Test Bank | Chapter 11 Public Goods and Common Resources – 9th - Foundations of Microeconomics 9e | Test Bank with Answer Key by Robin Bade by Robin Bade. DOCX document preview.
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Foundations of Microeconomics, 9e (Bade)
Chapter 11 Public Goods and Common Resources
11.1 Classifying Goods and Resources
1) A good is nonexcludable if
A) only the government can produce it.
B) nobody can be excluded from enjoying the benefits of the good.
C) when you pay for the good, you are guaranteed to be the sole consumer.
D) when you consume a unit, that means there is no less for someone else.
E) it is also nonrival.
Topic: Excludable
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
2) If you can prevent someone from consuming a good, that good is called
A) rival.
B) nonrival.
C) excludable.
D) nonexcludable.
E) a public good.
Topic: Excludable
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
3) A good or resource is excludable if
A) only the government can produce them.
B) nobody can be excluded from enjoying the benefits of the good or resource.
C) when you pay for the good or resource, you are guaranteed to be the sole consumer.
D) when you consume a unit, that means there is one less for someone else.
E) it is a common resource.
Topic: Excludable
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
4) Which of the following goods is best described as nonexcludable?
A) flood-control levees
B) pay-per-view television
C) a restaurant meal
D) a college education
E) a cow grazing in a pasture
Topic: Excludable
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
5) The fact that technology prevents Sam in Nevada from using the email account of Samantha in Virginia means that email is an example of
A) a good that is nonexcludable.
B) a good that is excludable.
C) a public good.
D) the free-rider problem.
E) the tragedy of the commons.
Topic: Excludable
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
6) A good is rival if
A) it has substitutes.
B) it can be consumed by many people simultaneously.
C) it is excludable.
D) consumption by one person decreases the quantity available for another person.
E) it has no complements.
Topic: Rival
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
7) A good is nonrival if
A) only the government can produce it.
B) nobody can be excluded from enjoying the benefits of the good.
C) when you pay for the good, you are guaranteed to be the sole consumer.
D) when you consume a unit, you have not decreased the amount left for consumption by other people.
E) anybody can be excluded from enjoying the benefits of the good.
Topic: Rival
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
8) A basketball game aired as a pay-per-view show by your local cable network and to which you can invite your friends to watch is a ________ good.
A) rival
B) nonrival
C) nonexcludable
D) rival and nonexcludable
E) quasi public/quasi private
Topic: Rival
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
9) The fact that Florida's consumption of national defense does not preclude North Dakota from consuming the same national defense is an example of
A) a private good.
B) a common resource.
C) the rival nature of consumption.
D) excludable goods.
E) a good that is nonrival in consumption.
Topic: Rival
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
10) A private good is defined as a good or service
A) that is something tangible.
B) that is rival and excludable.
C) that is rival and nonexcludable.
D) produced by a single country.
E) that is nonrival and nonexcludable.
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
11) A private good is
A) nonexcludable and nonrival.
B) excludable and rival.
C) excludable and nonrival.
D) nonrival and excludable.
E) subject to the free-riding problem.
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
12) A good that is both rival and excludable is
A) a good that is impossible to produce.
B) a private good.
C) a common resource.
D) a public good.
E) nonexistent because no good can be both rival and excludable.
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
13) A good that is ________ and ________ is a ________.
A) rival; excludable; private good
B) rival; excludable; public good
C) nonrival; excludable; public good
D) rival; nonexcludable; private good
E) nonrival; nonexcludable; private good
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
14) A good is a private good if
A) people who do not pay for the good can enjoy it without paying for it.
B) it is not a common resource.
C) the good is nonrival.
D) the good is excludable and rival.
E) it is both nonexcludable and nonrival.
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
15) Which of the following is the best example of a private good?
A) a can of Diet Pepsi
B) a missile defense system
C) a library in St. Louis
D) a sidewalk in Fargo
E) a cod fish swimming in the middle of the ocean
Topic: Private good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
16) Which of the following is an example of a pure private good?
A) national defense
B) the Florida State Turnpike, a non-congested toll highway
C) Lake Erie
D) the Metropolitan Museum of Art in New York City
E) the new heat pump your neighbor bought for her house
Topic: Private good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
17) An office in the Empire State Building is
A) a private good.
B) nonexcludable, because it is possible to restrict access to it.
C) a common resource.
D) a public good because many people can be in the Empire State Building.
E) excludable and nonrival.
Topic: Private good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
18) A professional football game played in a completely full stadium is NOT a public good because it is
A) nonexcludable and nonrival.
B) excludable and nonrival.
C) excludable and rival.
D) nonexcludable and rival.
E) not supplied by the government.
Topic: Private good
Skill: Level 3: Using models
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
19) One important feature that distinguishes a private good from a public good is that
A) only the government can produce private goods.
B) nobody can be excluded from enjoying the benefits of a private good.
C) a private good is excludable and a public good is nonexcludable.
D) if you consume a unit of a private, that means there is no less for someone else.
E) a private good is nonrival and a public good is rival.
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
20) One important feature that distinguishes a public good from a private good is that
A) only the government can produce public goods.
B) it is impossible to prevent a person from enjoying the benefits from a public good.
C) if you pay for a unit of a public good, you are guaranteed to be the sole consumer.
D) if you consume a unit of a public good, there is one unit less for someone else.
E) Both answers C and D are correct.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
21) A good or resource that is both nonrival and nonexcludable is
A) a good that is impossible to produce.
B) a private good.
C) a common resource.
D) a public good.
E) nonexistent because it is impossible for a good or resource to be both nonrival and nonexcludable.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
22) A public good is
A) rival and excludable.
B) rival and nonexcludable.
C) nonrival and excludable.
D) nonrival and nonexcludable.
E) a good that has an infinite number of substitutes.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
23) A public good
A) only yields benefits to those that decide to buy it.
B) is the same as a common resource.
C) is nonrival and nonexcludable.
D) is rival.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
24) A good or resource from which no one can be excluded and which is nonrival is a
A) government good.
B) private good.
C) common good.
D) public good.
E) common resource.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
25) If no one can be excluded from receiving the benefits of a good or service and the consumption of the good or service does not decrease the amount available to someone else from consuming it, then the good
A) is a private good.
B) is a common resource.
C) is a public good.
D) is a club good.
E) Both answers B and C are correct.
Topic: Public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Revised
AACSB: Reflective thinking
26) If a good or resource is rival, it could be a
A) public good.
B) private good.
C) common resource.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
Topic: Private good, common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
27) A common resource is
A) a service rather than a good.
B) nonrival and nonexcludable.
C) rival and excludable.
D) rival and nonexcludable.
E) nonrival and excludable.
Topic: Common resource
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
28) A club good is
A) a service rather than a good.
B) nonrival and nonexcludable.
C) rival and excludable.
D) rival and nonexcludable.
E) nonrival and excludable.
