Economics Quiz

320,000

Highway engineers want to improve a dangerous stretch of highway. They expect that it will reduce the risk of someone dying in an accident from 5.3 percent to 2.1 percent over the life of the highway. If a human life is worth $10 million, then the project is worth doing as long as it does not cost more than

club goods and public goods

Goods that are not rival in consumption include both

club goods and public goods.

Goods that are not rival in consumption include both

common resources and private goods

Goods that are rival in consumption include both

Tragedy of the Commons.

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1) not toss cigarette butts onto public streets and sidewalks, and (2) pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a

a common resource when it is congested, but it is a public good when it is not congested.

A city street is

people can be prevented from using it.

A good is excludable if

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

A lighthouse is typically considered to be a public good because

club good, because it is excludable but not rival in consumption.

Fire protection is a

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

For private goods allocated in markets,

each dish would be both excludable and rival in consumption.

Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except

private goods and club goods.

Goods that are excludable include both

common resources and public goods

Goods that are not excludable include both

common resources and public goods.

Goods that are not excludable include both

rival in consumption

If one person's use of a good diminishes another person's enjoyment of it, the good is

excludable.

If people can be prevented from using a certain good, then that good is called

increase entrance fees

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

Both b and c are correct.

It should not be surprising if the public sector fails to pay for the right amount or right kinds of basic research because a. basic research is not a public good. b. the benefits of basic research are hard to measure. c. members of Congress usually have little expertise in science.

of the free-rider problem.

Most lighthouses are operated by the government because

Tragedy of the Commons.

On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. Suppose that the Minnesota State Park Service institutes a variable fee structure. On weekdays when the picnic areas get little use, the fee is zero. On normal weekends, the fee is $8 per person. On holiday weekends, the fee is $14 per person. The fee system corrects a problem known as the

a private good or a club good

People can be prevented from using a good if the good is

free riding

Pete is a non-union employee at The Electric Co. The majority of the employees at The Electric Co. are unionized. The union at The Electric Co. has negotiated very good benefits. Even though he is not a union member and he does not have to pay union dues, Pete receives all the benefits that the union has negotiated. Pete's behavior is an example of

negative externality that can be viewed as a common-resource problem

Pollution is a

these goods create a free-rider problem.

Public schools, parks, libraries, and roads are paid for largely through tax revenue because

allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of extinction to grizzly bear populations.

Residents of Hong Kong are able to find restaurants that advertise a dish that contains grizzly bear paws. Since it is unlikely that grizzly bear paws are purchased from a private producer of animal paws, we can likely conclude that

are available free of charge.

Resources tend to be allocated inefficiently when goods

an entry fee be charged on summer weekend days when many people tend to visit the beach.

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach. Seymour wants an efficient way to prevent overcrowding at the beach, so he should require

Estimating the value of a human life is difficult but necessary to evaluate the proposal.

Suppose that policymakers are doing cost-benefit analysis on a proposal to add traffic barriers to divide the flow of traffic in an effort to increase safety on a given highway. Which of the following statements is correct?

0.01

The Occupational Safety and Health Administration (OSHA) has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks. The cost of imposing a regulation that would ban the chemical is $10 million. OSHA has calculated that each person saved by this regulation has a value equal to $10 million. If the benefits are exactly equal to the costs, what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

401

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $32 million. If the value of a human life is equal to $10 million, how many people must the policy affect in order for the benefits to exceed the costs?

externalities or as a problem of common resources.

The failure of markets to adequately protect the environment can viewed either as a problem of

my enjoyment of the national defense does not diminish your enjoyment of the national defense of the United States.

The national defense of the United States is not rival because

All of the above are reasons the ocean remains one of the largest unregulated resources. Answers: a. many countries have access to the ocean.

The ocean remains one of the largest unregulated resources for each of the following reasons except

The private market is the best way to supply education.

The privately-owned school system in Smalltown has a virtually unlimited capacity. It accepts all applicants and operates on both tuition and private donations. Although every resident places value on having an educated community, the school's revenues have suffered lately due to a large decline in private donations from the elderly population. Since the benefit that each citizen receives from having an educated community is a public good, which of the following would not be correct?

a common resource.

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

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

Under which of the following scenarios would a park be considered a club good?

negative externality that can be viewed as a common-resource problem.

What do clean air in New York City and elephants in Africa have in common?

an externality

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates

government

When goods do not have a price, which of the following primarily ensures that the good is produced?

markets fail to allocate resources efficiently

When property rights are not well established,

markets fail to allocate resources efficiently.

When property rights are not well established,

fire protection in a small town

Which of the following goods is excludable but not rival in consumption?

(i) and (iii) only

Which of the following is a disadvantage of government provision of a public good such as national defense? (i) The government does not know the exact willingness of consumers to pay for the public good. (ii) The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good. (iii) Taxpayers do not agree on the optimal quantity of the public good that the government should provide.

The number of satellites increases to the point where they begin running into each other.

Which of the following is an example of the Tragedy of the Commons?

a neighborhood garden

Which of the following is not a common resource?

national defense

Which of the following is not a common resource?