Econ. Chap. 19

Which of the following statements is TRUE? A) A forced rider is someone who helps pay for a public good but doesn't get any benefit from it. B) Public schooling is a private good. C) Public goods should be produced up to the point where consumer surplus equals producer surplus. D) The government cannot produce private goods.

A) A forced rider is someone who helps pay for a public good but doesn't get any benefit from it.

If a consumer could pay $100 for a new pair of jeans or $100 toward asteroid deflection, what would that consumer likely choose? I. purchase the jeans II. purchase asteroid deflection III. purchase both the jeans and asteroid deflection A) I only B) II only C) III only D) I and II only

A) I only

Which of the following scenarios best describes a tragedy of the commons problem? A) Neighborhood residents discover strawberry plants in the flower beds at the city park. B) Illegal immigrants who do not pay taxes benefit from tax-funded police patrols. C) Pacifists become forced riders in tax hikes to fund national defense plans. D) There is overcrowding on otherwise nice public beaches.

A) Neighborhood residents discover strawberry plants in the flower beds at the city park.

Which of the following is an example of the tragedy of the commons? A) Tuna in the ocean are being over harvested because it is difficult to prevent anyone from fishing for tuna. B) Personal computers have become a commonplace appliance in many homes, causing an expedited tragedy of technology. C) There is an increasing threat to wildlife due to habitat loss in national forests. D) Television's popularity has become a common tragedy in our society.

A) Tuna in the ocean are being over harvested because it is difficult to prevent anyone from fishing for tuna.

Goods that are not excludable include both: A) common resources and public goods. B) private and public goods. C) natural monopolies and common resources. D) only public goods, since no other goods are not excludable.

A) common resources and public goods.

Google provides a(n) ________ good but uses advertising to make its good ________. A) excludable; nonexcludable B) common; more scarce C) nonexcludable; excludable D) public; private

A) excludable; nonexcludable

Tuna in the ocean is a common resource because: A) it is difficult to prevent people from fishing in the ocean and every time someone catches tuna there is less tuna for someone else. B) all tuna are identical (i.e., a homogenous good) and sold in competitive markets. C) there is an abundance of tuna and no one fisherman can affect the market equilibrium output. D) None of the answers is correct.

A) it is difficult to prevent people from fishing in the ocean and every time someone catches tuna there is less tuna for someone else.

Which of the following is a list of nonexcludable, nonrival only? A) national defense, a lighthouse, smog reduction B) a public beach, soup kitchen meals, public roads C) online video games, a public beach, national defense, a lighthouse D) a public beach, a lighthouse, toll highways, public roads

A) national defense, a lighthouse, smog reduction

What quantity of public goods should the government produce? A) the quantity that maximizes the sum of producer and consumer surplus B) the quantity where consumer surplus is maximized C) the quantity where consumer surplus is maximized and producer surplus is minimized D) the quantity where the total benefits equal the total costs

A) the quantity that maximizes the sum of producer and consumer surplus

Most nonrival private goods are priced ______ marginal cost. A) above B) below C) at D) indeterminately compared with

A. above

During the Holy Roman Empire, Germany's Rhine River was a major trade artery (and provided tax revenue). The numerous castles along the Rhine were toll stations, with most merchants having to travel sizable lengths of the river to arrive at their destination. Although the Emperors closely guarded the right to charge a toll, local nobility would occasionally break the law and build a castle along the Rhine to charge a toll (hence the origin of the phrase, "robber baron"). When possible, such "robber castles" were destroyed to prevent the tragedy of the commons. What is the commons resource here? A) toll revenue B) trade C) castles D) the Rhine

A. toll revenue

Mosquito control must be provided by the government because if: A) a lot of people free ride then mosquito control would be overprovided by the market. B) a lot of people free ride then mosquito control would be underprovided by the market. C) only few people are benefited then mosquito control would be overprovided by the market. D) only few people are benefited then mosquito control would be underprovided by the market.

B) a lot of people free ride then mosquito control would be underprovided by the market.

Markets tend to be inefficient when it comes to public goods because: A) the government tends to overproduce the good. B) free riders lead to an underproduction of the good. C) the rival nature of the good makes it hard to collect payment from consumers. D) consumers tend to value these goods less than private goods.

B) free riders lead to an underproduction of the good.

Which of the following is rival and NOT excludable? A) cable TV B) lobsters in the ocean C) national defense D) clothing

B) lobsters in the ocean

The tragedy of the commons occurs when a good is: A) rival in consumption and excludable. B) rival in consumption and not excludable. C) not rival in consumption and excludable. D) neither rival in consumption nor excludable.

B) rival in consumption and not excludable.

Small tribes may be able to solve the tragedy of the commons by: A) subsidizing the activity that creates the tragedy. B) using social norms to punish and ostracize those that overuse a common resource. C) setting price controls below the equilibrium price to clear the market. D) All of the answers are correct.

B) using social norms to punish and ostracize those that overuse a common resource.

State highways are an example of a: A) private good. B) public good. C) common resource. D) nonrival private good.

B. public good

Which of the following scenarios describes how a tragedy of the commons problem occurs? A) A radio station goes out of service because it cannot raise enough money from advertising. B) Illegal immigrants who do not pay taxes benefit from tax-funded school systems. C) Farmers harvest deer out of season rather than pay the high price of beef. D) The establishment of tradable pollution allowances helps reduce pollution.

C) Farmers harvest deer out of season rather than pay the high price of beef.

Which of the following statements is TRUE? I. In order for society to have a sufficient level of national defense, the government must tax the public to raise funds for a standing army. II. For every 100 people that use a public good, approximately 500 people are prevented from using it. III. People do not have an incentive to voluntarily pay for nonexcludable goods. A) I and II only B) III only C) I and III only D) I, II, and III

C) I and III only

(Table: Types of Goods) Refer to the table. Which of the following statements is TRUE? A) Section 1 includes national defense. B) Section 2 includes a can of soda. C) Section 3 includes cable TV. D) Section 4 includes an MP3 song.

C) Section 3 includes cable TV.

Which of the following examples specifies the cause of the tragedy of the common? A) People like to eat chicken so demand for chicken has significantly increased. B) The supply of chicken is plentiful, causing the profit margin of selling chicken to decrease. C) Tuna in the ocean are not privately owned so fishermen have an incentive to overfish. D) The supply of tuna is rare, creating high profit margins and incentives for fishermen to underfish tuna.

C) Tuna in the ocean are not privately owned so fishermen have an incentive to overfish.

Which of the following is a list of private goods only? A) a watermelon, toll highways, a private beach, a chair B) a watermelon, cable Internet service, a private beach, a pencil, a chair C) a watermelon, a chair, a pencil D) online video games, a watermelon, a private beach, a pencil, a chair

C) a watermelon, a chair, a pencil

Which of the following is a list of rival, excludable goods only? A) a watermelon, toll highways, a private beach, a chair B) a watermelon, cable Internet service, a private beach, a pencil, a chair C) a watermelon, a chair, a pencil D) online video games, a watermelon, a private beach, a pencil, a chair

C) a watermelon, a chair, a pencil

Protection provided by the ozone layer is a: A) private good. B) public good. C) common resource. D) nonrival private good.

C) common resource.

When it comes to national defense, antiwar protesters are: A) latent payers. B) reserved funders. C) forced riders. D) free riders.

C) forced riders.

Toilet paper is a rival good because: A) there is a lot of competition in the toilet paper market. B) it is a substitute good for a bidet. C) one person's use of toilet paper reduces the ability of another person to use the same sheets. D) it is made from natural resources.

C) one person's use of toilet paper reduces the ability of another person to use the same sheets.