Topic: Club good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: New
AACSB: Reflective thinking
29) If a good or resource is nonrival but excludable it is a
A) private good.
B) club good.
C) common resource.
D) public good.
E) None of the above answers are correct because it is impossible for a good to be nonrival and excludable.
Topic: Club good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: New
AACSB: Reflective thinking
30) An example of a club good is
A) Youtube.
B) Amazon.com.
C) Target.
D) Disney+.
E) Honda SUVs.
Topic: Club good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: New
AACSB: Reflective thinking
31) Use the table to answer this question. Consider 3 goods or resources:
apples, a fireworks display, and copper in a mine
Classify each item by noting the characteristics in each of the table's cells.
A) apples = cell A; fireworks display = cell D; copper = cell A.
B) apples = cell B; fireworks display = cell B; copper = cell A.
C) apples = cell A; fireworks display = cell B; copper = cell C.
D) apples = cell B; fireworks display = cell D; copper = cell A.
E) apples = cell A; fireworks display = cell B; copper = cell D
Topic: Classifying goods and resources
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Application of knowledge
32) Use the table to answer this question. Consider 3 goods or resources:
sewer system, wild fish, legal system.
Classify each item by noting the characteristics in each of the table's cells.
A) sewer system = cell C; wild fish = cell B; legal system = cell D.
B) sewer system = cell B; wild fish = cell A; legal system = cell D.
C) sewer system = cell A; wild fish = cell B; legal system = cell D.
D) sewer system = cell C; wild fish = cell B; legal system = cell A.
E) sewer system = cell C; wild fish = cell D; legal system = cell B.
Topic: Classifying goods and resources
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Application of knowledge
33) Use the table to answer this question. Consider 3 goods or resources:
shoes, scenic view, satellite radio.
Classify each item by noting the characteristics in each of the table's cells.
A) shoes = A; scenic view = C; satellite radio = D.
B) shoes = A; scenic view = D; satellite radio = C.
C) shoes = D; scenic view = B; satellite radio = C.
D) shoes = B; scenic view = A; satellite radio = C.
E) shoes = C; scenic view = B; satellite radio = D.
Topic: Classifying goods and resources
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Application of knowledge
34) An example of a common resource is
A) a bridge.
B) a non-crowded movie theater.
C) a tuna in the ocean.
D) national defense.
E) All of the above answers are correct.
Topic: Common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
35) To hunters, deer in the woods are an example of a
A) public good.
B) private good.
C) common resource.
D) public resource.
E) natural monopoly.
Topic: Common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
36) A mother notices that when she divides brownies equally between her two children and gives each child her share on a separate plate, the brownies last a long time. But when she gives her children a plate to share, the brownies are gone pretty quickly. The mother concludes from this that brownies given on a single plate are
A) excludable but they might either be rival or nonrival.
B) nonexcludable and nonrival.
C) excludable and rival.
D) excludable and nonrival.
E) nonexcludable and rival.
Topic: Common resource
Skill: Level 4: Applying models
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
37) Which of the following goods is excludable and nonrival?
A) food
B) air
C) the Internet
D) a streetlight
E) a two liter bottle of Mountain Dew
Topic: Club good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
38) When use of a good decreases the quantity available for someone else, the good is
A) rival.
B) nonrival.
C) excludable.
D) nonexcludable.
E) a public good.
Topic: Rival
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
39) The fact that Sha's enjoyment of a sunset on Saint Simon's Island does NOT preclude Lou from enjoying the sunset is an example of
A) a good that is nonrival.
B) a good that is excludable.
C) a private good.
D) the rival nature of consumption.
E) a common resource.
Topic: Rival
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
40) A private good is ________ and ________.
A) rival; excludable
B) rival; nonexcludable
C) nonrival; excludable
D) nonrival; nonexcludable
E) scarce; expensive
Topic: Private good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
41) If I order a pizza and invite my neighbors to eat it, the pizza is
A) a private good.
B) a common resource.
C) a public good because many people ate it.
D) either a common resource or a public good depending on whether it is overused.
E) produced by a natural monopoly.
Topic: Private good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
42) A public good is ________ and ________.
A) rival; excludable
B) rival; nonexcludable
C) nonrival; excludable
D) nonrival; nonexcludable
E) cheap; available
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
43) A public good
A) can only be consumed by one person at a time.
B) can be consumed simultaneously by many people.
C) is any good provided by a company owned by a member of the public.
D) is any good provided by government.
E) is both rival and excludable.
Topic: Public good
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
44) Which of the following is the best example of a public good?
A) national defense
B) a Ford Thunderbird
C) Yosemite National Park
D) a Mountain Dew
E) satellite radio
Topic: Public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
45) Which of the following is the best example of a common resource?
A) national defense
B) a Ford Thunderbird
C) Yosemite National Park
D) a can of Mountain Dew
E) a cable television network
Topic: Common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Reflective thinking
11.2 Public Goods and the Free-Rider Problem
1) The free-rider problem exists because
A) private goods or services cause some people to want to take them for free.
B) some goods or services are excludable and cause envy for those who don't have them.
C) some goods or services that are rival and leave some people without them.
D) people cannot be excluded from consuming public goods even if they don't pay for them.
E) people must all consume the same public good and so everyone wants to pay for it.
Topic: Free rider
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
2) The free-rider problem is associated with
A) public goods.
B) private goods.
C) common resources.
D) any type of good.
E) club goods.
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Revised
AACSB: Reflective thinking
3) Public goods create a free-rider problem because
A) only people who pay for the good or service can enjoy the good or service.
B) people do not want to consume public goods.
C) the good or service is rival in nature.
D) the good or service is excludable.
E) people can enjoy the good or service no matter whether or not they pay for it.
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
4) A good that can be consumed even if the consumer does NOT pay for it
A) is necessarily rival in consumption.
B) completely avoids the free rider problem.
C) does not exist because firms won't produce goods for which consumers won't pay.
D) is nonexcludable.
E) might be nonexcludable but is definitely nonrival.
Topic: Free rider
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
5) The free-rider problem
i. means that people can consume a good without paying for it.
ii. means that people pay too much for a good in order to consume it.
iii. applies to a public good.
A) i only
B) iii only
C) i and ii
D) ii and iii
E) i and iii
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
6) Which of the following is an example of the free-rider problem?
A) John attends a lecture on investing in high-tech companies for which he paid $100 to hear.
B) Tom watches Mystery on his local PBS television station, but Tom does not contribute anything to PBS.
C) Sarah works overtime while her co-workers opt for a traditional schedule.
D) Jethro buys a skunk-hunting permit that he refuses to share with his sister.
E) Katie catches a swordfish in the ocean.
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
7) The local public broadcasting station (PBS) calls you during its pledge drive. You do not donate any money but do tune in to watch reruns of Downton Abbey on the PBS station. Your behavior is an example of
A) the free rider problem.
B) the law of demand.
