Question 1

In a functioning market,people will buy a good up to the point where:

Accepted Answer

A)  the marginal benefit of the last unit is equal to the marginal cost of that unit.
B)  the marginal benefit of each unit is equal to the marginal cost of each unit.
C)  the total benefit of the good is equal to the total cost of the good.
D)  they can no longer afford it.E) C) and D)
F) A) and B)

Question 2

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created,their demand curve:

Accepted Answer

A)  would shift straight down and they would consume less.
B)  would shift straight up and they would consume more.
C)  would shift straight down and they would consume more.
D)  would shift straight up and they would consume less.E) A) and B)
F) A) and C)

Question 3

Private goods are:

Accepted Answer

A)  not rival in consumption,but excludable.
B)  rival in consumption and excludable.
C)  rival in consumption,but not excludable.
D)  not rival in consumption and not excludable.E) B) and C)
F) A) and C)

Question 4

Because government bodies have the power to make up for inadequate supply of a good:

Accepted Answer

A)  its presence as a producer is in virtually every market.
B)  it can be efficiency enhancing in markets for public goods.
C)  they have incentive to compete with local businesses.
D)  None of these statements is true.E) B) and D)
F) B) and C)

Question 5

One way the government decides how to pay for public goods is:

Accepted Answer

A)  how easy it is to exclude people who don't pay.
B)  determining who uses the good the most and increasing their property taxes.
C)  comparing individual's marginal benefits of the good.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 6

Government intervention can be productive and efficiency enhancing:

Accepted Answer

A)  whenever it regulates a market.
B)  in markets for public goods and common resources.
C)  because the government always acts with altruistic motives.
D)  except in markets for public goods.E) None of the above
F) A) and B)

Question 7

An example of an excludable good is:

Accepted Answer

A)  a movie in a theater.
B)  a city park.
C)  a rainbow.
D)  None of these is an excludable good.E) B) and C)
F) C) and D)

Question 8

Because government bodies have the power to impose limits on how much of a resource is consumed:

Accepted Answer

A)  it can be efficiency enhancing in markets for common resources.
B)  it will always cause deadweight loss.
C)  they decide what is the "right" amount for the public to consume.
D)  they will often correct a market before testing the effectiveness of social norms to correct the problem.E) A) and B)
F) A) and D)

Question 9

If the cost were greater than the marginal benefit of a good:

Accepted Answer

A)  consumers could increase their utility by buying more.
B)  consumers could increase their utility by buying less.
C)  producers should increase production.
D)  None of these is true.E) A) and B)
F) B) and C)

Question 10

Excludability matters because it:

Accepted Answer

A)  allows owners to set an enforceable price on a good.
B)  allows consumers to control the price of a good.
C)  creates a perceived scarcity that allows the seller to keep the price artificially high.
D)  creates a perceived scarcity that causes buyers to have an inelastic demand for the good.E) A) and D)
F) A) and C)

Question 11

Nonexcludability,in the case of rival goods,causes:

Accepted Answer

A)  inefficiently high demand.
B)  inefficiently low demand.
C)  efficient,high demand.
D)  efficient,low demand.E) C) and D)
F) A) and B)

Question 12

An example of an excludable good is:

Accepted Answer

A)  ice cream.
B)  a movie in a theater.
C)  a digital camera.
D)  All of these are excludable goods.E) B) and C)
F) A) and D)

Question 13

Traffic lights would be considered:

Accepted Answer

A)  a common resource.
B)  a private good.
C)  a public good.
D)  an artificially scarce good.E) B) and D)
F) All of the above

Question 14

To combat the undersupply of public goods,a solution is:

Accepted Answer

A)  for the government to step in and provide it directly.
B)  to place a quota on the consumption of the good.
C)  to change social norms around consumption of the good.
D)  All of these are effective ways to deal with the undersupply of public goods.E) B) and C)
F) A) and D)

Question 15

The problem caused by goods that are considered common resources is that they:

Accepted Answer

A)  are overconsumed.
B)  are undersupplied.
C)  are oversupplied.
D)  are underconsumed.E) A) and B)
F) A) and C)

Question 16

Public goods,when left to the private market:

Accepted Answer

A)  will be undersupplied.
B)  will be overconsumed.
C)  will be underconsumed.
D)  will be oversupplied.E) C) and D)
F) A) and D)

Question 17

A type of good that is subject to market failure is:

Accepted Answer

A)  a public good.
B)  a private good.
C)  an uncommon resource.
D)  None of these goods is subject to market failure.E) C) and D)
F) B) and D)

Question 18

All solutions to market failures in markets for public goods or common resources:

Accepted Answer

A)  try to force the internalization 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) A) and C)
F) A) and B)

Question 19

Like negative externalities,tradable permits are useful in allocating common resources because:

Accepted Answer

A)  the depletion of common resources imposes a negative externality.
B)  the problem present in both is overconsumption.
C)  the socially optimal quantity is not the same as the individual consumers in either case.
D)  All of these statements are true.E) B) and D)
F) A) and B)

Question 20

The free-rider problem is triggered by being:

Accepted Answer

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

Exam 19: Public Goods and Common Resources

The problem caused by goods that are considered common resources is that they:

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Like negative externalities,tradable permits are useful in allocating common resources because:

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In a functioning market,people will buy a good up to the point where:

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Government intervention can be productive and efficiency enhancing:

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Private goods are:

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An example of an excludable good is:

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A type of good that is subject to market failure is:

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Excludability matters because it:

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Traffic lights would be considered:

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All solutions to market failures in markets for public goods or common resources:

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Because government bodies have the power to impose limits on how much of a resource is consumed:

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If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created,their demand curve:

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An example of an excludable good is:

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Because government bodies have the power to make up for inadequate supply of a good:

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If the cost were greater than the marginal benefit of a good:

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To combat the undersupply of public goods,a solution is:

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Nonexcludability,in the case of rival goods,causes:

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Public goods,when left to the private market:

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One way the government decides how to pay for public goods is:

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The free-rider problem is triggered by being:

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