Chapter 11 EXAM 3

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

a. Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents a. a common resource problem. b. a public good. c. a club good. d. All of the above are correct.

a. a common resource problem.

Bob owns 5 acres of land. Bob sells the land to a real estate developer who builds a subdivision with 10 houses. The land is an example of a good that is a. both rival in consumption and excludable. b. neither rival in consumption nor excludable. c. excludable, but not rival in consumption. d. rival in consumption, but not excludable.

a. both rival in consumption and excludable.

When something of value has no price attached to it, a. externalities will be present. b. production of the product has no cost. c. government should not intervene to produce the product. d. private companies will eventually produce the product, and the good will no longer be free.

a. externalities will be present.

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.

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

The Coase theorem asserts that, in the presence of externalities, a. private economic actors sometimes can reach a bargain that produces an efficient outcome. b. private economic actors always can reach a bargain that makes everyone better off. c. private solutions cannot be very effective. d. corrective taxes cannot be very effective

a. private economic actors sometimes can reach a bargain that produces an efficient outcome.

The Tragedy of the Commons results when a good is a. rival in consumption and not excludable. b. excludable and not rival in consumption. c. both rival in consumption and excludable. d. neither rival in consumption nor excludable.

a. rival in consumption and not excludable.

Excludability is the property of a good whereby a. one person's use diminishes other peoples' use. b. a person can be prevented from using it. c. the government rations the quantity of a good that is available. d. the resource is congestible.

b. a person can be prevented from using it.

Which of the following goods is excludable but not rival in consumption? a. a congested toll road b. fire protection in a small town c. a tornado siren d. whales in the ocean

b. fire protection in a small town

Which of the following goods is the best example of a public good? a. garbage-collection services that are provided by a municipal government b. music that is broadcast over the airwaves by a privately-owned FM radio station c. electricity that is provided to farmhouses by a rural electric cooperative d. cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates

b. music that is broadcast over the airwaves by a privately-owned FM radio station

The overuse of a common resource relative to its economically efficient use is called a. the free rider problem. b. the Tragedy of the Commons. c. a public good. d. cost-benefit analysis.

b. the Tragedy of the Commons.

Which of the following is an example of the free-rider problem? a. Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. b. Alfred receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch. c. Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking. d. Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale.

c. Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking

Which of the following is usually true about government-provided goods? a. These goods have a zero opportunity cost. b. These goods are not scarce. c. People do not have to pay a fee to enjoy these goods. d. The invisible hand is at work to ensure these goods are provided in the market

c. People do not have to pay a fee to enjoy these goods.

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

c. Visitors can enter the park free of charge and there are always plenty of empty picnic tables.

Resources tend to be allocated inefficiently when goods a. are private goods. b. are rival in consumption and excludable. c. are available free of charge. d. are available only at very high prices.

c. are available free of charge.

A view of a spectacular sunset along a private beach is an example of a a. private good. b. public good. c. nonrival but excludable good. d. rival but nonexcludable good.

c. nonrival but excludable good.

Because public goods are a. excludable, people have an incentive to be free riders. b. excludable, people do not have an incentive to be free riders. c. not excludable, people have an incentive to be free riders. d. not excludable, people do not have an incentive to be free riders.

c. not excludable, people have an incentive to be free riders.

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

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

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

The U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is a. excludable. b. not excludable. c. rival in consumption. d. not rival in consumption.

d. not rival in consumption.

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

d. people can be prevented from using it.