C) the law of supply.
D) a marginal cost.
E) a rival good.
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Application of knowledge
8) Which of the following is a correct statement?
A) To obtain the economy's marginal benefit for a public good, marginal benefits of all individuals at each quantity have to be added.
B) To obtain the economy's marginal benefit for a public good, the quantity that all individuals are willing to buy at each price must be added.
C) To obtain the economy's marginal benefit curve for a public good, we sum the individual demand curves horizontally.
D) Because public goods are nonexcludable, the economy's marginal benefit curve for a public good is the same as its marginal cost curve.
E) None of the above answers is correct.
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
9) If we know everyone's individual marginal benefit curve for a public good, then the economy's marginal benefit curve for that public good can be found by
A) finding the average of everyone's marginal benefit.
B) summing horizontally the amount of everyone's marginal benefit.
C) summing vertically the amount of everyone's marginal benefit.
D) averaging either horizontally or vertically the amount of everyone's marginal benefit.
E) none of the above; it is impossible to find this value.
Topic: Marginal benefit
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
10) To find the economy's marginal benefit curve of a public good, we
A) sum the marginal benefits of each individual at each quantity.
B) sum the costs of the inputs used to produce the good.
C) sum the quantities demanded at each individual price.
D) sum the prices consumers are willing to pay for different quantities of the good.
E) average the prices consumers are willing to pay for the same quantity of the good.
Topic: Marginal benefit
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
11) We determine the economy's marginal benefit curve for a public good or service by
A) vertically summing the individual marginal benefit curves of each member of society.
B) horizontally summing the individual marginal benefits curves of each member of society.
C) multiplying the marginal benefits of each member of society.
D) dividing the sum of the marginal benefits of each member of society by the number of people in society.
E) vertically summing the individual firm's marginal cost curves.
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
12) For which type of good is it necessary to sum the marginal benefit curves vertically in order to obtain the economy's marginal benefit curve?
A) public goods
B) club goods
C) private goods
D) any excludable good
E) common resources
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Revised
AACSB: Analytical thinking
13) Suppose a public good is provided in an economy with only two consumers, Popeye and Captain Hook. If Popeye values the public good at $4,000 per year, and Captain Hook values it at $3,000 per year, the economy's marginal benefit of the public good per year is
A) $7,000.
B) $4,000.
C) $3,000.
D) $1,000.
E) $12,000.
Topic: Marginal benefit
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
14) The marginal benefit of a public good ________ as more of the good is produced.
A) increases
B) decreases
C) stays the same
D) None of the above is correct because the marginal benefit could increase, decrease, or not change depending on whether the marginal cost increases, decreases, or does not change as more is produced.
E) None of the above is correct because the marginal benefit could increase, decrease, or not change depending on whether more, fewer, or the same number of people consume the good as more is produced.
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
15) As more of a public good is produced, the marginal benefit of each additional unit ________ and as more of a private good is produced, the marginal benefit of each additional unit ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
16) Marginal cost curves for public goods are usually
A) downward sloping.
B) upward sloping.
C) horizontal.
D) vertical.
E) U-shaped.
Topic: Marginal cost
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
17) A library is a public good. The marginal cost curve for libraries in Lafayette, California
A) has a negative slope.
B) is definitely a horizontal line.
C) has a positive slope.
D) is a vertical line.
E) is identical to the marginal benefit curve because libraries are nonrival.
Topic: Marginal cost
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
18) To determine the efficient quantity of a public good to supply
A) the private firms that will produce the good each produce the exact same quantity.
B) marginal benefit and marginal cost are equated, the same as is done to determine the efficient quantity of a private good.
C) total benefit is equated to total cost, the same as is done to determine the efficient quantity of a private good.
D) politicians use the principle of maximum differentiation.
E) marginal benefit must exceed marginal cost by as much as possible.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
19) Which of the following represents an efficient quantity of a public good?
A) the quantity at which the marginal cost of production is minimized
B) the quantity at which the number of free riders is maximized
C) the quantity at which the marginal benefit minus marginal cost is minimized
D) the quantity at which the marginal benefit is equal to the marginal cost
E) the quantity at which the marginal benefit exceeds the marginal cost by the maximum amount possible
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
20) The efficient quantity of a public good is the quantity at which marginal benefit is
A) greater than marginal cost by any amount.
B) less than marginal cost.
C) equal to marginal cost.
D) zero.
E) greater than marginal cost by the maximum amount.
Topic: Efficient quantity of a public good
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
21) To achieve the efficient level of national defense
A) the government could provide national defense because it is a public good.
B) private firms can provide national defense because it is a private good.
C) the government can provide national defense because it is a private good.
D) the government can provide national defense because it is a common resource.
E) None of the above answers is correct.
Topic: Efficient quantity of a public good
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
22) Suppose the marginal cost of the fourth unit of a public good is $20. If Mark and Judy are the only members of society, and they are willing to pay $10 and $11, respectively, for the fourth unit of the good, then the efficient quantity is
A) 3 units.
B) 4 or more units.
C) 0 units.
D) More information is needed about the marginal benefits of the first, second, and third units of the public good.
E) None of the above answers is correct.
Topic: Efficient quantity of a public good
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
23) Suppose the government is producing a public good. If the marginal benefit of the last unit of a public good produced is greater than the marginal cost of that unit, to achieve the efficient amount of production, what should be done?
A) The government should produce more units.
B) The government should cease production.
C) Private firms should take over the production and sale of the good.
D) Nothing, because the government is already producing the efficient quantity of the public good.
E) The government should produce fewer units.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
24) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Determine the marginal benefit to society of the second missile gunboat.
A) $16 million
B) $8 million
C) $12 million
D) $10 million
E) $4 million
Topic: Marginal benefit
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
25) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Determine the marginal benefit to society of the fourth missile gunboat.
A) $8 million
B) $4 million
C) $2 million
D) $1 million
E) $40 million
Topic: Marginal benefit
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
26) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Suppose the marginal cost of a missile gunboat is $8 million. What is the efficient quantity of missile gunboats?
A) 1 boat
B) 2 boats
C) 3 boats
D) 4 boats
E) More information about whether the services provided by missile gunboats are rival or not is needed.
Topic: Efficient quantity of a public good
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
Minutes of fireworks | Anita's MB (dollars per minute) | Steve's MB (dollars per minute) |
16 | $20 | $28 |
17 | 18 | 25 |
18 | 16 | 22 |
19 | 14 | 19 |
20 | 12 | 16 |
27) The table above shows Anita and Steve's marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy, what is the economy's marginal benefit from the 18th minute of fireworks?
A) $38
B) $33
C) $30
D) $162
E) $129
Topic: External benefit
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
28) The table above shows Anita and Steve's marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy, what is the economy's marginal benefit from the 19th minute of fireworks?
