Question 1

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 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)  install 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.

Question 2

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Accepted Answer

A) True 
 B)False

Question 3

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Accepted Answer

A) True 
 B)False

Question 4

Under which of the following scenarios would a park be considered a common resource?

Accepted Answer

A)  Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B)  Visitors 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.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  Environmental degradation is an example of a free rider problem..
B)  The division between public goods and common resources is clear-cut.
C)  Some goods, such as lighthouses, may be either private or public goods.
D)  The free-rider problem prevents governments from supplying public goods.

Question 6

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.

Question 7

Excessive fishing occurs because

Accepted Answer

A)  each individual fisherman has little incentive to maintain the species for the next year.
B)  fishermen rely on government managers to worry about fish populations.
C)  fishermen are unionized, so they are not concerned with externalities.
D)  fishermen have other marketable skills and do not fear exploitation of fish reserves.

Question 8

In what sense is it meaningful to say that fighting poverty is a public good?

Accepted Answer

The argument that fighting poverty is a ...

Question 9

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

Accepted Answer

A)  Assign each person in the building a time when they are allowed to use the stairwell.
B)  Encourage people to voluntarily keep off the stairwell during peak times.
C)  Charge everyone who uses the stairwell when it is congested the same fee. People who value the use of the stairs the most will be the ones who use the stairwell at peak times.
D)  Hold a lottery to determine who wins the right to use the stairwell at peak times.

Question 10

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.

Question 11

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
-Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Accepted Answer

Fish in the ocean is the best ...

Question 12

The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

Accepted Answer

It is possible that everyone can agree t...

Question 13

Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

Accepted Answer

A)  Elephants live in Africa, whereas cows live in the United States.
B)  Elephants are a common resource.
C)  Cows are a common resource.
D)  Cows are a public good.

Question 14

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 15

Knowledge is an example of a

Accepted Answer

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

Question 16

What can the government do to solve the problem of excessive use of common resources?

Accepted Answer

Government can impose regulati...

Question 17

Figure 11-1 
-Refer to Figure 11-1. A bottle of soda is an example of the type of good represented by Box

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.

Question 18

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1)  not toss cigarette butts onto public streets and sidewalks, and (2)  pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a

Accepted Answer

A)  private goods problem.
B)  Nash equilibrium.
C)  Tragedy of the Commons.
D)  cost-benefit equilibrium.

Question 19

The national defense of the United States is not rival because

Accepted Answer

A)  my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States.
B)  my enjoyment of the national defense does diminish your enjoyment of the national defense of the United States.
C)  once the nation is defended, it is impossible to prevent any single person from enjoying the benefit of this defense.
D)  once the nation is defended, it is possible to prevent any single person from enjoying the benefit of this defense.

Question 20

A vacation home in Malibu is

Accepted Answer

A)  not rival in consumption and excludable.
B)  rival in consumption and excludable.
C)  not rival in consumption and not excludable.
D)  rival in consumption and not excludable.

Exam 11: Public Goods and Common Resources

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Correct Answer
verified

What can the government do to solve the problem of excessive use of common resources?

Correct Answer
verified
Government can impose regulati...
View Answer

Which of the following statements is correct?

Correct Answer
verified

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

Correct Answer
verified

Figure 11-1 -Refer to Figure 11-1. A bottle of soda is an example of the type of good represented by Box

Correct Answer
verified

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

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Correct Answer
verified

A vacation home in Malibu is

Correct Answer
verified

Correct Answer
verified
It is possible that everyone can agree t...
View Answer

In what sense is it meaningful to say that fighting poverty is a public good?

Correct Answer
verified
The argument that fighting poverty is a ...
View 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 Answer
verified

The national defense of the United States is not rival because

Correct Answer
verified

Correct Answer
verified

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct Answer
verified

Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

Correct Answer
verified

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct Answer
verified

Under which of the following scenarios would a park be considered a common resource?

Correct Answer
verified

Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Correct Answer
verified
Fish in the ocean is the best ...
View Answer

Excessive fishing occurs because

Correct Answer
verified

Knowledge is an example of a

Correct Answer
verified

Exam 11: Public Goods and Common Resources

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Correct AnswerverifiedShow Answer

What can the government do to solve the problem of excessive use of common resources?

Correct AnswerverifiedGovernment can impose regulati...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The congestion is so bad that people have been complaining to the building's owner. Which of the following methods would be the most efficient way of reducing congestion?

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1. A bottle of soda is an example of the type of good represented by Box

Correct AnswerverifiedShow Answer

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

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Correct AnswerverifiedShow Answer

A vacation home in Malibu is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt is possible that everyone can agree t...View AnswerShow Answer

In what sense is it meaningful to say that fighting poverty is a public good?

Correct AnswerverifiedThe argument that fighting poverty is a ...View AnswerShow 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

The national defense of the United States is not rival because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Correct AnswerverifiedShow Answer

Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

Correct AnswerverifiedShow Answer

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct AnswerverifiedShow Answer

Under which of the following scenarios would a park be considered a common resource?

Correct AnswerverifiedShow Answer

Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Correct AnswerverifiedFish in the ocean is the best ...View AnswerShow Answer

Excessive fishing occurs because

Correct AnswerverifiedShow Answer

Knowledge is an example of a

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Government can impose regulati...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It is possible that everyone can agree t...
View Answer

Correct Answer
verified
The argument that fighting poverty is a ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fish in the ocean is the best ...
View Answer

Correct Answer
verified

Correct Answer
verified