Question 1

For private goods allocated in markets,

Accepted Answer

A)  prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
B)  prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.
C)  the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
D)  the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.E) B) and C)
F) A) and D) A

Question 2

A town engineer comes to the city council with a proposal to install a traffic light at a certain intersection that currently has a stop sign.The benefit of the traffic light is increased safety because the light will reduce the incidence of fatal traffic accidents by 50 percent per year.Which of the following statements is correct?

Accepted Answer

A)  The city council should vote to install the traffic light because the benefits will outweigh the costs.
B)  The city council should carefully evaluate the benefits of reduced fatalities against only the explicit costs of the light.
C)  The city council should carefully evaluate the benefits of reduced fatalities against the costs of the light and of the extra time that drivers will spend waiting for a green light.
D)  The costs will invariably outweigh the benefits.E) C) and D)
F) None of the above

Question 3

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False  False

Question 4

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Accepted Answer

Eliminating poverty is not a good that t...

Question 5

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Accepted Answer

A)  On the questionnaire,some residents are likely to exaggerate the value they associate with the park.
B)  On the questionnaire,some residents are likely to exaggerate the costs they associate with the park.
C)  The use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of residents' perceptions of the costs and benefits of a park.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 6

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Accepted Answer

A)  Without prices,it is difficult to be sure how much people really value a good.
B)  Analysts can't be sure that the respondents to surveys are telling the truth.
C)  Analysis must include not only the cost of building the project but also the cost of maintenance,if any.
D)  People value goods differently if they are publicly provided rather than privately provided.E) A) and B)
F) A) and C)

Question 7

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Accepted Answer

A) True 
 B)False  False

Question 8

Private markets usually fail to provide lighthouses because

Accepted Answer

A)  lighthouses cost too much to build relative to their benefits.
B)  government intervention makes it hard for private lighthouse owners to compete in the market.
C)  ship captains have incentives to use lighthouses without paying.
D)  lighthouses are valued very little by ship captains these days.E) All of the above
F) B) and C)

Question 9

Even economists who advocate small government agree that national defense is a good that the government should provide.

Accepted Answer

A) True 
 B)False

Question 10

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Accepted Answer

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

Question 11

Suppose that a small county is considering adding a guard rail to a dangerous curve by a river.The guard rail will cost 70,000 dinar.The average damage done to vehicles that slide off the road at the curve is 10,000 dinar.It is expected that the guard rail will prevent 5 vehicles from sliding off the road during its usable life.What should the county do?

Accepted Answer

A)  Install the guard rail because safety is priceless.
B)  Install the guard rail because the benefits exceed the costs.
C)  Do not install the guard rail because the costs exceed the benefits.
D)  Do not install the guard rail at any cost because drivers can purchase private insurance for their vehicles.E) A) and C)
F) B) and C)

Question 12

Figure 11-1 
-Refer to Figure 11-1.The box labeled B represents

Accepted Answer

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

Question 13

The difference between specific knowledge and general knowledge is that

Accepted Answer

A)  the creation of general knowledge is usually more profitable for the creator.
B)  specific knowledge is excludable,while general knowledge is not excludable.
C)  general knowledge is excludable,while specific knowledge is not excludable.
D)  general knowledge is rival in consumption,while specific knowledge is not rival in consumption.E) B) and D)
F) B) and C)

Question 14

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.Which of the following statements is correct?

Accepted Answer

A)  The benefits are usually easier to measure than the costs.
B)  Because human life is priceless,any measure to increase traffic safety would generate benefits that outweigh the costs.
C)  Estimating the value of a human life is difficult but necessary in order to evaluate the proposal.
D)  Both a and b are correct.E) C) and D)
F) A) and D)

Question 15

Which of the following statements is correct?

Accepted Answer

A)  The establishment of property rights sometimes gives rise to market failure.
B)  The absence of property rights sometimes gives rise to market failure.
C)  In the context of public goods,the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights.
D)  Government regulation of private behavior,in response to market failure,can never improve social well-being.E) A) and C)
F) A) and B)

Question 16

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Accepted Answer

A) True 
 B)False

Question 17

National Public Radio would be considered a club good.

Accepted Answer

A) True 
 B)False

Question 18

A toll on a congested road is in essence

Accepted Answer

A)  an interstate highway tax.
B)  a Department of Motor Vehicles tax.
C)  a gasoline tax.
D)  a corrective tax.E) B) and D)
F) B) and C)

Question 19

Advocates of antipoverty programs claim that fighting poverty is a public good.

Accepted Answer

A) True 
 B)False

Question 20

A textbook is a

Accepted Answer

A)  private good and the knowledge that one gains from reading the book is a common resource.
B)  private good and the knowledge that one gains from reading the book is a public good.
C)  common resource and the knowledge that one gains from reading the book is a public good.
D)  common resource and the knowledge that one gains from reading the book is a private good.E) C) and D)
F) B) and C)

Exam 11: Public Goods and Common Resources

For private goods allocated in markets,

Correct Answer
verified
A

Correct Answer
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Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct Answer
verified
False

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Correct Answer
verified
Eliminating poverty is not a good that t...
View Answer

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Correct Answer
verified

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Correct Answer
verified

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Correct Answer
verified
False

Private markets usually fail to provide lighthouses because

Correct Answer
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Even economists who advocate small government agree that national defense is a good that the government should provide.

Correct Answer
verified

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct Answer
verified

Correct Answer
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Figure 11-1 -Refer to Figure 11-1.The box labeled B represents

Correct Answer
verified

The difference between specific knowledge and general knowledge is that

Correct Answer
verified

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.Which of the following statements is correct?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Correct Answer
verified

National Public Radio would be considered a club good.

Correct Answer
verified

A toll on a congested road is in essence

Correct Answer
verified

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct Answer
verified

A textbook is a

Correct Answer
verified

Exam 11: Public Goods and Common Resources

For private goods allocated in markets,

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct AnswerverifiedFalse

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Correct AnswerverifiedEliminating poverty is not a good that t...View AnswerShow Answer

In a certain city,the government is considering acquiring some land and turning it into a park (without any fences or gates) .In an attempt to determine the extent to which residents of the city would value the park,residents are asked to fill out a questionnaire.Which of the following is correct?

Correct AnswerverifiedShow Answer

Which of the following is not a reason that the findings of cost-benefit analyses on public goods are only rough approximations?

Correct AnswerverifiedShow Answer

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Correct AnswerverifiedFalse

Private markets usually fail to provide lighthouses because

Correct AnswerverifiedShow Answer

Even economists who advocate small government agree that national defense is a good that the government should provide.

Correct AnswerverifiedShow Answer

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 11-1 -Refer to Figure 11-1.The box labeled B represents

Correct AnswerverifiedShow Answer

The difference between specific knowledge and general knowledge is that

Correct AnswerverifiedShow Answer

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A free-rider is someone who receives the benefit of a good but avoids paying for it.

Correct AnswerverifiedShow Answer

National Public Radio would be considered a club good.

Correct AnswerverifiedShow Answer

A toll on a congested road is in essence

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct AnswerverifiedShow Answer

A textbook is a

Correct AnswerverifiedShow Answer

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified
Eliminating poverty is not a good that t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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