A) $38
B) $30
C) $162
D) $129
E) $33
Topic: External benefit
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
29) The table above shows Anita and Steve's marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy and the marginal cost to produce one minute of fireworks is $28, what is the efficient quantity of fireworks?
A) 16 minutes
B) more than 20 minutes
C) 19 minutes
D) less than 16 minutes
E) 20 minutes
Topic: External benefit
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
30) The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma. Police protection is a public good. If the city of Hugo hires 25 officers, then
A) marginal cost will exceed marginal benefit, which means that the efficient number of officers is more than 25.
B) marginal cost will exceed marginal benefit, which means that the efficient number of officers is less than 25.
C) marginal benefit will exceed marginal cost, which means that Hugo should reduce the number of officers they hire.
D) marginal benefit equals marginal cost.
E) None of the above answers is correct.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
31) The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma. Police protection is a public good. If the city of Hugo hires 5 officers, marginal
A) cost exceeds marginal benefit, so therefore fewer officers should be hired.
B) benefit exceeds marginal cost, so therefore more officers should be hired.
C) benefit equals marginal cost.
D) benefit exceeds marginal cost, so therefore no more officers should be hired.
E) benefit exceeds marginal cost but not by as much as possible, so 5 officers is not the efficient number to be hired.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
32) The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma. Police protection is a public good. The efficient number of officers that should be hired by the city of Hugo is
A) 15.
B) 25.
C) 10.
D) 0.
E) More than 25 because MB > $0 when 25 officers are hired.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
33) Because national defense is potentially subject to free riding, a private sector market for national defense would lead to
A) the efficient amount of national defense if there is free riding.
B) more than the efficient amount being produced if there is free riding.
C) less than the efficient amount being produced if there is free riding.
D) less than the efficient amount being produced if there is not free riding.
E) None of the above answers is correct.
Topic: Private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
34) The free-rider problem for a public good means that
A) a private market would provide less than the efficient amount of the good.
B) a private market would provide more than the efficient amount of the good.
C) the good is rival.
D) the good is excludable.
E) a private market would provide the efficient amount of the good.
Topic: Private provision
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
35) For any individual consumer, free-riding is
A) common for private goods.
B) rational.
C) irrational.
D) impossible for public goods.
E) the same as paying a fair price for the good.
Topic: Private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
36) A private, competitive market
A) provides the efficient quantity of a public good.
B) allocates too few resources for a public good.
C) allocates too many resources for a public good.
D) can be relied upon to allocate resources efficiently both for private and public goods.
E) will allocate too many resources for a public good only if free riding occurs.
Topic: Private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
37) Why are private firms unable to produce public goods?
A) Because the government outlaws private firms from producing them.
B) The marginal cost of production is too high for private production to be possible.
C) They can produce these goods, but they would not earn any revenue because of the free-rider problem.
D) The tragedy of the commons means that private firms produce an inefficient amount of public goods.
E) None of the above answers is correct.
Topic: Private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
38) Bureaucrats
A) have no incentive to influence the quantity of public goods provided by the government.
B) have no role in the production of public goods.
C) attempt to maximize their budget.
D) make political policy.
E) are generally rationally ignorant about the size of their budget.
Topic: Bureaucrats
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
39) Voters typically have information only about issues that have a perceptible effect on their well-being and tend not to have information about other issues. Behavior such as this is known as
A) voter preferences.
B) inefficient overprovision.
C) political competition.
D) rational ignorance.
E) the tragedy of voters.
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
40) It is rational for a voter to be ignorant about an issue unless the
A) voter is maximizing his or her well-being.
B) voter is a member of a political party.
C) issue is on the ballot.
D) issue has a perceptible effect on the voter's well-being.
E) voter worries about the tragedy of the free rider.
Topic: Rational ignorance
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
41) When Jean makes a decision NOT to obtain information about an issue that doesn't have a perceptible effect on her, Jean's choice is referred to as
A) rational exuberance.
B) irrational exuberance.
C) irrational intelligence.
D) rational ignorance.
E) the principle of minimum ignorance.
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
42) Rational ignorance is the decision NOT to
A) vote in elections.
B) acquire information because the marginal benefit of doing so exceeds the marginal cost.
C) acquire information because the marginal cost of doing so exceeds the expected marginal benefit.
D) acquire information because the marginal cost of doing so equals the expected marginal benefit.
E) follow the principle of minimum differentiation.
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
43) The concept of rational ignorance is defined as
A) the decision not to acquire knowledge because of high marginal cost.
B) the deceit by bureaucrats who fool politicians in order to maximize their budgets.
C) politicians not telling the voters the real truth to stay in office.
D) voters being kept from knowing the facts by bureaucrats.
E) bureaucrats not knowing the size of their budget.
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
44) Very few voters know the enormous cost of providing price supports to farmers. As a result, these voters most likely exhibit
A) the public provision of a good.
B) the principle of minimum differentiation.
C) rational ignorance.
D) the tragedy of the commons.
E) None of the above answers is correct.
Topic: Rational ignorance
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
45) Competition in the political marketplace can result in the efficient provision of a public good if
A) there is only one political party.
B) voters' preferences are unknown.
C) benefits are small.
D) voters are well informed and evaluate the alternatives.
E) politicians need to be elected by majority votes.
Topic: Efficient provision
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
46) Which of the following can bring about an efficient level of public goods being provided by the government?
A) voters who do not care about benefits and costs of public goods
B) rational ignorance on the part of voters
C) competition between political parties trying to win an election
D) self-interest among government bureaucrats
E) free riding on the part of voters
Topic: Efficient provision
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
47) Which of the following is necessary for competition in the political marketplace to result in the production of the efficient amount of a public good?
A) bureaucrats practice self-interest
B) well informed voters and political parties
C) rational ignorance
D) maximum differentiation of political competitors
E) Answers A, B and D are correct.
Topic: Efficient provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
48) The government can be large in size because of
A) inefficient overprovision caused by high voter turnout in elections.
B) efficient overprovision caused by rational voter ignorance.
C) inefficient overprovision caused by rational voter ignorance.
D) efficient overprovision caused by irrational voter ignorance.
E) inefficient overprovision caused by rational politician/bureaucrat ignorance.
Topic: Inefficient overprovision
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
49) One reason the size of the government is large is because
A) people's demand for private goods grows faster than their demand for public goods.
B) politicians do not support spending on things such as education and public health.
C) voters' incomes grow, thereby causing an increased demand for private goods.
D) budget maximization by bureaucrats and rational ignorance by voters lead to overproduction.
E) rational ignorance by politicians who follow the principle of minimum differentiation.
Topic: Inefficient overprovision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
50) Inefficient overproduction of a public good by the government is
A) the only efficient method of producing public goods.
B) not likely to occur when voters choose rational ignorance.
C) the term used to describe a surplus of a public good.
D) one explanation of why government might be large.
E) not likely to occur if voters are rationally ignorant.
