of $400,000 is greater than the cost.
B)   install the light because the expected benefit of $45,000 is greater than the cost.
C)   not install the light because the expected benefit of $45,000 is only equal to the cost.
D)   not install the light because the expected benefit of $40,000 is less than the cost.E) B) and D)
F) None of the above

Question 6

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. 
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Amber receive?

Accepted Answer

A)   $0
B)   $26
C)   $32
D)   $56E) A) and C)
F) B) and D)

Question 7

The provision of a public good generates a

Accepted Answer

A)   positive externality, as does the use of a common resource.
B)   positive externality and the use of a common resource generates a negative externality.
C)   negative externality, as does the use of a common resource.
D)   negative externality and the use of a common resource generates a positive externality.E) A) and C)
F) All of the above

Question 8

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Accepted Answer

A)   taxing the use of the common resource
B)   turning the common resource into a club good
C)   turning the common resource into a private good
D)   regulating the use of the common resourceE) A) and B)
F) B) and D)

Question 9

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Accepted Answer

A)   3.5 percentage points.
B)   5.5 percentage points.
C)   6.1 percentage points.
D)   9.0 percentage points.E) None of the above
F) All of the above

Question 10

The enclosure movement in England in the 17th century represented an attempt to transform

Accepted Answer

A)   a public good into a private good.
B)   a private good into a public good.
C)   a private good into a common resource.
D)   a common resource into a private good.E) B) and C)
F) A) and B)

Question 11

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

Accepted Answer

A)   install the walkway because the estimated benefit is twice the cost.
B)   be indifferent between installing and not installing the walkway because the estimated benefit equals the cost.
C)   not install the walkway, since the cost is twice the estimated benefit.
D)   install the walkway, since the cost of even a single life is too great not to take action.E) None of the above
F) All of the above

Question 12

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Accepted Answer

A)   rival in consumption and is excludable.
B)   not rival in consumption, but is excludable.
C)   rival in consumption, but is not excludable.
D)   not rival in consumption nor is it excludable.E) B) and C)
F) A) and D)

Question 13

Before considering any public project, the government should

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (ii)  only
D)   (i) , (ii) , and (iii) E) A) and B)
F) A) and C)

Question 14

Property rights are well established for

Accepted Answer

A)   private goods.
B)   public goods.
C)   common resources.
D)   both (b)  and (c) .E) B) and C)
F) A) and C)

Question 15

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

Accepted Answer

A)   $60,000.
B)   $290,000.
C)   $350,000.
D)   $600,000.E) A) and D)
F) B) and D)

Question 16

When the absence of property rights causes a market failure, the government can potentially solve the problem

Accepted Answer

A)   by clearly defining property rights.
B)   through regulation.
C)   by supplying the good itself.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 17

Which of the following is not a common resource?

Accepted Answer

A)   elephants in the wild
B)   a narrow trail in a park
C)   a neighborhood garden
D)   Neither a nor b is a common resource.E) All of the above
F) None of the above

Question 18

Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is correct?

Accepted Answer

A)   The efficient provision of private goods is intrinsically more difficult than the efficient provision of public goods.
B)   The efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods.
C)   Private markets provide quantities of public goods that exceed the socially-efficient quantities of those goods.
D)   Private decision makers utilize quantities of common resources that fall short of the socially-efficient quantities of those resources.E) B) and C)
F) None of the above

Question 20

If people can be prevented from using a certain good, then that good is called

Accepted Answer

A)   rival in consumption.
B)   excludable.
C)   a common resource.
D)   a public good.E) B) and D)
F) B) and C)

Exam 11: Public Goods and Common Resources

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Correct Answer
verified

Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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If people can be prevented from using a certain good, then that good is called

Correct Answer
verified

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct Answer
verified

Studies that compare the wages of more risky and less risky occupations estimate the value of a human life to be about

Correct Answer
verified

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

Correct Answer
verified

Before considering any public project, the government should

Correct Answer
verified

The enclosure movement in England in the 17th century represented an attempt to transform

Correct Answer
verified

Which of the following quotations illustrates the Tragedy of the Commons?

Correct Answer
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Correct Answer
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Which of the following is not a typical solution to the "Tragedy of the Commons?"

Correct Answer
verified

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Correct Answer
verified

When the absence of property rights causes a market failure, the government can potentially solve the problem

Correct Answer
verified

Correct Answer
verified

Property rights are well established for

Correct Answer
verified

Variable tolls on roads

Correct Answer
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Which of the following is not a common resource?

Correct Answer
verified

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

Correct Answer
verified

The provision of a public good generates a

Correct Answer
verified

Exam 11: Public Goods and Common Resources

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Correct AnswerverifiedShow Answer

Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If people can be prevented from using a certain good, then that good is called

Correct AnswerverifiedShow Answer

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

Correct AnswerverifiedShow Answer

Studies that compare the wages of more risky and less risky occupations estimate the value of a human life to be about

Correct AnswerverifiedShow Answer

Suppose that the cost of installing an overhead pedestrian walkway in a college town is $150,000. The walkway is expected to reduce the risk of fatality by 1.5 percent, and the cost of a human life is estimated at $10 million. The town should

Correct AnswerverifiedShow Answer

Before considering any public project, the government should

Correct AnswerverifiedShow Answer

The enclosure movement in England in the 17th century represented an attempt to transform

Correct AnswerverifiedShow Answer

Which of the following quotations illustrates the Tragedy of the Commons?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a typical solution to the "Tragedy of the Commons?"

Correct AnswerverifiedShow Answer

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Correct AnswerverifiedShow Answer

When the absence of property rights causes a market failure, the government can potentially solve the problem

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Property rights are well established for

Correct AnswerverifiedShow Answer

Variable tolls on roads

Correct AnswerverifiedShow Answer

Which of the following is not a common resource?

Correct AnswerverifiedShow Answer

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

Correct AnswerverifiedShow Answer

The provision of a public good generates a

Correct AnswerverifiedShow Answer

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