Micro Quiz #11

The town of Smallhaven is on a small island connected to Large City by a single bridge. Most of the residents of Smallhaven work in Large City. As a result, the bridge becomes very congested for two hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Smallhaven would likely be most efficient in alleviating the congestion? - A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times. - A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times. - Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25. -A press conference in which the mayor requests that people try to cross the bridge earlier or later than the typical commute times.

B A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times.

Market failure associated with the free-rider problem is a result of - a problem associated with pollution. - benefits that accrue to those who don't pay. - benefits that accrue to providers of the product. - market power.

B benefits that accrue to those who don't pay

Goods that are rival in consumption but not excludable would be considered -club goods. -common resources. -public goods. -private goods.

B common resources

Private companies are most likely to invest in medical research if - they will produce general knowledge. - they will produce a specific product for which they may receive a patent. - there is no government intervention in the market for medical products. - others will benefit from their discoveries.

B they will produce a specific product for which they may receive a patent

Private decisions about consumption of common resources and production of public goods usually lead to an -efficient allocation of resources and external effects. -efficient allocation of resources and no external effects. - inefficient allocation of resources and external effects. -inefficient allocation of resources and no external effects.

C inefficient allocation of resources and external effects

People cannot be prevented from using a good if the good is a - private good or a public good. - private good or a common resource. - public good or a common resource. - public good or a club good.

C public good or a common resource

Under which of the following scenarios would a park be considered a common resource? - Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables. - Visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use. - 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.

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

If the government decides to build a new community center, the first step would be to conduct a study to determine the value of the project. The study is called a -budget analysis. -project analysis. -reimbursement analysis. -cost-benefit analysis.

D cost-benefit analysis

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it. True or False

False

Common resources and public goods have in common that they are not excludable and they are not rival in consumption. True or False

False

GO BACK TO QUIZ True or False

False

A good that is excludable is one that someone can be prevented from using if she did not pay for it. True or False

True

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity. True or False

True

If a highway is congested, then use of that highway by an additional person would lead to a -negative externality. -positive externality. -Pigovian externality. -free-rider problem with rush-hour drivers stuck in traffic.

A negative externality

For private goods allocated in markets, - prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. - prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. - the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. - the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

A prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.