Topic: Inefficient overprovision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
51) When someone enjoys the benefit of a good or service but does NOT pay for it, that person
A) is a free range consumer.
B) is a free rider.
C) receives no marginal benefit from the good.
D) must be consuming an excludable good.
E) is contributing to the tragedy of the commons.
Topic: Free rider
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
52) The marginal benefit of a public good is the
A) sum of the marginal benefits of all the individuals at each quantity.
B) marginal benefit of the individual person who places the lowest value on the good, multiplied by the number of people in the economy.
C) marginal benefit of the individual person who places the highest value on the good, multiplied by the number of people in the economy.
D) benefit of the last person's consumption.
E) average of the marginal benefits of all the individuals at each quantity.
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
53) The marginal benefit curve of a public good
A) slopes downward.
B) slopes upward.
C) is vertical.
D) is horizontal.
E) is U-shaped.
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
54) Sue and Mark are the only two members of a community. Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000. If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good, then for efficiency the lighthouse should
A) be built but only Sue should be allowed to use it.
B) be built but only Mark should be allowed to use it.
C) be built and both Sue and Mark should be allowed to use it.
D) not be built because its marginal cost exceeds Sue's marginal benefit.
E) not be built because its marginal cost exceeds both Sue's and Mark's marginal benefit.
Topic: Efficient quantity of a public good
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
55) The efficient quantity of a public good is
A) the quantity produced by private firms.
B) the quantity at which the marginal benefit equals the marginal cost.
C) impossible to determine because each person's marginal benefit is different.
D) the quantity at which the marginal benefit exceeds the marginal cost by as much as possible.
E) the quantity determined by the intersection of the demand curve and the supply curve.
Topic: Efficient quantity of a public good
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
56) The efficient quantity of a public good can't be produced by private firms because
A) only the government has the necessary resources.
B) it is impossible to determine the efficient amount.
C) consumers have an incentive to free ride and not pay for their share of the good.
D) private firms aren't large enough.
E) the price would be too high if private firms produced the goods.
Topic: Public good, private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
57) If the two political parties propose similar or identical policies, they are following the principle of
A) rational ignorance.
B) inefficient overprovision.
C) free riding.
D) minimum differentiation.
E) the commons.
Topic: Principle of minimum differentiation
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
58) ________ is the decision not to acquire information because the marginal cost of doing so exceeds the marginal benefit.
A) Rational ignorance
B) The principle of minimum differentiation
C) A free rider
D) Consumer ignorance
E) The tragedy of the commons
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
59) Government bureaucracies over-provide public goods and grow larger because of their goal of ________ combined with ________ of the voters.
A) budget maximization; rational ignorance
B) budget minimization; irrational intelligence
C) budget maximization; minimum differentiation
D) budget maximization; irrational exuberance
E) minimum differentiation; budget maximization
Topic: Inefficient overprovision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
60) Consider the benefits and costs associated with the maintenance on U.S. transportation infrastructure, a public good. The efficient amount of maintenance on the infrastructure is determined by the intersection of the ________ curves.
A) marginal social cost and marginal social benefit
B) marginal benefit and marginal cost
C) marginal private benefit and marginal private cost
D) marginal external benefit and marginal external cost
E) marginal social cost and marginal cost
Topic: Eye on U.S. Infrastructure
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
61) ________ are public goods. If bureaucrats want to ensure the efficient quantity is produced, ________.
A) Life-saving drugs; marginal social benefit must be greater than marginal cost
B) Cars; marginal cost must equal to marginal benefit
C) Highways; marginal social benefit must be equal to marginal social cost
D) Factories; marginal social cost must be greater than marginal cost
E) U.S. exports; marginal cost must be greater than marginal benefit
Topic: Public good
Skill: Level 5: Critical thinking
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
62) The figure shows the costs and benefits associated with the maintenance of interstate highways. If bureaucrats maintain the efficient number of miles, ________ miles will be maintained at a cost of ________.
A) 25,000; $50 billion
B) more than 25,000; $100 billion
C) less than 25,000; $50 billion
D) more than 25,000; $50 billion
E) 25,000; $100 billion
Topic: Efficient quantity of a public good
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
63) The figure shows the costs and benefits associated with the maintenance of interstate highways. If bureaucrats maintain the efficient number of miles, the net benefit totals
A) $100 billion.
B) $50 billion.
C) $37.5 billion.
D) $87.5 billion.
E) $12.5 billion.
Topic: Net benefit
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
64) The figure shows the costs and benefits associated with the maintenance of interstate highways. If bureaucrats maintain the efficient number of miles, the total benefit equals
A) $87.5 billion.
B) $100 billion.
C) 25,000 miles.
D) $50 billion.
E) $37.5 billion.
Topic: Total benefit
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
11.3 Common Resources
1) In which of the following cases does the tragedy of the commons occur?
i. cattle grazing on private ranches
ii. catching lobsters off the coast of Florida
iii. raising salmon on salmon farms
iv. using legal services provided by the courts
A) i only
B) ii only
C) ii and iii
D) i and iv
E) i and iii
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
2) The tragedy of the commons arises because ________ exceeds ________ when the resource is used.
A) marginal social benefit; marginal private benefit
B) marginal social cost; marginal private cost
C) marginal social benefit; marginal private cost
D) marginal private cost; marginal private benefit
E) marginal private cost; marginal social cost
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
3) Which of the following applies to the tragedy of the commons and a common resource?
i. In the absence of government action, there are no incentives to prevent the overuse of the common resource.
ii. When consumers take account of the marginal social benefit and marginal cost, overuse of the common resource occurs.
iii. Even with government action, it is impossible to achieve the efficient level of use of a common resource.
A) i only
B) i and ii
C) ii and iii
D) i, ii, and iii
E) ii only
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
4) For a common resource, it is the case that
A) MSC > MC.
B) MSC < MC.
C) MSB > MB.
D) MB > MSB.
E) None of the above answers is correct.
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
5) For a common resource, the marginal private benefit of the resource is
A) greater than the marginal social benefit.
B) equal to the marginal social benefit.
C) less than the marginal social benefit.
D) not comparable to the marginal social benefit.
E) not defined because the resource is nonexcludable.
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
6) To achieve the efficient amount of use of a common resource, the use should be such that ________ equals ________.
A) marginal social cost; marginal private cost
B) marginal social cost; marginal social benefit
C) marginal private benefit; marginal cost
D) marginal cost; marginal benefit
E) marginal social benefit; marginal private cost
Topic: Efficient use of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
7) A common resource is used efficiently if
A) the output is maximized.
B) marginal social benefit equals marginal social cost.
C) marginal private benefit equals marginal cost.
D) marginal social benefit is maximized.
E) only the excess of the resource is utilized.
Topic: Efficient use of the commons
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
8) One way to overcome the tragedy of the commons is to
A) assign property rights so that someone owns the resource.
B) take away property rights so that no one owns the resource.
