Chapter 17 Econ FINAL

A good is excludable if nonpayers can be prevented from consuming it. A.) True B.) False

A

A low voter turnout can be explained by noting that political action is a public good and people who don't vote can free-ride on those who do. A.) True B.) False

A

For a public good, the marginal social benefit will be higher than any individual's marginal benefit of consumption. A.) True B.) False

A

Imposing a Pigouvian tax on a good, establishing a system of tradable licenses, and assigning property rights are methods to alleviate the problems associated with: A.) common resources. B.) positive externalities. C.) public goods. D.) private goods.

A

The best example of a private good is: A.) an automobile. B.) national defense. C.) law enforcement. D.) public education.

A

The marginal cost of producing an artificially scarce good is equal to: A.) zero. B.) its price. C.) the average total cost. D.) the marginal benefit if consumer surplus equals zero.

A

The private market will lead to _____ of clean air because _____. A.) too much consumption; it is nonexcludable but rival in consumption B.) production of the socially optimal amount; the marginal cost is zero C.) too little consumption; it is nonexcludable but rival in consumption D.) government provision; it is a public good

A

What is difficult about using cost-benefit analysis to estimate the level of a public good that will maximize social welfare? A.) It is difficult to estimate the marginal social benefits of supplying a public good. B.) The government cannot use cost-benefit analysis to estimate this. C.) It is difficult to estimate the marginal costs of supplying a public good. D.) The costs of using it may make the provision of the public good prohibitive.

A

Which of the following is a private good? A.) a fast-food cheeseburger B.) traffic lights C.) cell phone service D.) mountain bike trails in a national forest

A

_____ are a good that is rival in consumption and nonexcludable. A.) Public parks B.) Private beaches C.) National defense D.) Public policy, such as national economic policy,

A

The best example of a public good is: A.) legal services. B.) national defense. C.) a municipal library. D.) cable television programming.

B

A(n) _____ is excludable and rival in consumption. A.) artificially scarce good B.) common resource C.) private good D.) public good

C

Consider an economy with just two citizens. If Sanjay's marginal benefit from mosquito control is $10 and Anjuli's marginal benefit is $25, then the optimal level of a public good like mosquito control occurs when the marginal cost of mosquito control is: A.) $10.00. B.) $25.00. C.) $35.00. D.) $17.50.

C

Every few months, public radio announces a call for pledge support. During this time, it asks listeners to contribute to their local public radio station. Although they raise money during this time, it often falls short of the amount they wish to raise because: A.) public radio free-rides on the listeners. B.) the marginal social cost equals the marginal social benefit of public radio listening. C.) listeners know they will be able to hear public radio even if they don't contribute. D.) they do not make the pledge period long enough.

C

If left to the private market, the amount of police protection provided in a city would be _____ than it is now, and free riders would pay _____ for police protection. A.) more; more B.) less; a higher price C.) less; nothing D.) more; nothing

C

In London, any motorist entering a particular area in the city center during certain specified times must pay a congestion fee equal to £8, with fines for noncompliance rising to as high as £120. The congestion fee is: A.) the wrong policy tool for solving the problem of congestion; instead, motorists should be allowed to make deals to determine when and where they are permitted to drive. B.) an attempt to internalize the costs of traffic delays and congestion. C.) a Pigouvian tax aimed at regulating the use of city streets, a common resource, and an attempt to internalize the costs of traffic delays and congestion. D.) a Pigouvian tax aimed at regulating the use of city streets, a common resource.

C

Public goods are NOT sold in efficient quantities in the marketplace because: A.) the more one person has, the less another person has. B.) they are usually so costly that only the wealthy can afford them. C.) once supplied to a buyer, they can be made available at no cost to someone else. D.) they are usually very poor quality goods.

C

Public goods differ from common resources in that both are _____, but public goods are _____, while common resources are _____. A.) rival in consumption; nonexcludable; excludable B.) nonrival in consumption; excludable; nonexcludable C.) nonexcludable; are nonrival in consumption; rival in consumption D.) excludable; nonrival in consumption; rival in consumption

C

Wenqin lives in a city that has a huge public rose garden. Residents can stroll through the rose garden, enjoy the scenic vistas, or have a picnic, all without paying a fee. The public rose garden is best described as: A.) rival and excludable. B.) nonrival and excludable. C.) nonrival and nonexcludable. D.) rival and nonexcludable.

C

When the market does NOT result in an efficient allocation of scarce resources, economists say there has been: A.) market dropout. B.) normative economics. C.) market failure. D.) market disincentives.

C

An e-book is similar to a published book in that it is _____, but it is also similar to national defense in that it is _____. A.) nonexcludable; rival in consumption B.) nonrival in consumption; excludable C.) rival in consumption; nonexcludable D.) excludable; nonrival in consumption

D

Assigning property rights helps to correct the problems associated with common resources: A.) because it allows the government to determine the amount that would lead to the socially optimal amount. B.) because it makes the good nonrival in consumption. C.) and therefore allows the market to better assess the marginal social benefits. D.) because it allows property owners to exclude users and to manage the resource more efficiently.

D

If a good is subject to the free-rider problem and an inefficiently high level of consumption, the good must be a(n): A.) artificially scarce good. B.) public good. C.) private good. D.) common resource.

D

Most neighborhood streets are illuminated at night by streetlights. The streetlights are _____ and _____. Therefore, they are likely to be _____ by the competitive market. A.) nonrival; nonexcludable; overprovided B.) nonrival; excludable; underprovided C.) rival; excludable; efficiently provided D.) nonrival; nonexcludable; underprovided

D

Pharmaceutical companies typically face very high fixed costs when developing new drugs. The marginal cost of producing a drug after development is very low. When these companies set price and output to maximize profit, patients pay a _____ price for _____ amounts of the drug than are socially optimal. A.) higher; higher B.) lower; lower C.) lower; higher D.) higher; lower

D