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Chapter 11 Public Goods and Common Resources-1

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Chapter 11;Public Goods and Common Resources;Multiple Choice;[i]. In the market for a good like ice-cream cones;a. an inefficient number of ice-cream cones will be produced.;b. the sum of producer surplus and consumer surplus is minimized.;c. price adjusts to balance supply and demand.;d. the price established in the market will not reflect the value of ice cream cones to consumers.;[ii]. When goods are available in an economy free of charge;a. market forces cannot be used to allocate resources.;b. too many of these goods will be produced since there is no cost of production.;c. the product will have no value for the majority of the population.;d. goods are not available in market economies free of charge.;[iii]. Each of the following are provided by nature EXCEPT;a. mountains.;b. beaches.;c. oceans.;d. parks.;[iv]. Each of the following are provided by government EXCEPT;a. playgrounds.;b. parks.;c. beaches.;d. parades.;[v]. For most goods in an economy, the signal that guides the decisions of buyers and sellers is;a. greed.;b. the self-interest of both buyers and sellers.;c. prices.;d. profits.;[vi]. In an economy, when goods do not have a price, what/who primarily ensures that the good is produced?;a. entrepreneurs;b. the government;c. charities;d. nature;[vii]. When a good is excludable it means that;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. no more than one person can use the good at the same time.;d. everyone will be excluded from obtaining the good.;[viii]. 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.;[ix]. When a good is rival it means that;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. no more than one person can use the good at the same time.;d. everyone will be excluded from obtaining the good.;[x]. If one person?s use of a good diminishes another person?s enjoyment of it, the good is;a. rival.;b. excludable.;c. normal.;d. exhaustible.;[xi]. Goods that are excludable include both;a. natural monopolies and public goods.;b. public goods and common resources.;c. common resources and private goods.;d. private goods and natural monopolies.;[xii]. Goods that are rival include both;a. natural monopolies and public goods.;b. public goods and common resources.;c. common resources and private goods.;d. private goods and natural monopolies.;[xiii]. Goods that are NOT excludable include both;a. private goods and public goods.;b. natural monopolies and common resources.;c. common resources and public goods.;d. private goods and natural monopolies.;[xiv]. Goods that are both excludable and rival would be considered;a. natural monopolies.;b. common resources.;c. public goods.;d. private goods.;[xv]. Which of the following would NOT be considered a private good?;a. tennis shoes;b. pizza;c. french fries;d. cable TV;[xvi]. Private goods are both;a. excludable and nonrival.;b. nonexcludable and rival.;c. excludable and rival.;d. nonexcludable and nonrival.;[xvii]. Which of the following would be considered a private good?;a. national defense;b. a public beach;c. local cable television service;d. a bottle of natural mineral water;[xviii]. A cheeseburger is;a. excludable and rival.;b. excludable and nonrival.;c. nonexcludable and rival.;d. nonexcludable and nonrival;[xix]. If the local government in Richmond, Missouri decides to put on a public fireworks display, the display would be;a. excludable.;b. rival.;c. a public good.;d. All of the above are correct.;[xx]. Goods that are nonexcludable and nonrival are;a. public goods.;b. private goods.;c. natural monopolies.;d. common resources.;[xxi]. Goods that are not rival include both;a. natural monopolies and public goods.;b. public goods and common resources.;c. common resources and private goods.;d. private goods and natural monopolies.;[xxii]. Most goods in the economy are;a. natural monopolies.;b. common resources.;c. public goods.;d. private goods.;[xxiii]. An example of a private good would be;a. cable TV.;b. tornado sirens.;c. clothing.;d. the environment.;[xxiv]. Public goods are;a. excludable but not rival.;b. rival but not excludable.;c. both excludable and rival.;d. neither excludable nor rival.;[xxv]. Goods that are not excludable are usually;a. higher priced than excludable goods.;b. higher priced than rival goods.;c. in short supply.;d. free of charge.;[xxvi]. When something of value has no price attached to it such as a public good;a. externalities will be present.;b. the good will be completely used up.;c. only those who are better off have to pay.;d. private companies