Econ Chapter 11 test A

One way to eliminate the Tragedy of the Commons is to a. limit access to the commons. b. increase access to the commons. c. increase law enforcement in public areas. d. provide more public land for recreation.

a. limit access to the commons

If one person's use of a good diminishes another person's enjoyment of it, the good is a. rival. b. normal. c. excludable. d. exhaustible.

a. rival

If everyone benefits from helping the poor, a. taxing the wealthy to raise the living standards of the poor can potentially make everyone better off. b. government intervention can only make things worse. c. eliminating taxes aimed at redistributing income will necessarily make rich people better off. d. private markets can adequately provide charity programs to help the poor despite free-rider problems.

a. taxing the wealthy to raise the living standards of the poor can potentially make everyone better off.

Why do elephants face the threat of extinction while cows do not? a. There is a high demand for products that come only from the cow. b. Cattle are owned by ranchers, while elephants are owned by no one. c. There are still lots of cattle that roam free, while most elephants are in zoos. d. Cattle are a valuable source of income for many people and elephants have no market value.

b. Cattle are owned by ranchers, while elephants are owned by no one.

A lighthouse is typically considered a good example of a public good because a. there is rarely another lighthouse nearby to provide competition. b. all passing ships are able to enjoy the benefits of the lighthouse without paying. c. a nearby port authority cannot avoid paying fees to the lighthouse owner. d. the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.

b. all passing ships are able to enjoy the benefits of the lighthouse without paying.

Basic research is a public good because it a. is a rival good. b. is difficult to exclude those who might benefit from it. c. is used to develop public goods. d. always benefits developed countries at the expense of developing countries.

b. is difficult to exclude those who might benefit from it.

If a road is congested, then use of that road by an additional person would lead to a a. positive externality. b. negative externality. c. natural monopoly problem. d. free-rider problem with rush hour drivers stuck in traffic.

b. negative externality.

A good is excludable if a. it is not a normal good. b. people can be prevented from using it. c. the government regulates its availability. d. one person's use of the good diminishes another person's enjoyment of it.

b. people can be prevented from using it.

Some goods can be either common resources or public goods depending on a. the marginal cost of the good. b. whether the good is rival. c. how policymakers deal with the good. d. none of the above.

b. whether the good is rival.

In an attempt to improve the pollution problem outside the central city of Singapore, the Singapore government a. charges a premium tax on gasoline. b. allows only motorcycle and bicycle transportation. c. auctions off the right to license new cars. d. does not allow taxis to travel outside the central city.

c. auctions off the right to license new cars.

The fish in the ocean are an example of a a. private good. b. public good. c. common resource. d. natural monopoly good.

c. common resource.

Overuse of common resources can potentially be resolved by governments that a. subsidize use. b. deregulate use. c. convert the common resource to a private good. d. all of the above

c. convert the common resource to a private good.

Excessive fishing occurs because a. fishermen have other marketable skills and do not fear exploitation of fish reserves. b. fishermen rely on government managers to worry about fish populations. c. each individual fisherman has little incentive to maintain the species for the next year. d. fishermen are concerned about the population dynamics of fish biomass, not current harvest rates.

c. each individual fisherman has little incentive to maintain the species for the next year.

A good solution to saving the tiger from extinction would be to a. tax the sale of tiger hides. b. outlaw the sale of tigers or any part of them. c. give the tigers' habitat to someone. d. regulate the traditional use of Asian medicines that use tiger liver.

c. give the tigers' habitat to someone.

Due to the externalities associated with public goods and common resources, a. private markets will lead to an efficient allocation of resources. b. private markets will correct for the gain or loss in consumer surplus. c. government intervention can potentially raise economic well-being. d. all of the above

c. government intervention can potentially raise economic well-being.

To most economists, the best solution to the overcrowding problem at Yellowstone National park is to a. increase financial aid from the government. b. place daily quotas on the number of vehicles that enter the park. c. increase entrance fees to the park. d. temporarily close down damaged sections of the park.

c. increase entrance fees to the park.

The market does not provide national defense because a. the fixed cost of national defense is too high. b. the resources to operate national defense are not available in the private sector. c. it is impossible to prevent any single person from enjoying the benefit of national defense. d. all of the above

c. it is impossible to prevent any single person from enjoying the benefit of national defense.

According to experience, the most effective solution to highway congestion is to a. build more roads. b. discourage urban sprawl by subsidizing urban apartment rents. c. set a price for access to roads, which is paid by those who use them. d. limit access to roads during the most congested times of the day.

c. set a price for access to roads, which is paid by those who use them.

A common theme among examples of market failure is a. the good being provided always harms society in some systematic way. b. there are regulations that prohibit the efficient functioning of private markets. c. some item of value does not have an owner with the legal authority to control it. d. cost-benefit analysis is likely to lead to implementation policies that promote private provision of goods and services.

c. some item of value does not have an owner with the legal authority to control it.

. Which of the following suggests that individuals do not place an infinite value on human life? a. sky-diving b. road intersections without stop signs c. cars that are manufactured and purchased without the latest safety features d. all of the above

d. all of the above

When a good does not have a price attached to it, private markets a. are characterized by market failure. b. can sometimes be improved by the government. c. cannot ensure that the good is produced and consumed in the proper amounts. d. all of the above

d. all of the above

Market failure associated with the free-rider problem is a result of a. a problem associated with pollution. b. a project in which costs exceed benefits. c. losses that accrue to providers of the product. d. benefits that accrue to those who don't pay.

d. benefits that accrue to those who don't pay.

Fire protection is a good example of a natural monopoly good because a. it is rival. b. it is nonexcludable. c. it is always provided by the government. d. protecting an extra house is unlikely to reduce the protection available to others.

d. protecting an extra house is unlikely to reduce the protection available to others.

Goods that are nonexcludable and nonrival are a. common resources. b. natural monopolies. c. private goods. d. public goods.

d. public goods.

. The U.S. government protects fish by a. subsidizing the fishing industry. b. heavily taxing competing industries. c. increasing taxes on fishing poles and lures. d. selling fishing licenses and regulating fish lengths.

d. selling fishing licenses and regulating fish lengths.