Question 1

Each of the following explains why cost-benefit analysis is difficult except

Accepted Answer

A)  there is no price with which to judge the value of a public good.
B)  surveys are often biased and unreliable.
C)  it is difficult to identify all factors that influence costs and benefits of public goods.
D)  government projects rarely have sufficient funding to complete them on time.E) B) and D)
F) A) and B)

Question 2

Some goods can be classified as either public goods or private goods depending on the circumstances.

Accepted Answer

A) True 
 B)False

Question 3

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 2.6 to 1.9 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Accepted Answer

A)  $70,000.
B)  $190,000.
C)  $260,000.
D)  $10,000,000.E) A) and D)
F) B) and C)

Question 4

A lighthouse that primarily benefits a single port owner is more like a

Accepted Answer

A)  public good.
B)  natural monopoly.
C)  private good.
D)  common resource.E) None of the above
F) A) and B)

Question 5

Advocates of antipoverty programs believe that fighting poverty

Accepted Answer

A)  can make everyone better off.
B)  is most successfully accomplished by charities.
C)  is most efficiently accomplished by the market.
D)  reduces the well-being of tax payers.E) B) and C)
F) A) and B)

Question 6

Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads.Which of the following statements would not be correct,assuming that the debit cards could be sold privately from person to person?

Accepted Answer

A)  It would be a very egalitarian policy.
B)  The system would redistribute income from those who drive more to those who drive less.
C)  The system could potentially redistribute income from the rich to the poor if the poor drive less.
D)  The cost to the government of such a program would greatly outweigh the benefit to society.E) A) and B)
F) B) and D)

Question 7

Public goods are both

Accepted Answer

A)  excludable and nonrival in consumption.
B)  nonexcludable and rival in consumption.
C)  excludable and rival in consumption.
D)  nonexcludable and nonrival in consumption.E) A) and B)
F) A) and C)

Question 8

A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 9

An overcrowded beach is an example of

Accepted Answer

A)  a positive externality.
B)  a Tragedy of the Commons.
C)  an environmentally inefficient allocation of resources.
D)  an economically unfair allocation of resources.E) C) and D)
F) All of the above

Question 10

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.We might expect that

Accepted Answer

A)  over time, the aquifer is likely to be overused.
B)  each farmer has a sufficient incentive to conserve the water.
C)  state governments have an incentive to insure that their farmers do not overuse the water.
D)  resources would be used more efficiently if the government paid for the pumps farmers use to get the water.E) A) and D)
F) B) and D)

Question 11

Market failure associated with the free-rider problem is a result of

Accepted Answer

A)  a problem associated with pollution.
B)  benefits that accrue to those who don't pay.
C)  losses that accrue to providers of the product.
D)  a project in which costs exceed benefits.E) A) and B)
F) All of the above

Question 12

A lighthouse might be considered a private good if

Accepted Answer

A)  there is a second lighthouse nearby, thus preventing a monopoly.
B)  the owner of the lighthouse is able to exclude beneficiaries from receiving the benefits of the lighthouse.
C)  ships are able to enjoy the benefits of the lighthouse without paying for the benefit.
D)  a nearby port authority is able to avoid paying any fees to the lighthouse owner.E) B) and C)
F) C) and D)

Question 13

Ken,Danita,and C.J.all enjoy watching the holiday lights displayed in their neighborhood.The homes association is considering displaying lights around the sign at the entrance to the neighborhood.Ken values the lights at $50,Danita at $40,and C.J.at $20.The lights cost $100.What should the homes association do?

Accepted Answer

A)  Install the lights because people like them.
B)  Install the lights because the benefits outweigh the costs.
C)  Do not install the lights because the costs outweigh the benefits.
D)  Do not install the lights in order to prevent the Tragedy of the Commons problem of overuse.E) B) and D)
F) None of the above

Question 14

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Accepted Answer

A)  allow individual shepherds to chose their own flock sizes.
B)  internalize the externality by subsidizing the production of sheep's wool.
C)  auction off a limited number of sheep-grazing permits.
D)  wait until the market corrects the problem.E) None of the above
F) C) and D)

Question 15

Table 11-1
This table describes the defense demands for three groups of people in Happyville. The second, third, and fourth column shows the quantity that a group will demand for a given price (the first column) .
 
-Refer to Table 11-1.If the marginal cost of national defense is constant at $12 per unit,what is the efficient level of national defense to provide?

Accepted Answer

A)  6 units
B)  13 units
C)  22 units
D)  33 unitsE) B) and C)
F) C) and D)

Question 16

Market failure with common resources occurs because

Accepted Answer

A)  the government imposes a negative externality on everyone's consumption of the resource.
B)  common resources can become public goods through overuse.
C)  consumption can be privately profitable even when it is socially undesirable.
D)  All of the above are correct.E) A) and B)
F) B) and C)

Question 17

The Tragedy of the Commons

Accepted Answer

A)  occurs most often with public goods.
B)  is only applicable to shared grazing rights among sheep herders.
C)  is eliminated when property rights are assigned to individuals.
D)  occurs when social incentives are in line with private incentives.E) B) and C)
F) A) and D)

Question 18

Goods that are excludable include both

Accepted Answer

A)  natural monopolies and public goods.
B)  public goods and common resources.
C)  common resources and private goods.
D)  private goods and natural monopolies.E) All of the above
F) B) and C)

Exam 11: Public Goods and Common Resources

Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads.Which of the following statements would not be correct,assuming that the debit cards could be sold privately from person to person?

Correct Answer
verified

Public goods are both

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 2.6 to 1.9 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Correct Answer
verified

Correct Answer
verified

A lighthouse might be considered a private good if

Correct Answer
verified

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct Answer
verified

An overcrowded beach is an example of

Correct Answer
verified

Market failure with common resources occurs because

Correct Answer
verified

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.We might expect that

Correct Answer
verified

Some goods can be classified as either public goods or private goods depending on the circumstances.

Correct Answer
verified

A lighthouse that primarily benefits a single port owner is more like a

Correct Answer
verified

Market failure associated with the free-rider problem is a result of

Correct Answer
verified

Goods that are excludable include both

Correct Answer
verified

Each of the following explains why cost-benefit analysis is difficult except

Correct Answer
verified

Advocates of antipoverty programs believe that fighting poverty

Correct Answer
verified

A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.

Correct Answer
verified

The Tragedy of the Commons

Correct Answer
verified

Correct Answer
verified

Exam 11: Public Goods and Common Resources

Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads.Which of the following statements would not be correct,assuming that the debit cards could be sold privately from person to person?

Correct AnswerverifiedShow Answer

Public goods are both

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 2.6 to 1.9 percent over the life of the system.The city should install the new lighting system if its cost does not exceed

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A lighthouse might be considered a private good if

Correct AnswerverifiedShow Answer

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

Correct AnswerverifiedShow Answer

An overcrowded beach is an example of

Correct AnswerverifiedShow Answer

Market failure with common resources occurs because

Correct AnswerverifiedShow Answer

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.We might expect that

Correct AnswerverifiedShow Answer

Some goods can be classified as either public goods or private goods depending on the circumstances.

Correct AnswerverifiedShow Answer

A lighthouse that primarily benefits a single port owner is more like a

Correct AnswerverifiedShow Answer

Market failure associated with the free-rider problem is a result of

Correct AnswerverifiedShow Answer

Goods that are excludable include both

Correct AnswerverifiedShow Answer

Each of the following explains why cost-benefit analysis is difficult except

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs believe that fighting poverty

Correct AnswerverifiedShow Answer

A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.

Correct AnswerverifiedShow Answer

The Tragedy of the Commons

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow 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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified