11 Micro Econ questions

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is correct? a. It is a club good which should be left as is b. It is a public good which must be publicly owned to be used efficiently c. It is a private good which must be privately owned to be used efficiently d. It is a common resource which will be overused if no one owns it.

It is a common resource which will be overused if no one owns it.

Under which of the following scenarios would a park be considered a common resource? a. Visitors to the park must pay an admittance fee, and frequently all of the picnic tables have been in use b. Visitors to the park must pay an admittance fee, but there are always picnic tables available c. Visitors can enter the park free of charge, but frequently all of the picnic tables are in use d. Visitors can enter the park free of charge and there are always plenty of empty picnic tables.

Visitors can enter the park free of charge, but frequently all of the picnic tables are in use

Which of the following goods is rival in consumption and excludable? a. a fireworks display b. a parade c. a box of sparklers d. national defense

a box of sparklers

In a certain city, the government is considering acquiring some land and turning it into a park (without any fences or gates). In an attempt to determine the extent to which residents of the city would value the park, residents are asked to fill out a questionnaire. Which of the following is correct? a. the use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of resident's perceptions of the costs and benefits of a park b. On the questionnaire, some residents are likely to exaggerate the costs they associate with the park c. On the questionnaire, some residents are likely to exaggerate the value they associate with the park d. All of the above

all of the above

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for the problem, the town could a. auction off a limited number of grazing permits b. wait until the market corrects the problem c. allow individual shepherds to choose their own flock sizes d. internalize the externality by subsidizing the production of sheep's wool

auction off a limited number of grazing permits

Consider a public road that anyone is allowed to drive on. If the road is often congested, the road would be considered a a. common resource b. club good c. public good d. private good

common resource

Goods that are rival in consumption include both a. private goods and club goods b. club goods and public goods c. common resources and private goods d. public goods and common resources

commons resources and private goods

Because it is a. neither excludable nor rival in consumption, a tornado siren is a common resource. b. rival in consumption but not excludable, a tornado siren is a common resource. c. excludable but to rival in consumption, a tornado siren is produced by a club good. d. neither excludable nor rival in consumption, a tornado siren is a public good.

neither excludable nor rival in consumption, a tornado siren is a public good

When a good is rival in consumption, a. one person's use of the good diminishes another person's ability to use it. b. people can be prevented from using the good. c. an unlimited number of people can use the good at the same time d. everyone will be excluded from obtaining the good.

one person's use of the good diminishes another person's ability to use it

The Tragedy of the Commons results when a good is a. rival in consumption and non excludable b. both rival in consumption and excludable c. neither rival in consumption or excludable d. excludable and not rival in consumption

rival in consumption and not excludable