C) leave the market alone because the market will reach an equilibrium in which the efficient amount of the resource is used.
D) educate people in order to overcome the problem of rational ignorance.
E) None of the above answers is correct.
Topic: Property rights
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
9) A government policy that can lead to the efficient use of a common resource is
A) a tax.
B) a production quota.
C) an emission fee.
D) a price ceiling.
E) None of the above answers is correct.
Topic: Quotas
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
10) When a production quota is used to remedy the tragedy of the commons, then
A) the quota is set so that use of the resource is where marginal private benefit equals marginal private cost.
B) the quota is set so that use of the resource is where marginal private benefit equals marginal social benefit.
C) the market equilibrium, but not the efficient outcome, is achieved.
D) users of the resource have an incentive to cheat on the quota.
E) previous users of the resource are given the incentive to avoid use of the resource.
Topic: Quotas
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
11) When producers are hard to monitor and property rights are too costly, ________ is (are) an effective method to achieve efficient use of a(n) ________.
A) individual transfer quotas; public good
B) making a government payment equal to the marginal private benefits; public good
C) individual transferable quotas; common resource
D) individual transferable quotas; excludable good
E) making a government payment equal to the marginal private costs; common resource
Topic: Individual transferable quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
Tons of fish | Marginal social benefit (dollars per hour) |
100 | 700 |
200 | 600 |
300 | 500 |
400 | 400 |
500 | 300 |
600 | 200 |
12) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. With no government intervention, the equilibrium quantity of fish caught is ________ tons.
A) 100
B) 200
C) 300
D) 400
E) 500
Topic: Inefficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
13) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. The efficient quantity of fish caught is ________ tons.
A) 100
B) 200
C) 300
D) 400
E) 500
Topic: Efficient use of the commons
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
14) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. With no government intervention, the market is
A) catching the efficient quantity of fish.
B) underproducing by 100 tons of fish.
C) underproducing by 300 tons of fish.
D) overproducing by 300 tons of fish.
E) overproducing by 200 tons of fish.
Topic: Inefficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
15) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. If the government sets a production quota, to have the efficient quantity of fish caught, the quota should equal ________ tons of fish.
A) 100
B) 200
C) 300
D) 400
E) 500
Topic: Quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Revised
AACSB: Analytical thinking
16) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. If the government sets an efficient production quota, the profit on the last ton of fish caught is ________ per ton.
A) $0
B) $100
C) $200
D) $300
E) $400
Topic: Quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Revised
AACSB: Analytical thinking
17) The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. If the government uses individual transferrable quotas to achieve the efficient outcome, what is the total quantity of fish caught?
A) 0 tons
B) 100 tons
C) 200 tons
D) 300 tons
E) 500 tons
Topic: Individual transferable quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
18) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The efficient outcome is
A) 0 tons per week.
B) 300 tons per week.
C) 400 tons per week.
D) None of the above answers is correct.
Topic: Efficient use of the commons
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
19) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The market equilibrium with no government intervention is
A) 0 tons per week.
B) 200 tons per week.
C) 400 tons per week.
D) 500 tons per week.
E) None of the above answers is correct.
Topic: Inefficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
20) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. The efficient outcome is
A) 0 tons per week.
B) 200 tons per week.
C) 300 tons per week.
D) 400 tons per week.
E) 500 tons per week.
Topic: Efficient use of the commons
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
21) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for cod, a common resource. A quota to prevent the overuse of the cod sets the catch equal to
A) 0 tons per week.
B) 200 tons per week.
C) 400 tons per week.
D) 300 tons per week.
E) 500 tons per week.
Topic: Quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
22) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The market equilibrium with no government intervention is raising
A) 0 goats.
B) 40 goats.
C) 50 goats.
D) 55 goats.
E) None of the above answers is correct.
Topic: Inefficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
23) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient outcome is raising
A) 0 goats.
B) 40 goats.
C) 50 goats.
D) 55 goats.
E) None of the above answers is correct.
Topic: Efficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
24) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. A quota to prevent the overuse of the common pasture sets the number of goats to be raised equal to
A) 0 goats.
B) 40 goats.
C) 50 goats.
D) 55 goats.
E) None of the above answers is correct.
Topic: Quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
25) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. If property rights to the pasture are granted to a farmer so that the farmer owns the pasture, the farmer raises
A) 0 goats.
B) 40 goats.
C) 50 goats.
D) 55 goats.
E) None of the above answers is correct.
Topic: Property rights
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
26) The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. Suppose the government assigns individual transferable quotas (ITQ) set to achieve the efficient outcome. The market price of an ITQ is ________ per pound.
A) $4.20
B) $2.00
C) $6.00
D) $4.00
E) $0.00
Topic: Individual transferable quotas
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
27) The tragedy of the commons is the absence of incentives to
A) correctly measure the marginal benefit.
B) prevent under use of the common resource.
C) prevent overuse and depletion of the common resource.
D) discover the resource.
E) prevent the free-rider problem.
Topic: Tragedy of the commons
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
28) For a common resource such as fish, the marginal private benefit ________ the marginal social benefit and the marginal private cost ________ the marginal social cost.
A) equals; is less than
B) is greater than; equals
C) equals; equals
D) is less than; is less than
E) is greater than; is greater than
Topic: Marginal private cost versus marginal social cost
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
29) For a common resource, the marginal private cost curve generally ________ and the marginal social cost curve generally ________.
A) slopes upward; slopes upward
B) slopes upward; slopes downward
C) slopes downward; slopes upward
D) slopes downward; slopes downward
E) is vertical; is horizontal
Topic: Marginal private cost versus marginal social cost
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Revised
AACSB: Analytical thinking
30) For a common resource, the equilibrium with no government intervention is such that ________ equals ________.
A) marginal private benefit; marginal social cost
B) marginal social benefit; marginal private cost
C) marginal social cost; marginal social benefit
D) marginal external benefit; marginal external cost
E) marginal social benefit; marginal external cost
Topic: Inefficient equilibrium
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
31) For a common resource, efficiency requires that the ________ equals the ________.
A) marginal private benefit; marginal private cost
B) marginal social benefit; marginal private cost
C) marginal social benefit; marginal social cost
D) marginal external benefit marginal external cost
E) marginal social benefit; marginal external cost
Topic: Efficient use of the commons
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
32) Which of the following is NOT a potential solution to the tragedy of the commons?
A) setting a production quota
B) granting individual transferable quotas
C) subsidizing use of the resource
D) establishing property rights to the resource
E) None of the above is correct because they are all potential solutions to the tragedy of the commons.
Topic: Efficient use of the commons
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
33) If the government assigns private property rights to a common resource, then the
A) resource is under-utilized.
B) marginal private cost becomes equal to the marginal social cost.
C) government needs to set a quota to achieve efficiency.
D) resource becomes subject to the free riding problem.
E) resource cannot be utilized.
