Question 1

The value of altruistic and communal behavior in society is:

Accepted Answer

A)   social capital.
B)   human capital.
C)   the benefits index.
D)   the human factor.

Question 2

Which action can be best described by the warm glow model?

Accepted Answer

A)   making a donation to a charitable organization to reduce tax obligations
B)   using a national park without contributing.
C)   making a large donation to a charitable organization to gain acceptance from friends.
D)   not being able to consume a private good and blaming the government for it.

Question 3

Government may not be able to determine the optimal amount of a public good because:

Accepted Answer

A)   it is easier to determine the costs and benefits associated with public goods than those associated with private goods.
B)   it is easier to determine the costs and benefits associated with private goods than those associated with public goods.
C)   the quantity of public goods provided by private parties is zero.
D)   there is no optimal mix of public and private goods.

Question 4

Health care reform implemented in Massachusetts in 2006 provides an example of:

Accepted Answer

A)   unsuccessful contracting out.
B)   successful contracting out.
C)   a private sector solution to the free rider problem.
D)   awarding government contracts without competitive bidding.

Question 5

The three problems facing a government trying to determine the optimal quantity of a public good include all of the following EXCEPT:

Accepted Answer

A)   preference revelation because individuals may not tell the government their true valuation of the public good.
B)   preference knowledge because individuals may not know their true valuation of the public good.
C)   preference implementation because it is hard to produce public goods in practice.
D)   preference aggregation because it is difficult to add up the preferences of millions of citizens. C

Question 6

What are the options available to government when deciding whether to rely on the private sector or the public sector to provide public goods? Use the example of prisons to illustrate.

Accepted Answer

At one extreme,public goods are produced...

Question 7

Suppose that two individuals,Jon and David,form a community and would like to construct a communal fort that would protect them from attacks.They both consume good X,a private good,and the protection of the fort,P.One unit of good X costs 1 unit of currency,and one unit of P costs 2 units of currency.Both Jon and David have an income of 100 and a utility function of the form:
U = log(Xi)+ 2 × log(PJ + PD)
The budget constraint for each is given by:
Xi + 2 × Pi = 100
(a)Find the amount of protection Jon will provide as a function of how much David provides,and explain why the relationship is the way it is.
(b)How much protection P will be privately provided in this case?
(c)Explain the economic intuition behind this amount,and compare it to the socially optimal amount without solving for the socially optimal amount.

Accepted Answer

33 units.(c)This amount of pro...

Question 8

Assume private individuals are already providing some quantity of a public good in the absence of government intervention.If government begins to provide the public good,it is likely that:

Accepted Answer

A)   private provision will be unaffected and the amount of the public good will substantially increase.
B)   taxpayers will refuse to support the provision of a public good that is already being provided in the private sector.
C)   private provision will be replaced by public provision,reflecting crowding out.
D)   private provision will be replaced by public provision,reflecting crowding in.

Question 9

Suppose that Scott and Bob live on the same street.In the winter,both of them like their streets plowed.Bob's demand is given by Q = 40 - P,and Scott's demand is given by Q = 30 - 2P.Suppose that the marginal cost of plowing the snow is constant at $35.
(a)What is the social marginal benefit curve?
(b)What is the socially efficient amount of plowing that should be done?
(c)What would be the socially efficient amount of plowing if the marginal cost of plowing were $5?

Accepted Answer

(a) The social marginal benefit curve ca...

Question 10

If government provision of a public good results in an equal reduction in the privately provided amount of that good,then:

Accepted Answer

A)   private provision is partially crowded out.
B)   private provision is not crowded out.
C)   the warm glow effect caused an increase in the net amount of the public good.
D)   private provision is fully crowded out. D

Question 11

In right-to-work states,the law allows people to opt out of joining a labor union and paying membership dues while still being covered by the collective bargaining agreement negotiated by the union.If the benefits of collective bargaining agreements are public goods,are these benefits likely to be underprovided in right-to-work states? Explain why or why not.

Accepted Answer

Yes,there might be a free rider problem ...

Question 12

A road,which can be considered as nonexcludable but rival in consumption,is an example of:

Accepted Answer

A)   a pure private good.
B)   a pure public good.
C)   an impure public good.
D)   an altruistic good.

Question 13

Which of the following is a reason to be cautious about interpreting results from laboratory experiments in economics?

Accepted Answer

A)   The experiments do not typically allow subjects to keep real money.
B)   The typical subjects in the experiments may not be representative of the entire population.
C)   The stakes are typically greater in experiments than in the real world.
D)   Laboratory experiments cannot really be conducted in economics since it is a social science.

Question 14

Business improvement districts have tended to be effective when:

Accepted Answer

A)   laws allow businesses to overcome the free rider problem.
B)   business owners are altruistic.
C)   there is substantial social capital in the business district.
D)   local businesses merge,aligning their interests. A

Question 15

Roads are typically viewed as a public good.However,some highways are financed by tolls levied on drivers instead of through taxes.Discuss why this model works for some roads and not others in terms of the properties of public goods.

Accepted Answer

To some extent,roads are non-rival-the f...

Question 16

Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?

Accepted Answer

A)   Private benefits equal private costs.
B)   Social marginal benefit equals private marginal cost.
C)   Consumer surplus equals producer surplus.
D)   Social marginal benefit exceeds social marginal cost.

Question 17

Which factor is likely to prevent private market forces from providing the optimal amount of a public good?