will eventually produce the product and the good will no longer be free.;[xxvii]. The market does not provide national defense because;a. it is impossible to prevent any single person from enjoying the benefit of national defense.;b. the fixed cost of national defense is too high.;c. the necessary resources for national defense are not available in the private sector.;d. All of the above are correct.;[xxviii]. A natural monopoly is;a. excludable but not rival.;b. rival but not excludable.;c. both excludable and rival.;d. neither excludable nor rival.;[xxix]. An example of a natural monopoly would be;a. cable TV.;b. tornado sirens.;c. clothing.;d. the environment.;[xxx]. Both public goods and common resources are;a. rival.;b. nonrival.;c. excludable.;d. nonexcludable.;[xxxi]. Common resources are both;a. rival and nonexcludable.;b. rival and excludable.;c. nonrival and excludable.;d. nonrival and nonexcludable.;[xxxii]. Common resource goods are;a. excludable but not rival.;b. rival but not excludable.;c. both excludable and rival.;d. neither excludable nor rival.;[xxxiii]. A good that is rival but not excludable would be a;a. public good.;b. private good.;c. natural monopoly.;d. common resource.;[xxxiv]. Which of the following would be considered a common resource good?;a. cable television;b. bottled natural mineral water;c. uncongested toll roads;d. fish in the ocean;[xxxv]. The fish in the ocean are an example of a;a. common resource.;b. public good.;c. private good.;d. natural monopoly.;[xxxvi]. When one person uses a common resource, which will NOT occur?;a. An externality will arise.;b. Other people are worse off.;c. It is difficult to charge him or her for usage of it.;d. No one else will be able to use the common resource.;[xxxvii]. Goods that are not excludable may be socially desirable;a. but not privately profitable.;b. and therefore will be provided by both the government and as a private good.;c. and have a lower price so more consumers will be able to afford them.;d. but are still generally taxed by the government.;[xxxviii]. When goods are not excludable;a. the good will be produced as a private good but not as a public good.;b. the good will not be produced since no one values it.;c. the free-rider problem prevents the private market from supplying them.;d. everyone can have all they want and the good will have a zero price.;[xxxix]. A free-rider problem exists for any good that is NOT;a. rival.;b. a private good.;c. free.;d. excludable.;[xl]. A free-rider is a person who;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. takes advantage of tax loop-holes to lower his taxes.;[xli]. When a good is excludable but not rival, it is an example of a;a. natural monopoly.;b. private good.;c. public good.;d. common resource.;[xlii]. Which of the following goods would satisfy attributes of a natural monopoly?;a. a congested public freeway;b. an airline flight that has been overbooked;c. local cable television;d. public parking;[xliii]. What characteristics do public goods and common resources have in common?;a. both goods are nonexcludable;b. both goods are excludable;c. both goods are rival;d. both goods are nonrival;[xliv]. For both public goods and common resources, an externality arises because;a. something of value has no price attached to it.;b. the goods are undervalued by society.;c. the social optimum level of output is lower than the market equilibrium?s.;d. All of the above are correct.;[xlv]. Which of the following is NOT considered a public good?;a. national defense;b. basic research;c. fire protection;d. fighting poverty;[xlvi]. National defense is provided by the government because;a. it is impossible for private markets to produce public goods.;b. products provided by the government can be produced more efficiently.;c. free-riders make it difficult for private markets to supply the socially optimal quantity.;d. if the good were produced in private markets, most likely too much of the product would be produced.;[xlvii]. For the government to provide a product with tax revenue;a. the total cost must exceed the total benefit.;b. it must be able to produce the product cheaper than the private market could.;c. the total benefit must exceed the total cost.;d. the government does not provide products with tax revenue.;[xlviii]. National defense is a classic example of a public good because;a. private security services are very difficult to find.;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. if individuals were required to purchase their own armored tank, there wouldn?t be enough to go around.;[xlix]. In 2002, per person expenditures on national defense amounted