1. Which of the
following is NOT a characteristic of a public good?
a. It requires resources to produce.
b. It is not diminished or depreciated as additional people
consume the good.
c. Its benefits cannot be withheld from anyone.
d. It is a free good with zero opportunity cost.
2. Which of the
following would be the best example of a public good?
a. a candy bar
b. a painting by Monet
c. a beautiful sunset
d. a crowded beach
3. To achieve the
optimal provision of public goods the
a. market should be allowed to find its equilibrium without
government intervention.
b. government must limit the provision of the goods.
c. government must tax producers of these goods.
d. government must either provide the goods or subsidize
their production.
4. Imagine a
2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly
owned, and people are invited to enjoy its beauty. Of course, when the weather
is nice it is difficult to find parking, and the trash cans overflow with food
wrappers on summer afternoons. Otherwise, it is a great place. The park is a
common good because
a. when trash cans overflow, a negative externality becomes
a positive externality.
b. it is not fenced to control access.
c. if too many people use it, one person’s use can prevent
others from using it.
d. you have to drive to get there and the automobile is a
private good.
5. Public goods are
a. rival and excludable.
b. rival but excludable.
c. nonrival but excludable.
d. nonrival and nonexcludable.
6. Private goods are
a. rival and excludable.
b. rival but excludable.
c. nonrival but excludable.
d. nonrival and nonexcludable.
7. Who among the
following is a free rider?
a. Barry steals candy from the store where he works.
b. Betty regularly uses the local public library in the town
in which she lives.
c. Joe drives 20,000 miles a year on public streets, but he
pays no more in taxes than Sam, who only drives 1,000 miles.
d. Fred watches many public television programs, but he has
never sent in a contribution to the station.
8. People have little
incentive to produce a public good because
a. the social benefit is less than the private benefit.
b. the social benefit is less than the social cost.
c. there is a free-rider problem.
d. there is a tragedy of the commons.
9. The free-rider
problem
a. forces supply of a public good to exceed demand.
b. allows more people to pay for the public good than if it
were a private good.
c. encourages overuse of a good that is freely available.
d. holds the equilibrium quantity of a public good below the
economically efficient level.
This table describes
the defense demands for three groups of people in Happyville. Each curve shows
the maximum amount the group is willing to pay for a given quantity of
Happyville defense.
10. What is the value
of the 33rd unit of national defense in Happyville?
a. $0
b. $2
c. $4
d. $6
11. If the marginal
cost of national defense is constant at $12 per unit, what is the efficient
level of national defense to provide?
a. 6 units
b. 13 units
c. 22 units
d. 33 units
12. A drawback of
government provision of a public good is that
a. the government lacks information about what people are
willing to pay for the good.
b. taxes have to be raised to pay for the good.
c. the government does not provide enough of any public
good.
d. it would be cheaper for the private sector to provide the
good.
13. A drawback of
government provision of a public good is that
a. government programs may reflect political considerations
rather than economic efficiency.
b. taxes have to be raised to pay for the good.
c. the government does not provide enough of any public
good.
d. it would be cheaper for the private sector to provide the
good.
14. The “open source”
movement in the technology industry supports the idea that programming code
should be made freely available. This group believes that
a. there is a negative externality generated by
technological advancement when private property rights are enforced.
b. the costs of maintaining private property rights are
greater than the benefit to society of making advances freely available.
c. the costs of maintaining private property rights are less
than the benefits to society of making advances freely available.
d. the costs and benefits of making advances freely
available exactly offset one another.
15. If antipoverty
and public assistance programs are public goods, then
a. the private benefits to society of providing such
programs are undervalued.
b. the private marketplace can provide a socially optimal
quantity of these programs with no government interference.
c. the private benefits to society of providing such
programs are overvalued.
d. Both a and b are correct.
16. The best way of
determining the value of a human life is to
a. evaluate the value of their expected earnings in the
labor market.
b. evaluate the risks people are willing to take and what
they would have to be paid to take them.
c. determine how much money a person had at the time of
death.
d. do nothing; human life is priceless.
17. A television
signal is an example of
a. a private good.
b. a nonrival good.
c. a social good.
d. a normal good.
18. Music is an
example of
a. a private good.
b. a social good.
c. a nonrival good.
d. a common good.
19. The commercial
value of ivory is a threat to the elephant, but the commercial value of beef is
a guardian of the cow. This is because
a. the cow is raised in developed economies while the
elephant lives primarily in less-developed nations.
b. cows are private goods while elephants tend to roam
without owners.
c. cows and elephants are public goods, but ivory is
nonrival.
d. ivory is nonrival and nonexclusive but beef is rival and
exclusive.
20. What causes the
tragedy of the commons?
a. Social and private incentives differ.
b. Common goods are nonrival and nonexclusive.
c. Common goods are nonexclusive, but rival.
d. Both A and C are correct.
21. The overuse of a
common resource relative to its economically efficient use is called
a. monopolistic competition.
b. tragedy of the commons.
c. common resource abuse.
d. communism.
22. The tragedy of
the commons is the
a. fact that government regulation is required to combat
externalities.
b. overuse of a common resource relative to its economically
efficient use.
c. idea that monopoly elements in society lead to
inefficient production.
d. false hope that government can solve our social problems.
23. When species of
life are endangered because they are overhunted, the problem is said to be
a. economically unsound.
b. environmentally inefficient.
c. a positive externality.
d. a tragedy of the commons.
24. An overcrowded
beach is an example of
a. a positive externality.
b. a tragedy of the commons.
c. environmentally inefficient allocation.
d. economically unsound allocation.
25. One economically
efficient way to eliminate the tragedy of the commons is to
a. tax the owners of the resource.
b. prevent anyone from using the resource.
c. reduce the marginal social benefit of the resource.
d. establish private ownership of the resource.
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