Question 1

If the government is supplying a public good,the efficient quantity is where the:

Accepted Answer

A)   total social benefit equals the cost.
B)   marginal social benefit is greater than the cost.
C)   marginal social benefit equals the cost.
D)   total social benefit outweighs the total cost.E) All of the above
F) C) and D)

Question 2

One way to solve the free-rider problem is:

Accepted Answer

A)   have the government provide the good at a certain cost.
B)   make the good or service more excludable.
C)   tax those who truly value the good.
D)   tax everyone an equal amount for the good.E) B) and D)
F) B) and C)

Question 3

The problem caused by goods that are considered common resources is that they are:

Accepted Answer

A)   undersupplied.
B)   oversupplied.
C)   under consumed.
D)   over consumed.E) All of the above
F) B) and C)

Question 4

When a good ends up undersupplied,we can assume it is a:

Accepted Answer

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

Question 5

Fish in the ocean would be considered:

Accepted Answer

A)   a common resource.
B)   a private good.
C)   a public good.
D)   an artificially scarce good.E) A) and D)
F) C) and D) A

Question 6

An example of a good that is rival in consumption is:

Accepted Answer

A)   a hamburger.
B)   radio signals broadcast over the air.
C)   national defense.
D)   public utilities.E) A) and B)
F) B) and C)

Question 7

A public good is:

Accepted Answer

A)   rival in consumption and excludable.
B)   not rival in consumption, but excludable.
C)   rival in consumption, but not excludable.
D)   not rival in consumption and not excludable.E) A) and D)
F) None of the above

Question 8

Nonexcludable goods tend to be undersupplied because:

Accepted Answer

A)   the free rider problem persists.
B)   people do not pay the true value of the good.
C)   people rarely willingly pay for something they could get for free, regardless of how much they value it.
D)   All of these statements are true.E) None of the above
F) A) and B)

Question 9

When what people pay does not necessarily reflect the real value they put on a good,it is likely that the:

Accepted Answer

A)   free rider problem exists.
B)   good will be oversupplied.
C)   good is easily excludable.
D)   good is nonrivalrous.E) B) and D)
F) All of the above

Question 10

When faced with a market failure,the government:

Accepted Answer

A)   usually tries to redistribute the existing surplus more fairly.
B)   always takes over the market.
C)   often encourages the well-functioning firms to stay through protectionist policy.
D)   generally enacts thoughtful policy in order to create market efficiency.E) A) and D)
F) B) and D)

Question 11

Fireworks would be considered:

Accepted Answer

A)   a common resource.
B)   a private good.
C)   a public good.
D)   an artificially scarce good.E) B) and D)
F) B) and C)

Question 12

An example of a public good that the government has made excludable is:

Accepted Answer

A)   city buses.
B)   sewer systems.
C)   police protection.
D)   national defense.E) None of the above
F) B) and C)

Question 13

One way the government can enhance efficiency through the management of common resources is by:

Accepted Answer

A)   banning the good.
B)   setting quotas for the good.
C)   government provision of the good.
D)   All of these can be effective and efficiency-enhancing solutions.E) A) and B)
F) A) and C)

Question 14

When the optimal quantity of consumption is zero for a given good:

Accepted Answer

A)   a ban is often the best solution.
B)   changing social norms is often the best solution.
C)   privatizing the good is often the best solution.
D)   government provision of the good is often the best solution.E) A) and D)
F) C) and D) A

Question 15

When goods are subject to market failure,all of the following are possible solutions to the market failure except:

Accepted Answer

A)   change social norms.
B)   have government either regulate the market or provide the good.
C)   privatize the good.
D)   set a very specific consumer quota on consumption.E) B) and C)
F) A) and C)

Question 16

When the government privatizes a common resource,it does all of the following except:

Accepted Answer

A)   forces the owner to consider all the costs and benefits of their consumption choices.
B)   creates excludability.
C)   increases efficiency.
D)   increases undesirable side effects.E) A) and B)
F) B) and D)

Question 17

The tragedy of the commons arises from the:

Accepted Answer

A)   good being rival.
B)   good being excludable.
C)   combination of rivalry and nonexcludability.
D)   combination of rivalry and excludability.E) A) and C)
F) A) and D) C

Question 18

Using a common resource:

Accepted Answer

A)   creates a positive externality for others.
B)   maximizes total surplus.
C)   is an irrational decision.
D)   imposes a negative externality on others.E) All of the above
F) B) and D)

Question 19

If the punishment associated with breaking a ban is not severe enough,it may:

Accepted Answer

A)   not alter the trade-offs enough to change the consumption patterns of the banned good.
B)   cause even more consumption of the good, exaggerating the problem.
C)   still decrease the consumption of the good if the price of the good changes.
D)   still be effective if it gains media attention.E) A) and B)
F) C) and D)

Question 20

Which of the following goods is most likely to be over consumed?

Accepted Answer

A)   Fish in the ocean
B)   Chickens on a farm
C)   Horses on a ranch
D)   Water from a reservoirE) B) and C)
F) C) and D)

Exam 19: Public Goods and Common Resources

If the government is supplying a public good,the efficient quantity is where the:

Correct AnswerverifiedShow Answer

One way to solve the free-rider problem is:

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The problem caused by goods that are considered common resources is that they are:

Correct AnswerverifiedShow Answer

When a good ends up undersupplied,we can assume it is a:

Correct AnswerverifiedShow Answer

Fish in the ocean would be considered:

Correct AnswerverifiedA

An example of a good that is rival in consumption is:

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A public good is:

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Nonexcludable goods tend to be undersupplied because:

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When what people pay does not necessarily reflect the real value they put on a good,it is likely that the:

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When faced with a market failure,the government:

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Fireworks would be considered:

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An example of a public good that the government has made excludable is:

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One way the government can enhance efficiency through the management of common resources is by:

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When the optimal quantity of consumption is zero for a given good:

Correct AnswerverifiedA

When goods are subject to market failure,all of the following are possible solutions to the market failure except:

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When the government privatizes a common resource,it does all of the following except:

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The tragedy of the commons arises from the:

Correct AnswerverifiedC

Using a common resource:

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If the punishment associated with breaking a ban is not severe enough,it may:

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Which of the following goods is most likely to be over consumed?

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A

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A

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C

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