Topic: Property rights
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
34) The market price of an individual transferable quota is equal to the
A) marginal private benefit.
B) marginal social benefit.
C) marginal private benefit minus the marginal cost.
D) marginal social benefit minus the marginal cost.
E) marginal private benefit plus the marginal cost.
Topic: Individual transferable quotas
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
35) The figure shows the costs and benefits associated with commercial harvesting of Florida lobster. The overharvesting equilibrium occurs when ________ lobster are caught.
A) 400
B) between 250 and 400
C) 250
D) less than 250
E) The question errs. Information about the marginal benefit curve is needed.
Topic: Inefficient equilibrium
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
36) The figure shows the costs and benefits associated with commercial harvesting of Florida lobster. The efficient number equals ________ lobster where ________.
A) 250; marginal benefit = marginal cost
B) 250; marginal social cost = marginal social benefit
C) between 250 and 400; marginal social cost > marginal cost
D) 400; marginal cost = marginal social benefit
E) 400; marginal cost = marginal benefit
Topic: Efficient use of the commons
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
37) The figure shows the costs and benefits associated with commercial harvesting of Florida lobster. Without government intervention, the deadweight loss equals area ________ at the overharvesting equilibrium.
A) C + B
B) A + B
C) B
D) C
E) A
Topic: Deadweight loss
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Analytical thinking
11.4 Chapter Figures
The figure above shows the marginal benefit curve (MB) and marginal cost curve (MC) of surveillance satellites that provide national defense services.
1) In the figure above, the efficient quantity of satellites to produce is
A) 200, because this is where marginal benefit equals marginal cost.
B) 200, because this is where the market is in equilibrium.
C) anywhere below 200, i.e., where marginal benefit exceeds marginal cost.
D) anywhere above 200, i.e., where marginal benefit is below marginal cost.
E) zero, because no one is willing to pay for satellites.
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
2) In the figure above, a private market will most likely produce
A) no satellites because of the free-rider problem.
B) 200 satellites because at this point marginal benefit equals marginal cost.
C) less than 200 satellites because over this output range marginal benefit exceeds marginal cost.
D) more than 200 satellites because over this output range marginal benefit is below marginal cost.
E) 200 satellites because at this point the market will be in equilibrium.
Topic: Public good, private provision
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
3) Using the figure above, suppose there are two political parties, the Hawks and the Doves, which agree on all issues except for the quantity of defense satellites. The Hawks want 300 satellites and the Doves want 100 satellites. The voters are well informed and know what is best for them. The parties run a voter survey and discover the marginal benefit curve (MB). They also know the marginal cost curve (MC). What quantity of satellites will most likely result from this political process?
A) 200, because unless each party proposes 200 satellites, the other party can beat it in an election
B) 300, because the Hawks are more likely to win
C) 100, because the Doves are more likely to win
D) 200, because the parties will strike a deal: each will agree to give up 100 satellites
E) Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided.
Topic: Principle of minimum differentiation
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
4) Suppose that satellites are publicly provided. The voters are rationally ignorant, while the Defense Ministry is well informed. Using the figure above, which of the following quantities of satellites is most likely to be provided?
A) 300
B) 200
C) 150
D) 100
E) zero
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
11.5 Integrative Questions
1) Which of the following can be rival and excludable?
i. a good
ii. a service
iii. a resource
A) i and ii
B) i and iii
C) ii and iii
D) i, ii and iii
E) only i
Topic: Integrative
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Reflective thinking
2) National defense is a ________ because ________.
A) public good; it can be an overused resource
B) public good; it is nonrival and nonexcludable
C) common resource; no one has the incentive to pay for his or her share
D) private good; no one has an incentive to conserve the good
E) common resource; it suffers from the tragedy of the commons
Topic: Integrative
Skill: Level 3: Using models
Section: Integrative
Status: Old
AACSB: Analytical thinking
3) Fish in the ocean are an example of ________ because they are ________.
A) public good; nonexcludable and nonrival
B) public good; rival and excludable
C) common resource; rival and nonexcludable
D) common resource; nonrival and nonexcludable
E) private good; caught by private fishermen
Topic: Integrative
Skill: Level 3: Using models
Section: Integrative
Status: Old
AACSB: Analytical thinking
4) A club good, such as Netflix, is
A) nonrival and excludable.
B) rival and excludable.
C) nonrival and nonexcludable.
D) rival and nonexcludable.
E) None of the above answers is correct.
Topic: Integrative
Skill: Level 2: Using definitions
Section: Integrative
Status: Revised
AACSB: Reflective thinking
5) The free-rider problem applies
A) to rival and excludable goods.
B) to common resources.
C) to nonrival and nonexcludable goods.
D) when marginal social benefit exceeds marginal private benefit.
E) when marginal social cost equals marginal private cost.
Topic: Integrative
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Reflective thinking
6) The marginal benefit curve of a public good is calculated by ________ individual marginal ________ curves.
A) averaging; cost/benefit
B) horizontally summing; cost
C) averaging; benefit
D) vertically summing; benefit
E) horizontally summing; benefit
Topic: Integrative
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Reflective thinking
7) The reason that private provision of a public good often leads to inefficiency is because
A) private property rights are too costly to enforce.
B) marginal private benefits are too costly to calculate.
C) no one has the incentive to pay for the good.
D) no one has an incentive to conserve the good.
E) the tragedy of the commons occurs and too many public goods are provided.
Topic: Integrative
Skill: Level 3: Using models
Section: Integrative
Status: Old
AACSB: Reflective thinking
8) Which of the following is TRUE?
i. A common resource is a resource that is nonrival and nonexcludable.
ii. Issuing individual transferable quotas (ITQ) means that for users of common resources, the marginal cost plus the price of the ITQ equals the marginal social cost.
iii. In an unregulated market, a common resource is used to the point at which marginal private benefit equals marginal cost.
A) only i
B) only ii
C) only iii
D) i and ii
E) ii and iii
Topic: Integrative
Skill: Level 3: Using models
Section: Integrative
Status: Old
AACSB: Reflective thinking
9) Ocean fish are considered rival because a fish taken by one person is ________ for anyone else, and they are nonexcludable because it is ________ to prevent people from catching them.
A) not available; difficult
B) not available; easy
C) available; difficult
D) available; easy
E) not available; fair
Topic: Excludable
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Application of knowledge
10) A seat at an N.B.A. Finals game is a ________ good because it is ________ and excludable.
A) natural monopoly; rival
B) public; rival
C) private; rival
D) natural monopoly; nonrival
E) private; nonrival
Topic: Private good
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Application of knowledge
11) Because fire protection is a ________ good, the free-rider problem is avoided by public provision and financing through ________.
A) public; taxes
B) private; taxes
C) natural monopoly; taxes
D) public; grants
E) public; vouchers
Topic: Public good
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Application of knowledge
12) For a common resource, such as tuna fish in the ocean, no fisher has a ________ incentive to conserve the resource and use it at an ________ rate.
