MICROECON Chapter 17 Hw questions

Look at the table Security in a residential community. The marginal cost of hiring the fourth security guard is _ __ and the marginal social benefit is ___ Quantity of security Guards Total Cost Total Individual Benefit to Each Resident 0 0 0 1 150 10 2 300 16 3 450 18 4 600 19

$150; $100

Which of the following are used to provide public goods? I. voluntary contributions II. taxes III. self-interested business firms II and III. I and II. I, II, and III. I only.

I, II, and III: voluntary contributions, taxes, self-interested business firms

A good is excludable if nonpayers can be prevented from consuming it. a. False b. True

True

T or F: The efficient level of provision of a public good is the level at which its marginal social benefit is equal to the marginal social cost of its production

True

T or F: To ensure efficient use of a common resource, the government could assign property rights.

True

Which of the following is a private good? a. traffic lights b. mountain bike trails c. a fast-food cheeseburger d. cell-phone service

a fast-food cheeseburger

Rivalry

a good is rival in consumption if its consumption by one consumer prevents simultaneous consumption by other consumers

A pigouvian tax

a tax on any market activity that generates negative externalities (costs not included in the market price).

Ch.17 PQ 26) (Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $24, how many units of the public good will be provided by the private market? a. 0 b. 12 c.16 d. 8

a. 0

One way the government of Alaska could prevent an inefficiently large production of crab fishing would be to: a. sell exclusive licenses for the right to fish. b. offer tax breaks for more efficient boats. c. subsidize fishermen to encourage competition. d. allow competition from foreign fishermen.

a. sell exclusive licenses for the right to fish

Some public goods would not be provided without government intervention because: a. the marginal cost of the good exceeds an individual's marginal benefit and the socially optimal price of the good would be zero (i.e., there is no chance of making a profit). b. the socially optimal price of the good would be zero (i.e., there is no chance of making a profit). c. the marginal cost of the good is less than an individual's marginal benefit. d. the marginal cost of the good exceeds an individual's marginal benefit.

a. the marginal cost of the good exceeds an individual's marginal benefit and the socially optimal price of the good would be zero (i.e., there is no chance of making a profit).

The best example of a private good is a. an automobile b. public education c. national defense d. law enforcement

an automobile

Which of the following goods BEST fits the characteristics of a private good? a.disease prevention b. an ice-cream cone c.fire protection a professor giving a lecture in a large classroom

b. Ice Cream Cone

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 allows property owners to exclude users and to manage the resource more efficiently. c. and therefore allows the market to better assess the marginal social benefits d.because it makes the good nonrival in consumption.

b. because it allows property owners to exclude users and to manage the resource more efficiently.

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

b. common resource

Stephanie stops at a gas station to fill up the tank of her car. The unleaded gasoline in her tank is best described as a(n): a. public good. b. private good. c. artificially scarce good. d. common resource.

b. private good

If at the quantity determined by private costs and benefits, the marginal social benefit of a public good is greater than the marginal social cost of providing the good: a. the private market will best determine how much of b. the good will be provided and to whom. c. free riding will not occur, so the private market will provide the socially optimal amount. c. a community will best provide the good. d. the community will not provide the good.

c. a community will best provide the good

An artificially scarce good is similar to a public good in that it is _____, but it is also similar to a private good in that it is _____. a. nonrival in consumption; nonexcludable b. nonexcludable; rival in consumption c. nonrival in consumption; excludable d. excludable; nonrival in consumption

c. nonrival in consumption; excludable

For which of the following goods is the marginal social benefit necessarily greater than the marginal private benefit? a. private goods b. artificially scarce goods c. public goods d. common resources

c. public goods

The marginal cost of producing an artificially scarce good is equal to: a. the marginal benefit if consumer surplus equals zero b. the average total cost c. zero d. its price

c. zero

The best example of an artificially scarce good is

cable television programming

For a public good, nonpayers _____ excluded from obtaining the benefits of the good. usually are a. cannot be b. can be c. are automatically d. usually are

cannot be

Bluefin tuna travel in schools throughout the world's oceans. Fishing boats from many nations harvest bluefin tuna as the schools migrate through their national waters. The schools of bluefin tuna are best described as: a. a public good. b. an artificially scarce resource. c. a private good. d. a common resource.

d. a common resource

Whether or not they pay for them, people cannot be excluded from receiving the benefits of: a. private goods. b. common resources. c. public goods. d. either public goods or common resources.

d. either public goods or common resources

The tendency of people or firms to consume a public good without paying for it is called the _____ problem. a. free-market b. free-goods c. free-cost d. free-rider

d. free-rider

Ch.17 PQ 19: The figure Model of a Market for a Common Resource shows the intersection of the private supply and demand curves. Without any consideration of the marginal social cost of using a common resource, the quantity of the common resource used at Q will be: a. smaller than is socially desirable. b. indeterminate without more information. c. efficient. d. larger than is socially desirable.

d. larger than socially desirable

Which of the following is the best example of a good whose consumption is NOT excludable? a. a taco b. clothing c. ice cream d. national defense

d. national defense

As a big music fan, you want to attend a weekend blues festival in your town. The purchase of a wristband gives you and thousands of other fans access to the outdoor concert pavilion. The blues festival is a good that has the characteristics of being: a. rival and excludable. b. rival and nonexcludable. c. nonrival and nonexcludable. d. nonrival and excludable.

d. nonrival and excludable

If the use of a common resource is determined in the private market, the resource will be _____, since the marginal social benefit will be equal to the marginal private cost of production, which is _____ than the marginal social cost. a. underused; equal to b. underused; greater than c. overused; greater than d. overused; less than

d. overused; less than

A(n) _____ is excludable and rival in consumption. a. public good b. artificially scarce good c. common resource d. private good

d. private good

A(n) _____ is nonexcludable and nonrival in consumption. a. artificially scarce good b. private good c. common resource d. public good

d. public

An inefficient allocation of resources will occur when

decision makers are not faced with the full benefits and costs of their choices

The tendency of people or firms to consume a public good without paying for it is called the

free-rider problem

Traffic congestion imposes higher costs and discomfort to residents of a city because the marginal social cost of any one individual's use of the roads is _____ the individual marginal cost. less than irrelevant to greater than equal to

greater than

Clean water in a river is nonexcludable because

it is not possible to prevent consumption by people who do not pay for it

When the allocation of resources is such that a different allocation would increase society's welfare, economists say:

market failure has occurred

Television programs are non rival because

more than one person can consume the same unit of the good at the same time.

A common resource is a good or service for which exclusion is _____ and which is _____ in consumption. a. possible; rival b. not possible; rival c. not possible; nonrival d. possible; nonrival

not possible; rival

If the use of a common resource is determined in the private market, the resource will be____, since the marginal social benefit will be equal to the marginal private cost of production, which is ____ than the marginal social cost.

overused; less than