Accepted Answer

A)   non-satiated preferences
B)   large differences among individuals in their demand for the public good
C)   little to no difference among individuals in their demand for the public good
D)   the free rider problem

Question 18

Public goods:

Accepted Answer

A)   are likely to be underprovided by the private sector due to the free rider problem.
B)   are likely to be overprovided by the private sector due to the free rider problem.
C)   can only be provided by the public sector,while private goods can only be provided by the private sector.
D)   cannot be provided by the private sector because they are rival in consumption.

Question 19

Which activity is most consistent with altruism?

Accepted Answer

A)   buying more of a good as its price rises,all things equal
B)   volunteering to pick up trash in the community
C)   taxing individuals to pay for a new park
D)   taxing businesses to pay for a new park

Question 20

If a good becomes less valuable as a result of one consumer's use of the good,but does not become worthless to other consumers,that good is:

Accepted Answer

A)   purely excludable.
B)   partially excludable.
C)   purely rival.
D)   partially rival.

Exam 7: Public Goods

The value of altruistic and communal behavior in society is:

Correct Answer
verified

Which action can be best described by the warm glow model?

Correct Answer
verified

Government may not be able to determine the optimal amount of a public good because:

Correct Answer
verified

Health care reform implemented in Massachusetts in 2006 provides an example of:

Correct Answer
verified

The three problems facing a government trying to determine the optimal quantity of a public good include all of the following EXCEPT:

Correct Answer
verified
C

What are the options available to government when deciding whether to rely on the private sector or the public sector to provide public goods? Use the example of prisons to illustrate.

Correct Answer
verified
At one extreme,public goods are produced...
View Answer

Correct Answer
verified
33 units.(c)This amount of pro...
View Answer

Assume private individuals are already providing some quantity of a public good in the absence of government intervention.If government begins to provide the public good,it is likely that:

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
(a) The social marginal benefit curve ca...
View Answer

If government provision of a public good results in an equal reduction in the privately provided amount of that good,then:

Correct Answer
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D

Correct Answer
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Yes,there might be a free rider problem ...
View Answer

A road,which can be considered as nonexcludable but rival in consumption,is an example of:

Correct Answer
verified

Which of the following is a reason to be cautious about interpreting results from laboratory experiments in economics?

Correct Answer
verified

Business improvement districts have tended to be effective when:

Correct Answer
verified
A

Roads are typically viewed as a public good.However,some highways are financed by tolls levied on drivers instead of through taxes.Discuss why this model works for some roads and not others in terms of the properties of public goods.

Correct Answer
verified
To some extent,roads are non-rival-the f...
View Answer

Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?

Correct Answer
verified

Which factor is likely to prevent private market forces from providing the optimal amount of a public good?

Correct Answer
verified

Public goods:

Correct Answer
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Which activity is most consistent with altruism?

Correct Answer
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If a good becomes less valuable as a result of one consumer's use of the good,but does not become worthless to other consumers,that good is:

Correct Answer
verified

Exam 7: Public Goods

The value of altruistic and communal behavior in society is:

Correct AnswerverifiedShow Answer

Which action can be best described by the warm glow model?

Correct AnswerverifiedShow Answer

Government may not be able to determine the optimal amount of a public good because:

Correct AnswerverifiedShow Answer

Health care reform implemented in Massachusetts in 2006 provides an example of:

Correct AnswerverifiedShow Answer

The three problems facing a government trying to determine the optimal quantity of a public good include all of the following EXCEPT:

Correct AnswerverifiedC

What are the options available to government when deciding whether to rely on the private sector or the public sector to provide public goods? Use the example of prisons to illustrate.

Correct AnswerverifiedAt one extreme,public goods are produced...View AnswerShow Answer

Correct Answerverified33 units.(c)This amount of pro...View AnswerShow Answer

Assume private individuals are already providing some quantity of a public good in the absence of government intervention.If government begins to provide the public good,it is likely that:

Correct AnswerverifiedShow Answer

Correct AnswerAnswered by ExamLex AI(a) The social marginal benefit curve ca...View AnswerShow Answer

If government provision of a public good results in an equal reduction in the privately provided amount of that good,then:

Correct AnswerverifiedD

Correct AnswerverifiedYes,there might be a free rider problem ...View AnswerShow Answer

A road,which can be considered as nonexcludable but rival in consumption,is an example of:

Correct AnswerverifiedShow Answer

Which of the following is a reason to be cautious about interpreting results from laboratory experiments in economics?

Correct AnswerverifiedShow Answer

Business improvement districts have tended to be effective when:

Correct AnswerverifiedA

Roads are typically viewed as a public good.However,some highways are financed by tolls levied on drivers instead of through taxes.Discuss why this model works for some roads and not others in terms of the properties of public goods.

Correct AnswerverifiedTo some extent,roads are non-rival-the f...View AnswerShow Answer

Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?

Correct AnswerverifiedShow Answer

Which factor is likely to prevent private market forces from providing the optimal amount of a public good?

Correct AnswerverifiedShow Answer

Public goods:

Correct AnswerverifiedShow Answer

Which activity is most consistent with altruism?

Correct AnswerverifiedShow Answer

If a good becomes less valuable as a result of one consumer's use of the good,but does not become worthless to other consumers,that good is:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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At one extreme,public goods are produced...
View Answer

Correct Answer
verified
33 units.(c)This amount of pro...
View Answer

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
(a) The social marginal benefit curve ca...
View Answer

Correct Answer
verified
D

Correct Answer
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Yes,there might be a free rider problem ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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To some extent,roads are non-rival-the f...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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