A) private; inefficient
B) private; efficient
C) public; inefficient
D) public; efficient
E) personal; inefficient
Topic: Tragedy of the commons
Skill: Level 2: Using definitions
Section: Integrative
Status: Old
AACSB: Analytical thinking
11.6 Essay: Classifying Goods and Resources
1) What does it mean for a good to be "nonexcludable"? Are private goods nonexcludable? Are public goods nonexcludable? Are common resources nonexcludable?
Topic: Excludable, nonexcludable
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
2) When describing goods and services, what is meant by the terms "rival" and "nonrival?" Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?
Topic: Rival, nonrival
Skill: Level 1: Definition
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
3) A few years back, The Wall Street Journal reported that the government of Thailand "plans to launch a chain of more than 3,000 Thai restaurants world-wide over the next five years, with the largest number, more than 1,000, slated for the United States." The Thai government will have a 30 percent minority stake in the restaurants and the rest will be given to Thai owners. The country's deputy commerce minister explains that the government will play an active role in drawing up menus, making sure that genuine Thai food is served and ensuring that 70 percent of supplies for the restaurants are imported from Thailand. Because the Thai government will be part owner of these restaurants, are these restaurants public goods?
Topic: Public good
Skill: Level 3: Using models
Section: Checkpoint 11.1
Status: Old
AACSB: Analytical thinking
4) Is a sailboat purchased in Victoria, British Columbia, a private good or a public good?
Topic: Private good
Skill: Level 3: Using models
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
5) What are the differences between public goods and private goods?
∙ nonrival, which means that consumption by one person doesn't decrease the quantity available for others' consumption, and
∙ nonexcludable, so that it is impossible or very costly to prevent people from consuming the good even if they did not pay for the good.
In contrast, private goods are
∙ rival, so that consumption by one person decreases the amount available for consumption by another person, and
∙ excludable, which means that it is possible to prevent someone from enjoying the benefits of consuming the good unless they pay for the good.
Topic: Public goods versus private goods
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
6) You are studying with a friend and your friend says, "private goods are excludable and nonrival, while public goods are nonexcludable and rival." Do you agree?
Topic: Public goods versus private goods
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
7) Some resources are private and others are common. Define a common resource, explain the definition, and provide an example of a private resource and a common resource.
Topic: Common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.1
Status: Old
AACSB: Written and oral communication
11.7 Essay: Public Goods and the Free-Rider Problem
1) What is the free-rider problem and with what is it associated?
Topic: Free rider
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
2) What is the free-rider problem? What results from the free-rider problem? What is a solution to the free-rider problem?
Topic: Free rider
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
3) "The principle of increasing marginal cost does not apply to public goods." Is this statement correct or not?
Topic: Marginal cost
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Reflective thinking
4) Protection of rivers in Idaho is a public good. If the marginal cost of protecting rivers in Idaho exceeds the marginal benefit of river protection, is there more than, less than, or the efficient amount of river protection taking place?
Topic: Efficient quantity of a public good
Skill: Level 2: Using definitions
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
5) How is the efficient quantity of public goods determined?
Topic: Efficient quantity of a public good
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
6) Why isn't national defense provided by free markets?
Topic: Private provision
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
7) What is rational ignorance?
Topic: Rational ignorance
Skill: Level 1: Definition
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
8) Why is watching sports more important to many prospective voters than watching the news? In your answer, mention the role played by rational ignorance and the cost of gathering information.
Topic: Rational ignorance
Skill: Level 5: Critical thinking
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
9) Under what conditions will the political process provide an inefficient amount of a public good?
Topic: Inefficient overprovision
Skill: Level 3: Using models
Section: Checkpoint 11.2
Status: Old
AACSB: Written and oral communication
10) The table above shows the marginal benefit that arises from providing police protection in an economy of two people, Paul and Art.
a. Construct a table of the economy's marginal benefit from providing police protection.
b. What is the economy's marginal benefit from having 3 police cars on duty?
a. The table showing the economy's marginal benefit from providing police protection is above. At each quantity, the economy's marginal benefit is the sum of Paul's marginal benefit plus Art's marginal benefit.
b. The economy's marginal benefit from having three cars on duty is $90.
Topic: Marginal benefit
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
11) Ten homeowners live around Lake Alice. Unfortunately, the lake is contaminated with various chemicals and the level of contamination is currently 20 parts per million. All the homeowners benefit equally if the level of contamination is reduced. The table above gives the marginal cost and marginal benefit for removing the contaminants from the lake.
a. What will be the parts per million if the homeowners alone are in charge of reducing the contaminants?
b. What is the efficient amount of contamination?
a. Homeowners will not reduce the contaminants at all because a free-rider problem prevails. The level of contamination will be 20 parts per million.
b. The efficient level of contamination is 10 parts per million, because that is the level for which the marginal cost is equal to the marginal benefit.
Topic: Efficient quantity of a public good
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
12) The table above provides information about the marginal cost and marginal benefit of streetlights, which are a public good.
a. What quantity would a private company provide? Why?
b. What is the efficient quantity?
a. Street lights are a public good, so a private company would provide zero street lights. The company would provide zero because everyone would free ride, that is, no one would voluntarily pay for the street lighting. Because the company knows that no one will pay, it will not provide any street lights.
b. The efficient quantity is 3 street lights per block because that is the quantity that equates the marginal benefit to the marginal cost.
Topic: Efficient quantity of a public good
Skill: Level 4: Applying models
Section: Checkpoint 11.2
Status: Old
AACSB: Analytical thinking
11.8 Essay: Common Resources
1) What is the tragedy of the commons?
Topic: Tragedy of the commons
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Written and oral communication
2) "The problem with a common resource is that no one gets to use the resource." Comment on the preceding assertion.
Topic: Tragedy of the commons
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Written and oral communication
3) Why are fish in the ocean an example of a resource that suffers from the tragedy of the commons but cattle grazing in a farmer's pasture do not suffer from the tragedy of the commons?
Topic: Tragedy of the commons
Skill: Level 3: Using models
Section: Checkpoint 11.3
Status: Old
AACSB: Written and oral communication
4) How does the marginal social cost curve of a common resource compare to the marginal private cost curve of the common resource? If there is a difference, why is there a difference? If there is not a difference, why is there not a difference?
Topic: Marginal social cost of a common resource
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Written and oral communication
5) How does the government determine the quota amount that will produce an efficient use of a common resource?
Topic: Quotas
Skill: Level 2: Using definitions
Section: Checkpoint 11.3
Status: Old
AACSB: Written and oral communication
6) What is an individual transferable quota (ITQ)?
Topic: Individual transferable quotas
Skill: Level 1: Definition
Section: Checkpoint 11.3
Status: Old
AACSB: Reflective thinking
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Foundations of Microeconomics 9e | Test Bank with Answer Key by Robin Bade
By Robin Bade