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Antonio,Vanessa,and Norah all enjoy looking at flowers blooming in gardens in their neighborhood.The neighborhood association is considering planting a flower garden around the sign at the entrance to the neighborhood.Antonio values the garden at $25,Vanessa at $15,and Norah at $30.The flowers and labor for the garden cost $55.What should the neighborhood association do?


A) Plant the garden because people like flowers.
B) Plant the garden because the benefits outweigh the costs.
C) Do not plant the garden because the costs outweigh the benefits.
D) Do not plant the garden in order to prevent the Tragedy of the Commons problem of overuse.

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

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A sidewalk runs across Milton's front yard near the street.By law,anyone has the right to use the sidewalk.When Milton shovels the sidewalk after a heavy snow,he is providing a


A) good that is rival in consumption.
B) private good.
C) public good.
D) common resource.

E) A) and B)
F) A) and C)

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Governments can improve market outcomes for


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) B) and C)
F) A) and C)

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Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $90 per day and the 4 store owners have agreed to split the costs of hiring guards equally.Which of the following statements is correct? A) The owner of Store A would prefer to hire 3 guards. B) The owner of Store B would prefer to hire 4 guards. C) The owner of Store C would prefer to hire 1 guard. D) All of the above are correct. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $90 per day and the 4 store owners have agreed to split the costs of hiring guards equally.Which of the following statements is correct?


A) The owner of Store A would prefer to hire 3 guards.
B) The owner of Store B would prefer to hire 4 guards.
C) The owner of Store C would prefer to hire 1 guard.
D) All of the above are correct.

E) A) and C)
F) A) and B)

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When a free-rider problem exists,


A) the market will devote too few resources to the production of the good.
B) the cost of the good will always be more than the benefit of the good.
C) the good will not be produced.
D) entrepreneurs will eventually find a way to make free-riders pay their share.

E) A) and D)
F) All of the above

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Property rights are well established for


A) private goods.
B) public goods.
C) common resources.
D) both (b) and (c) .

E) A) and B)
F) B) and D)

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Studies that compare the wages of more risky and less risky occupations estimate the value of a human life to be about


A) $1 million.
B) $5 million.
C) $10 million.
D) $20 million.

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

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Under which of the following scenarios would a park be considered a common resource?


A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

E) A) and B)
F) A) and C)

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Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $100 per day.Then total surplus for the 4 store owners is A) $45 if 1 guard is hired. B) $60 if 2 guards are hired. C) $45 if 3 guards are hired. D) All of the above are correct. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $100 per day.Then total surplus for the 4 store owners is


A) $45 if 1 guard is hired.
B) $60 if 2 guards are hired.
C) $45 if 3 guards are hired.
D) All of the above are correct.

E) B) and C)
F) A) and C)

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An AM radio transmission of a baseball game is


A) excludable and rival in consumption.
B) excludable and not rival in consumption.
C) not excludable and rival in consumption.
D) not excludable and not rival in consumption.

E) B) and D)
F) None of the above

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Which parable describes the problem of wild animals that are hunted to the point of extinction?


A) Coase theorem
B) Tragedy of the Commons
C) Cost-benefit analysis
D) Clean Air Act

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

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Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

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No one owns the wild salmon,while privat...

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Which of the following is an example of the Tragedy of the Commons?


A) The number of professional football teams increases to the point where the quality of the games decreases, as does television viewership.
B) The number of satellites increases to the point where they begin running into each other.
C) Disney World becomes so crowded that it institutes a lottery for admissions.
D) A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.

E) B) and C)
F) All of the above

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Table 11-1 Consider the town of Anywhere with only three residents, Mary, Bill, and Tricia. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. Table 11-1 Consider the town of Anywhere with only three residents, Mary, Bill, and Tricia. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. -Refer to Table 11-1.Suppose the cost to build the park is $33 per acre and that the residents have agreed to split the cost of building the park equally.If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park,how much total surplus will Bill receive? A) -$2 B) $2 C) $9 D) $10 -Refer to Table 11-1.Suppose the cost to build the park is $33 per acre and that the residents have agreed to split the cost of building the park equally.If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park,how much total surplus will Bill receive?


A) -$2
B) $2
C) $9
D) $10

E) A) and D)
F) A) and C)

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National defense is a classic example of a public good because


A) there is no market for private security services.
B) it is difficult to exclude people from receiving the benefits from national defense once it is provided.
C) everyone agrees that some level of national defense is important, but only the government knows the optimal amount.
D) there are no private firms willing to supply defense goods such as tanks and weapons.

E) B) and D)
F) All of the above

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It would always be a mistake to view


A) a tornado siren as a public good.
B) a congested road as a common resource.
C) cable TV as a common resource.
D) a mathematical theorem as a public good.

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

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Which of the following goods is excludable but not rival in consumption?


A) a congested toll road
B) fire protection in a small town
C) a tornado siren
D) whales in the ocean

E) A) and B)
F) A) and C)

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When a highway is congested,giving rise to negative externalities,it is appropriate to view the highway as a common resource.

A) True
B) False

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A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population.Which of the following statements is not correct?


A) Lobsters are rival but not excludable.
B) The lobster population is an example of the tragedy of the commons.
C) Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population.
D) If left unregulated, the lobster population will likely increase.

E) B) and C)
F) None of the above

Correct Answer

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Phil owns 10 acres of beautiful wooded land.When Phil decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees.This state park


A) will tend to be overused because it is nonexcludable.
B) is a common resource when it becomes crowded on sunny summer weekends.
C) is rival in consumption when it becomes crowded on sunny summer weekends.
D) All of the above are correct.

E) A) and D)
F) C) and D)

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