to;a. $800.;b. $1,200.;c. $1,500.;d. $2,000.;[l]. When one person uses a common resource, such as fish in the ocean, which would NOT be true?;a. Other people are likely to be worse off.;b. Other people are not likely to be compensated for their loss.;c. He or she neglects to account for external effects.;d. There will still be enough left, since one person cannot make a major impact.;[li]. Due to the externalities associated with public goods and common resources;a. private markets will lead to an efficient allocation of resources.;b. government intervention can potentially raise economic well-being.;c. private markets will correct for the gain or loss to consumer surplus.;d. the free-rider problem is eliminated.;[lii]. 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. If the private market quantity of education is below the socially desirable quantity, Smalltown can remedy its problem by;a. allowing the local government to compel local citizens to subsidize education by taxing them.;b. increasing tuition to compensate for the decrease in donations.;c. increasing teacher wages.;d. All of the above are correct.;[liii]. 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 each citizen receives from having an educated community is a public good, which would NOT be true?;a The free-rider problem causes the private market to undersupply education to the community.;b. The government can potentially help the market reach a socially optimal level of education.;c. A tax increase to pay for education could potentially make the community better off.;d. The private market is the best way to supply education.;[liv]. Market failure associated with the free-rider problem is a result of;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. a project in which costs exceed benefits.;[lv]. The government provides public goods because;a. private markets are incapable of producing public goods.;b. free-riders make it difficult for private markets to supply the socially optimal quantity.;c. markets are always better off with some government oversight.;d. external benefits will occur to private producers.;[lvi]. Basic research is a public good because it;a. is difficult to exclude those who might benefit from it.;b. is used to develop public goods.;c. always benefits developed countries at the expense of developing countries.;d. is a rival good.;[lvii]. The free-rider problem exists with;a. fire protection.;b. knowledge.;c. cable TV.;d. congested toll roads.;[lviii]. When a free-rider problem exists;a. too few resources are devoted to 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.;[lix]. Too few resources are devoted to the creation of knowledge because profit-seeking firms;a. undervalue knowledge in their pursuit of revenues.;b. abuse their patents.;c. tend to free-ride on the knowledge that others have developed.;d. tend to rely on existing employee knowledge.;[lx]. Knowledge is an example of a;a. public good.;b. private good.;c. common resource.;d. natural monopoly good.;[lxi]. The U.S. patent system;a. makes both general and technical knowledge excludable.;b. makes only technical knowledge excludable.;c. creates a disincentive to invent.;d. All of the above are correct.;[lxii]. The difference between technological knowledge and general knowledge is that;a. general knowledge creation is usually more profitable for the creator.;b. technological knowledge is excludable and general knowledge is not.;c. general knowledge is excludable and technological knowledge is not.;d. general knowledge is rival and technological knowledge is not.;[lxiii]. Which of the following is NOT a reason why government agencies subsidize basic research?;a. The private market devotes too few resources to basic research.;b. The general knowledge developed through basic research can be used without charge.;c. The social benefit of additional knowledge is perceived to be greater than the cost of subsidies.;d. The government attempts to attract the best and the brightest researchers.;[lxiv]. Because general knowledge is not excludable;a. the government contributes to its production.;b. the cost generally outweighs the benefit to society.;c. private markets would choose to not supply any general knowledge to society.;d. general knowledge cannot be ?supplied? to the market by anyone since it is not a product.;[lxv]. As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because;a. benefits are hard to measure.;b. patents correct for an unknown portion of the externality.;c. members of Congress are often experts in the sciences.;d. the costs always exceed the benefits.

 

Paper#35588 | Written in 18-Jul-2015

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