Individual transferable quotas (ITQs) are like a ________, allowing ________. A) subsidy; the internal benefit of fishing to be externalized B) corrective tax; fishermen a tax write-off for capital purchases C) permit; fishermen the right to catch a limited number of fish D) cartel; fisherman to raise market prices by limiting competition

C) permit; fishermen the right to catch a limited number of fish

The lionfish is an invasive species from the Indo-Pacific, now also found in the East Coast of the United States and in the Caribbean. An exceptional predator that reproduces year round, the lionfish has wreaked havoc on the natural ecosystem with a population more than 10 times higher than in its native environment. With a population so high, it is unlikely the extermination practices of any one person, or even any one organization could eliminate them, though eliminating them would benefit everyone. Therefore, the National Oceanic and Atmospheric Administration (NOAA) launched a campaign highlighting how tasty lionfish are and presenting instructions on how to cook them. The NOAA's approach to solving this problem is best described as using the economics of: A) public goods to solve nonexcludable goods. B) private goods to solve the tragedy of the commons. C) private goods to solve a public goods free riding problem. D) commons resources to solve forced riding.

C) private goods to solve a public goods free riding problem.

The tragedy of the commons is the tendency for any good which is: A) rival and excludable to be underused and overmaintained. B) nonrival and nonexcludable to be underused and overmaintained. C) rival and nonexcludable to be overused and undermaintained. D) nonrival and excludable to be overused and undermaintained.

C) rival and nonexcludable to be overused and undermaintained.

In the long run, individual transferable quotas ______ the fishing catch in New Zealand. A) decreased B) did not affect C) increased D) had an indeterminate effect upon

C. increased

The incentive to dedicate private resources to maintaining a common resource is low because: A) there is no benefit from maintenance of a common resource. B) entrepreneurs have not found a way to profit from common resources. C) the benefits of maintenance are external, not private benefits. D) maintenance is very expensive.

C. the benefits of maintenance are external, not private benefits.

A common resource is: A) likely to be overutilized. B) a good that, when used by one person, leaves less for everyone else. C) rival but nonexcludable. D) All of the answers are correct.

D) All of the answers are correct.

(Table: Types of Goods) Refer to the table. Which of the following statements is TRUE? I. Section 1 may contain fruit, chicken, and underwear. II. Section 2 may contain fish in the ocean, public roads, and public hunting grounds. III. Section 3 may contain Wi-Fi, cable TV, and digital music. IV. Section 4 may contain asteroid deflection, national defense, and radio. A) I, II, and IV B) III and IV C) II only D) I, II, III, and IV

D) I, II, III, and IV

During the Middle Ages, many villages had areas reserved for families to take their cows or sheep to graze. All families were welcome to use this land without charge. The land for grazing can be characterized as a: A) public good. B) private good. C) natural resource. D) common resource.

D) common resource.

Which of the following is a list of public goods only? A) a public beach, soup kitchen meals, public roads B) online video games, a public beach, national defense, a lighthouse C) a public beach, a lighthouse, toll highways, public roads D) national defense, a lighthouse, smog reduction

D) national defense, a lighthouse, smog reduction

Digital music is an example of a: A) private good B) public good. C) common resource. D) nonrival private good.

D) nonrival private good.

The tragedy of the commons refers to the: A) underproduction of public goods in economic markets. B) underproduction of a common good. C) overuse of a nonrival and nonexcludable good. D) overuse of a rival but nonexcludable good.

D) overuse of a rival but nonexcludable good.

Asteroid defense is likely to be ______ by the market because ______. A) efficiently provided; there are low transaction costs to collecting the operational funding, as suggested by the Coase theorem. B) overprovided; of the market power of the military-industrial complex. C) either overprovided or underprovided; it is a common good. D) underprovided; there is an incentive to free ride.

D) underprovided; there is an incentive to free ride.

Voting and other democratic procedures: I. provide information about an individual's preferences for public goods. II. result in an efficient allocation of resources. III. result in the government underproducing public goods, just like the market would. A) I and II only B) I and III only C) III only D) I only

D. I only

Goods that are rival in consumption include both: A) public goods and common resources. B) common resources and natural monopolies. C) common resources and private goods. D) public goods and private goods.

c. common resources and private goods.