Question 1

People have little incentive to produce a public good because

Accepted Answer

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.E) B) and D)
F) C) and D)

Question 2

Common resources are related to negative externalities because consumers of common resources ignore the negative impact of their consumption on other consumers of the common resource.

Accepted Answer

A) True 
 B)False

Question 3

If the local government sells apples at a roadside stand, the apples are public goods because they are provided by the government.

Accepted Answer

A) True 
 B)False

Question 4

A common resource is

Accepted Answer

A)   not rival but excludable.
B)   both rival and excludable.
C)   rival but not excludable.
D)   neither rival nor excludable.E) C) and D)
F) B) and C)

Question 5

What is meant by goods that are excludable and rival?

Accepted Answer

A good is excludable if it is possible t...

Question 6

Music is an example of

Accepted Answer

A)   a private good.
B)   a social good.
C)   a non-rival good.
D)   a common good.E) B) and C)
F) A) and B)

Question 7

Which of the following is NOT a characteristic of a public good?

Accepted Answer

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.E) A) and D)
F) B) and C)

Question 8

What are the private and social costs associated with over-consumption of alcohol and what options are available for the government to correct this?

Accepted Answer

Alcohol's private costs include the cost...

Question 9

Which is not a private benefit from education?

Accepted Answer

A)   Better skills and knowledge.
B)   More productive workforce.
C)   Better job prospects.
D)   Higher salaries in the long term.E) C) and D)
F) B) and C)

Question 10

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How do governments correct for this apparent market failure?

Accepted Answer

Governments assign and protect the prope...

Question 11

If one person's consumption of a good diminishes other people's use of the good, the good is said to be

Accepted Answer

A)   rival.
B)   a good produced by a natural monopoly.
C)   a common resource.
D)   excludable.E) None of the above
F) A) and D)

Question 12

A club good produced by a natural monopoly is

Accepted Answer

A)   rival but not excludable.
B)   neither rival nor excludable.
C)   not rival but excludable.
D)   both rival and excludable.E) None of the above
F) B) and C)

Question 13

De-merit goods

Accepted Answer

A)   are over consumed in the view of the government.
B)   are harmful to individual consumer.
C)   have negative externalities.
D)   can be all of the above.E) C) and D)
F) A) and B)

Question 14

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Accepted Answer

A)   government regulation.
B)   that prices are not low enough so firms overproduce.
C)   that prices are not high enough so people over consume.
D)   that property rights have not been well established.E) B) and C)
F) All of the above

Question 15

A negative externality affects market efficiency in a manner similar to

Accepted Answer

A)   an excludable good.
B)   a private good.
C)   a common resource.
D)   a public good.E) A) and C)
F) A) and D)

Question 16

___________ is a survey-based approach that aims to place a monetary value on a good through getting respondents to state a preference and a willingness to pay.

Accepted Answer

A)   Contingent valuation method
B)   Conjoint analysis
C)   Marketing methodology
D)   Value derived methodE) B) and D)
F) A) and B)

Question 17

Common resources are overused because common resources are free to the consumer.

Accepted Answer

A) True 
 B)False

Question 18

If someone owned the property rights to clean air, that person could charge for the use of the clean air in a market for clean air and, thus, air pollution could be reduced to the optimal level.

Accepted Answer

A) True 
 B)False

Question 19

Imagine a 200 hectare 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 rubbish bins overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

Accepted Answer

A)   when rubbish bins 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 car is a private good.E) A) and B)
F) All of the above

Question 20

Governments can improve market outcomes for

Accepted Answer

A)   public goods but not common resources.
B)   common resources but not public goods.
C)   both public goods and common resources.
D)   neither public goods nor common resources.E) A) and C)
F) A) and D)

Exam 10: Public Goods, Common Resources and Merit Goods

Common resources are related to negative externalities because consumers of common resources ignore the negative impact of their consumption on other consumers of the common resource.

Correct Answer
verified

A negative externality affects market efficiency in a manner similar to

Correct Answer
verified

What is meant by goods that are excludable and rival?

Correct Answer
verified
A good is excludable if it is possible t...
View Answer

If the local government sells apples at a roadside stand, the apples are public goods because they are provided by the government.

Correct Answer
verified

A club good produced by a natural monopoly is

Correct Answer
verified

Governments can improve market outcomes for

Correct Answer
verified

De-merit goods

Correct Answer
verified

___________ is a survey-based approach that aims to place a monetary value on a good through getting respondents to state a preference and a willingness to pay.

Correct Answer
verified

What are the private and social costs associated with over-consumption of alcohol and what options are available for the government to correct this?

Correct Answer
verified
Alcohol's private costs include the cost...
View Answer

Music is an example of

Correct Answer
verified

Common resources are overused because common resources are free to the consumer.

Correct Answer
verified

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Correct Answer
verified

If someone owned the property rights to clean air, that person could charge for the use of the clean air in a market for clean air and, thus, air pollution could be reduced to the optimal level.

Correct Answer
verified

Which is not a private benefit from education?

Correct Answer
verified

People have little incentive to produce a public good because

Correct Answer
verified

If one person's consumption of a good diminishes other people's use of the good, the good is said to be

Correct Answer
verified

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How do governments correct for this apparent market failure?

Correct Answer
verified
Governments assign and protect the prope...
View Answer

Correct Answer
verified

A common resource is

Correct Answer
verified

Which of the following is NOT a characteristic of a public good?

Correct Answer
verified

Exam 10: Public Goods, Common Resources and Merit Goods

Common resources are related to negative externalities because consumers of common resources ignore the negative impact of their consumption on other consumers of the common resource.

Correct AnswerverifiedShow Answer

A negative externality affects market efficiency in a manner similar to

Correct AnswerverifiedShow Answer

What is meant by goods that are excludable and rival?

Correct AnswerverifiedA good is excludable if it is possible t...View AnswerShow Answer

If the local government sells apples at a roadside stand, the apples are public goods because they are provided by the government.

Correct AnswerverifiedShow Answer

A club good produced by a natural monopoly is

Correct AnswerverifiedShow Answer

Governments can improve market outcomes for

Correct AnswerverifiedShow Answer

De-merit goods

Correct AnswerverifiedShow Answer

___________ is a survey-based approach that aims to place a monetary value on a good through getting respondents to state a preference and a willingness to pay.

Correct AnswerverifiedShow Answer

What are the private and social costs associated with over-consumption of alcohol and what options are available for the government to correct this?

Correct AnswerverifiedAlcohol's private costs include the cost...View AnswerShow Answer

Music is an example of

Correct AnswerverifiedShow Answer

Common resources are overused because common resources are free to the consumer.

Correct AnswerverifiedShow Answer

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Correct AnswerverifiedShow Answer

If someone owned the property rights to clean air, that person could charge for the use of the clean air in a market for clean air and, thus, air pollution could be reduced to the optimal level.

Correct AnswerverifiedShow Answer

Which is not a private benefit from education?

Correct AnswerverifiedShow Answer

People have little incentive to produce a public good because

Correct AnswerverifiedShow Answer

If one person's consumption of a good diminishes other people's use of the good, the good is said to be

Correct AnswerverifiedShow Answer

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How do governments correct for this apparent market failure?

Correct AnswerverifiedGovernments assign and protect the prope...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A common resource is

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of a public good?

Correct AnswerverifiedShow Answer

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A good is excludable if it is possible t...
View Answer

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Alcohol's private costs include the cost...
View Answer

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Correct Answer
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Correct Answer
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Governments assign and protect the prope...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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