ECO 101 Ch.11

When a free-rider problem exists, Select one: a. the market will devote too few resources to the production of the good. b. the cost of the good will always be more than the benefit of the good. c. the good will not be produced. d. entrepreneurs will eventually find a way to make free-riders pay their share.

A. The market will devote too few resources to the production of the good.

A tax on gasoline often reduces road congestion because gasoline Select one: a. and driving are complements. b. and driving are substitutes. c. is a normal good, while driving is an inferior good. d. is an inferior good, while driving is a normal good. Clear my choice

a. and driving are complements.

Neither public goods nor common resources are Select one: a. excludable, but only public goods are not rival in consumption. b. excludable, but only common resources are not rival in consumption. c. rival in consumption, but only public goods are not excludable. d. rival in consumption, but only common resources are not excludable. Clear my choice

a. excludable, but only public goods are not rival in consumption.

Even economists who advocate small government agree that Select one: a. national defense is a public good and that the government should provide it. b. national defense is a common resource and that the government should provide it. c. national defense is a public good, but many of them believe that it should be provided by private firms rather than by the government. d. national defense is a common resource, but many of them believe that it should be provided by private firms rather than by the government.

a. national defense is a public good and that the government should provide it.

Refer to Figure 11-1. The box labeled A represents Select one: a. private goods. b. club goods. c. common resources. d. public goods.

a. private goods.

If one person's use of a good diminishes another person's enjoyment of it, the good is Select one: a. rival in consumption. b. excludable. c. normal. d. exhaustible. Clear my choice

a. rival in consumption.

The value and cost of goods are easiest to determine when the goods are Select one: a. private goods. b. public goods. c. common resources. d. club goods.

a.private goods.

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

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

A good that is rival in consumption and not excludable is called a Select one: a. public good. b. common resource. c. club good. d. private good.

b. common resource.

Elephants are endangered, but cows are not because Select one: a. cows are not as valuable as elephants. b. elephants are a common resource, while cows are private goods. c. cows are a common resource, while elephants are private goods. d. it is legal to kill cows but not elephants. Clear my choice

b. elephants are a common resource, while cows are private goods.

If people can be prevented from using a certain good, then that good is called Select one: a. rival in consumption. b. excludable. c. a common resource. d. a public good.

b. excludable.

National defense is a classic example of a public good because Select one: a. there is no market for private security services. b. it is difficult to exclude people from receiving the benefits from national defense once it is provided. c. everyone agrees that some level of national defense is important, but only the government knows the optimal amount. d. there are no private firms willing to supply defense goods such as tanks and weapons.

b. it is difficult to exclude people from receiving the benefits from national defense once it is provided.

When property rights are not well established, Select one: a. private goods become public goods. b. markets fail to allocate resources efficiently. c. the distribution of private goods is unfair. d. government resources are used inefficiently. Clear my choice

b. markets fail to allocate resources efficiently.

A free rider is a person who Select one: a. will only purchase a product on sale. b. receives the benefit of a good but avoids paying for it. c. can produce a good at no cost. d. rides public transit regularly. Clear my choice

b. receives the benefit of a good but avoids paying for it.

Resources tend to be allocated inefficiently when goods Select one: 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.

Figure 11-1 Refer to Figure 11-1. The box labeled C represents Select one: a. private goods. b. club goods. c. common resources. d. public goods.

c. common resources.

Both private goods and club goods are Select one: a. rival in consumption. b. non-rival in consumption. c. excludable. d. non-excludable.

c. excludable.

One way to eliminate the Tragedy of the Commons is to Select one: a. increase law enforcement in public areas. b. limit access to the commons. c. increase access to the commons. d. decrease taxes.

c. increase access to the commons.

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with Select one: a. fire protection. b. poverty. c. pollution. d. national defense. Clear my choice

c. pollution.

The Tragedy of the Commons occurs because Select one: a. government property is most heavily used by the wealthy. b. everyone deserves an equal share of government property. c. social and private incentives differ. d. established property rights create competition.

c. social and private incentives differ.

Elephant populations in some African countries have started to rise because Select one: a. environmentalists have developed effective educational campaigns. b. the value of ivory has decreased. c. some elephants have been made a private good, and people are allowed to kill elephants on their own property. d. regulations are being enforced more forcefully.

c. some elephants have been made a private good, and people are allowed to kill elephants on their own property.

Government policy can potentially raise economic well-being Select one: a. in all markets for goods and services. b. in economic models, but not in reality. c. when a good does not have a price attached to it. d. never.

c. when a good does not have a price attached to it.

For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is Select one: a. advertising. b. quality. c. reputation. d. price.

d. price.

A lighthouse is typically considered to be a public good because Select one: 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.

Both public goods and common resources are Select one: a. rival in consumption. b. nonrival in consumption. c. excludable. d. nonexcludable.

d. non-excludable.

A good is excludable if Select one: 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.

A cheeseburger is a Select one: a. common resource, because it is rival in consumption but not excludable. b. public good, because it is rival in consumption but not excludable. c. public good, because it is excludable and rival in consumption. d. private good, because it is excludable and rival in consumption.

d. private good, because it is excludable and rival in consumption.

Most goods in the economy are Select one: a. club goods. b. common resources. c. public goods. d. private goods.

d. private goods.

A streetlight is a Select one: a. private good. b. club good. c. common resource. d. public good.

d. public good

A cost-benefit analysis of a highway is difficult to conduct because analysts Select one: a. cannot estimate the explicit cost of a project that has not been completed. b. are unlikely to have access to costs on similar projects. c. are not able to consider the opportunity cost of resources. d. will have difficulty estimating the value of the highway.

d. will have difficulty estimating the value of the highway.