Question 1

What result can we expect to see when goods are nonexcludable?

Accepted Answer

A)  Consumers demand a higher quantity than they would if they had to pay for what they consumed.
B)  Consumers demand a lower quantity than they would if they had to pay for what they consumed.
C)  Firms supply a lower quantity than they would if they incurred the full costs of the provision of the good.
D)  Firms supply a higher quantity than they would if they had to pay for what they supplied.E) B) and C)
F) A) and C)

Question 2

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the tragedy of the commons if:

Accepted Answer

A)  the community agrees to aid in enforcement.
B)  the country has the resources to enforce them.
C)  the community participates in setting the punishments for breaking them.
D)  None of these are true.E) None of the above
F) C) and D)

Question 3

Which of the following is a way the government can enhance efficiency through the management of a common resource?

Accepted Answer

A)  Ban the good
B)  Set quotas for the good
C)  Government ownership of the good
D)  All of these can be effective and efficiency-enhancing solutions.E) B) and C)
F) A) and D)

Question 4

In many areas, local governments have placed limits on how many fish an individual can catch in a single day. This regulation is likely in place because without it: the free rider problem would exist. fish are a nonexcludable good. fish are a rival good.

Accepted Answer

A)  II only
B)  I and II only
C)  II and III only
D)  I, II, and IIIE) None of the above
F) B) and C)

Question 5

When a good is not easily excludable, what people pay for it will:

Accepted Answer

A)  reflect the real value they place on it.
B)  exactly equal the social benefit of the good.
C)  not necessarily reflect the real value they place on it.
D)  be greater than the social benefit of the good.E) A) and D)
F) A) and C)

Question 6

Tradable permits are useful in allocating common resources because:

Accepted Answer

A)  the depletion of common resources imposes a negative externality.
B)  the problem of overconsumption can be addressed.
C)  the socially optimal quantity is not the same as the individual consumer's optimal quantity.
D)  All of these are true.E) A) and B)
F) None of the above

Question 7

Tradable allowances may be a better solution to common-resource problems than quotas because tradable allowances:

Accepted Answer

A)  allocate the good without government intervention.
B)  ensure that the resource is allocated to those with the highest willingness to pay, while quotas do not.
C)  are more equitable than quotas.
D)  allow the government to set a specific amount of the good to be consumed, while quotas do not.E) None of the above
F) All of the above

Question 8

Which type of good is neither rival in consumption nor excludable?

Accepted Answer

A)  Common resource
B)  Private
C)  Public
D)  Artificially scarceE) A) and C)
F) B) and C)

Question 9

Which of the following is a good that is rival in consumption?

Accepted Answer

A)  A sweater
B)  Bottled water
C)  Tap water
D)  All of these are goods that are rival in consumption.E) B) and C)
F) A) and B)

Question 10

All solutions to market failures in markets for public goods:

Accepted Answer

A)  try to force the correction of externalities.
B)  must be provided by the government.
C)  are not perfect, and total surplus cannot be maximized in these markets.
D)  need to be accepted by the affected parties to be effective.E) All of the above
F) C) and D)

Question 11

The free rider problem arises when a good is _______ and the tragedy of the commons arises when a good is ________________.

Accepted Answer

A)  nonexcludable; both rival and nonexcludable
B)  rival; both rival and nonexcludable
C)  both rival and nonexcludable; rival
D)  both rival and nonexcludable; excludableE) B) and D)
F) None of the above

Question 12

Which of the following goods is likely to cause a market failure and be undersupplied?

Accepted Answer

A)  Research
B)  Orange juice
C)  River water
D)  Grazing pastureE) None of the above
F) C) and D)

Question 13

Which of the following is not a solution to the market failure that occurs with public goods?

Accepted Answer

A)  Changing social norms
B)  Government regulation of the market
C)  Privatization of the good
D)  Setting a very specific quota on consumptionE) C) and D)
F) B) and D)

Question 14

Government intervention can be productive and efficiency enhancing:

Accepted Answer

A)  whenever the marginal social benefit is positive.
B)  in markets for common resources.
C)  because the government always acts with altruistic motives.
D)  in all markets except those for public goods.E) A) and C)
F) A) and B)

Question 15

Which of the following is a public good?

Accepted Answer

A)  National Defense
B)  A library
C)  Timber
D)  Natural gasE) B) and C)
F) A) and D)

Question 16

If the punishment associated with breaking a government 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)  increase consumption of the good, exaggerating the problem.
C)  still decrease consumption of the good if the price of the good changes.
D)  still be effective if it gains enough media attention.E) A) and B)
F) A) and C)

Question 17

An artificially scarce good is:

Accepted Answer

A)  rival in consumption and excludable.
B)  excludable, but not rival in consumption.
C)  rival in consumption, but not excludable.
D)  neither rival in consumption nor excludable.E) C) and D)
F) B) and C)

Question 18

A government ban on a good that suffers from overconsumption may be ineffective if the:

Accepted Answer

A)  likelihood of being caught breaking the ban is high.
B)  likelihood of being caught breaking the ban is very low.
C)  punishment for breaking the ban is severe.
D)  public did not participate in setting the punishment for breaking the ban.E) B) and C)
F) A) and C)

Question 19

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

Accepted Answer

A)  is nonrivalrous.
B)  will be undersupplied.
C)  is easily excludable.
D)  is not socially desirable.E) All of the above
F) A) and C)

Question 20

Which of the following is not a public good that the government can make excludable?

Accepted Answer

A)  Toll roads
B)  City buses
C)  State colleges
D)  National DefenseE) B) and D)
F) None of the above

Exam 19: Public Goods and Common Resources

Which of the following is not a public good that the government can make excludable?

Correct AnswerverifiedShow Answer

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the tragedy of the commons if:

Correct AnswerverifiedShow Answer

Which type of good is neither rival in consumption nor excludable?

Correct AnswerverifiedShow Answer

When a good is not easily excludable, what people pay for it will:

Correct AnswerverifiedShow Answer

In many areas, local governments have placed limits on how many fish an individual can catch in a single day. This regulation is likely in place because without it: the free rider problem would exist. fish are a nonexcludable good. fish are a rival good.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Government intervention can be productive and efficiency enhancing:

Correct AnswerverifiedShow Answer

The free rider problem arises when a good is _______ and the tragedy of the commons arises when a good is ________________.

Correct AnswerverifiedShow Answer

Tradable permits are useful in allocating common resources because:

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All solutions to market failures in markets for public goods:

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Which of the following goods is likely to cause a market failure and be undersupplied?

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What result can we expect to see when goods are nonexcludable?

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Tradable allowances may be a better solution to common-resource problems than quotas because tradable allowances:

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Which of the following is a public good?

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An artificially scarce good is:

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

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Which of the following is a way the government can enhance efficiency through the management of a common resource?

Correct AnswerverifiedShow Answer

Which of the following is not a solution to the market failure that occurs with public goods?

Correct AnswerverifiedShow Answer

A government ban on a good that suffers from overconsumption may be ineffective if the:

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Which of the following is a good that is rival in consumption?

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The free rider problem arises when a good is _ and the tragedy of the commons arises when a good is __________.

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