Question 1

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) B) and C)
F) A) and D)

Question 2

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) A) and C)
F) B) and C)

Question 3

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Accepted Answer

A)  The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot.
B)  The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year.
C)  The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce.
D)  Both a and b are possible solutions to this example of the Tragedy of the CommonsE) C) and D)
F) All of the above

Question 4

Property rights are well established for

Accepted Answer

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

Question 5

Table 11-3
This table describes the police protection demands for three equal sized groups of people in Safetyville. The second, third, and fourth columns show the number of person-hours of police protection per day that a group will demand for a given price (the first column) . th unit of police protection in Safetyville? A) $24 B) $42 C) $54 D) $72" class="answers-bank-image d-inline" rel="preload" >
-Refer to Table 11-3. What is the value of the 39th unit of police protection in Safetyville?

Accepted Answer

A)  $24
B)  $42
C)  $54
D)  $72E) B) and C)
F) A) and D)

Question 6

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Accepted Answer

Basic research is ne...

Question 7

People cannot be prevented from using a good if the good is

Accepted Answer

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

Question 8

Which two types of goods are rival in consumption?

Accepted Answer

Private goods and co...

Question 9

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) B) and D)
F) A) and D)

Question 10

Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?

Accepted Answer

A)  Use of the beach by the nine new beachgoers will yield a negative externality.
B)  The town can reduce the congestion externality by raising the fee to access the beach.
C)  An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion.
D)  Each of the nine friends would have been better off staying at home.E) C) and D)
F) A) and B)

Question 11

Elephants are endangered, but cows are not because

Accepted Answer

A)  cows are not as valuable as elephants.
B)  elephants are a common resource, while cows are private goods.
C)  cows are a common resource, while elephants are private goods.
D)  it is legal to kill cows but not elephants.E) B) and D)
F) A) and B)

Question 12

The Occupational Safety and Health Administration (OSHA)  has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks. The cost of imposing a regulation that would ban the chemical is $10 million. OSHA has calculated that each person saved by this regulation has a value equal to $10 million. If the benefits are exactly equal to the costs, what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

Accepted Answer

A)  0.001
B)  0.01
C)  0.1
D)  1.0E) C) and D)
F) A) and B)

Question 13

Free goods are usually efficiently allocated without government intervention.

Accepted Answer

A) True 
 B)False

Question 14

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Accepted Answer

A) True 
 B)False

Question 15

A tax on gasoline often reduces road congestion because gasoline

Accepted Answer

A)  and driving are complements.
B)  and driving are substitutes.
C)  is a normal good, while driving is an inferior good.
D)  is an inferior good, while driving is a normal good.E) A) and B)
F) A) and D)

Question 16

Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?

Accepted Answer

A)  Install the park benches because people like places to sit.
B)  Install the park benches because the benefits outweigh the costs.
C)  Do not install the park benches because the costs outweigh the benefits.
D)  Do not install the park benches to prevent the Tragedy of the Commons problem of overuse.E) A) and B)
F) A) and C)

Question 17

What particular characteristic do private goods and club goods have in common?

Accepted Answer

Private go...

Question 18

A tornado siren is a

Accepted Answer

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

Question 19

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Accepted Answer

A) True 
 B)False

Question 20

When goods do not have a price, which of the following primarily ensures that the good is produced?

Accepted Answer

A)  buyers
B)  sellers
C)  government
D)  the marketE) A) and C)
F) None of the above

Exam 11: Public Goods and Common Resources

A tax on gasoline often reduces road congestion because gasoline

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Property rights are well established for

Correct Answer
verified

Free goods are usually efficiently allocated without government intervention.

Correct Answer
verified

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

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

Variable tolls on roads

Correct Answer
verified

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct Answer
verified

What particular characteristic do private goods and club goods have in common?

Correct Answer
verified
Private go...
View Answer

Which two types of goods are rival in consumption?

Correct Answer
verified
Private goods and co...
View Answer

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Correct Answer
verified
Basic research is ne...
View Answer

A tornado siren is a

Correct Answer
verified

People cannot be prevented from using a good if the good is

Correct Answer
verified

Correct Answer
verified

Elephants are endangered, but cows are not because

Correct Answer
verified

When goods do not have a price, which of the following primarily ensures that the good is produced?

Correct Answer
verified

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

A tax on gasoline often reduces road congestion because gasoline

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Property rights are well established for

Correct AnswerverifiedShow Answer

Free goods are usually efficiently allocated without government intervention.

Correct AnswerverifiedShow Answer

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

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

Variable tolls on roads

Correct AnswerverifiedShow Answer

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Correct AnswerverifiedShow Answer

What particular characteristic do private goods and club goods have in common?

Correct AnswerverifiedPrivate go...View AnswerShow Answer

Which two types of goods are rival in consumption?

Correct AnswerverifiedPrivate goods and co...View AnswerShow Answer

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

Correct AnswerverifiedBasic research is ne...View AnswerShow Answer

A tornado siren is a

Correct AnswerverifiedShow Answer

People cannot be prevented from using a good if the good is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Elephants are endangered, but cows are not because

Correct AnswerverifiedShow Answer

When goods do not have a price, which of the following primarily ensures that the good is produced?

Correct AnswerverifiedShow Answer

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Correct AnswerverifiedShow Answer

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Private go...
View Answer

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Private goods and co...
View Answer

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Basic research is ne...
View Answer

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Correct Answer
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Correct Answer
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