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Chapter 11 Public Goods and Common Resources-3




[1]. A tax on gasoline often reduces road congestion because gasoline;a. and driving are complementary goods.;b. and driving are substitute goods.;c. and driving are normal goods.;d. is considered an inferior good.;[2]. According to economist Lester Thurow, no city has ever been able to solve its congestion problems by;a. imposing tolls.;b. building more roads.;c. increasing gasoline taxes.;d. enforcing traffic laws.;[3]. Road tolls used to reduce traffic can be desirable because of each of the following EXCEPT;a. they charge people based on consumption.;b. they can help bring usage closer to its optimal level.;c. rates can differ according to the time of day.;d. the administrative costs are virtually nonexistent.;[4]. Singapore is the only city in the world to reduce road congestion by;a. government-imposed road pricing.;b. building 10 miles of new highways each week.;c. using boats as the primary source of transportation.;d. allowing each family to own only one car.;[5]. Road pricing is used in Singapore to;a. raise revenue for new roads.;b. sell the rights to 50 mile stretches of roads to individuals.;c. reduce congestion and pollution problems.;d. allow contractors to bid on the specific sections of new roads they want to build.;[6]. In Singapore, the road tolls are charged to drivers based on each of the following EXCEPT the;a. time of day when driving occurs.;b. pollution problem for the day.;c. particular roads used.;d. distance drivers travel on the roads.;[7]. To ameliorate the pollution problem outside the central city of Singapore, the Singapore government;a. charges a premium tax on gasoline.;b. auctions off the right to license new cars.;c. does not allow taxis to travel outside the central city.;d. allows only motorcycle and bicycle transportation.;[8]. Proposals to use road tolls in an effort to reduce traffic congestion are often rejected by the public because;a. there is no longer sufficient government intervention.;b. they allow the rich to drive more than the poor.;c. they tax only those who chose to drive on the toll roads.;d. All of the above are correct.;[9]. Suppose all citizens in a certain city are given identical debit cards used to pay for toll roads. Which of the following statements would NOT be true, assuming that the debit cards could be sold privately from person to person?;a. This would be a very egalitarian policy.;b. This system would end up being a redistribution of income from those that drive more to those that drive less.;c. This system could potentially be a redistribution of income from the rich to the poor if the poor drive less.;d. The cost to the government of such a program would greatly outweigh the benefit to society.;[10]. Excessive fishing occurs because;a. each individual fisherman has little incentive to maintain the species for the next year.;b. fishermen rely on government managers to worry about fish populations.;c. fishermen are concerned about the population dynamics of fish biomass, not current harvest rates.;d. fishermen have other marketable skills and do not fear exploitation of fish reserves.;[11]. One of the least regulated common resources today is;a. U.S. national parks.;b. the ocean.;c. U.S. government land in the West.;d. the Great Lakes.;[12]. The ocean remains one of the largest unregulated resources for each of the following reasons EXCEPT;a. many countries have access to the ocean.;b. it is difficult to get international cooperation among countries that hold different values.;c. the oceans are so vast that enforcing any agreements would be difficult.;d. the international organization formed to patrol the oceans is totally ineffective.;[13]. The U.S. government protects fish by;a. subsidizing the fishing industry.;b. heavily taxing competing industries.;c. selling fishing licenses and regulating fish lengths.;d. All of the above are correct.;[14]. Why do elephants face the threat of extinction while cows do not?;a. Cattle are a valuable source of income for many people and elephants have no market value.;b. There is a high demand for products that come only from the cow.;c. There are still lots of cattle that roam free, while most elephants are in zoos.;d. Cattle are owned by ranchers, while elephants are owned by no one.;[15]. Elephants are endangered and cows are not because;a. cows are not as valuable as elephants.;b. elephants are a common resource and cows are a private good.;c. cows are a common resource and elephants are a private good.;d. it is legal to kill cows, but not elephants.;[16]. Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow?s guardian?;a. No other animal has ivory tusks.;b. Elephants are a common resource.;c. Cows are a common resource.;d. Cows are a public good.;[17]. Because in many countries in Africa elephants roam freely, each individual African elephant poacher has;a. a strong incentive to kill as many elephants as he can find.;b. a strong incentive to protect the elephants.;c. the ability to save the elephants.;d. All of the above are correct.;[18]. Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is such a high demand for beef?;a. Cows reproduce at a high rate and have adapted well to their environment.;b. Public policies have been implemented to protect cows from predators and diseases.;c. Cows are privately owned and many endangered species are owned by no one.;d. There is a natural ecological balance between the birth rate of cows and human consumption.;[19]. Elephant populations in some African countries have started to rise because;a. poachers are working together to save the elephants.;b. it is now illegal to kill elephants and sell their ivory.;c. elephants have been made a private good and people are allowed to kill elephants on their own property.;d. high ivory taxes make it hard to earn a decent return on elephant tusks.;[20]. A good solution to saving the tiger from extinction would be;a. to outlaw the sale of tiger liver.;b. to tax the sale of tiger hides.;c. to give the tigers? habitat to someone.;d. to regulate the traditional use of Asian medicines that use tiger liver.;[21]. It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to;a. increase entrance fees.;b. conduct a study to determine the daily attendance capacity of the individual parks.;c. reduce the national park service budget.;d. All of the above are possible solutions.;[22]. One proposed solution to overused, deteriorating national parks would be to;a. have Congress increase the entrance fees.;b. increase the number of bears.;c. decrease management and maintenance of facilities.;d. reduce the number of improved camping facilities.;[23]. To most economists, the best solution to the overcrowding problem at Yellowstone National park is to;a. increase entrance fees to the park.;b. place daily quotas on the number of vehicles that enter the park.;c. increase financial aid from the government.;d. temporarily close down damaged sections of the park.;[24]. Which of the following statements concerning Yellowstone National Park is NOT true?;a. Entrance fees have not kept pace with inflation over the last century.;b. When the park gets too crowded no more visitors are allowed.;c. The park does not take advantage of the free market to correct for overcrowding.;d. If Yellowstone received additional support from the federal government, the overuse problem would be eliminated.;[25]. Raising the entrance fee at Yellowstone National Park to compensate for overuse would NOT;a. potentially increase park revenues.;b. potentially decrease the number of visitors.;c. allow market forces to correct for the externality.;d. make our national park a private good.;[26]. Currently in the United States very few entrepreneurs operate their own wildlife parks because;a. urban sprawl is eating up rural areas too quickly.;b. government-sponsored national parks set entrance fees below cost.;c. restrictive laws invariably prohibit such activity.;d. private citizens demand fewer parks each year.;[27]. Markets fail to allocate resources efficiently when;a. prices fluctuate.;b. those with the property rights abuse their privileges.;c. property rights are not well established.;d. the government refuses to intervene in private markets.;[28]. When the absence of property rights causes a market failure, the government can potentially solve the problem;a. by clearly defining property rights.;b. through regulation.;c. by supplying the good itself.;d. All of the above are correct.;[29]. 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. When the final bill for the meal comes they decide they will split the cost evenly among each of the people at the table. When the food is delivered to the table, each person faces incentives similar to;a. consumption of a common resource good.;b. production of a public good.;c. consumption of a natural monopoly good.;d. production of a private good.;[30]. 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. When the final bill for the meal comes they decide they will split the cost evenly among each of the people at the table. In this particular case, a tragedy of the commons problem is likely because of each of the following EXCEPT;a. each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost.;b. there is an externality associated with eating the food on the table.;c. when one person eats he may not take into account how his choice affects his friends.;d. each dish would be both excludable and rival.;[31]. Four friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Alta, Utah. Unfortunately the condominium does not come with maid service. Everyone values clean dishes, but the fact that unwashed dishes pile up in the sink would best be explained by an economist who understands that clean dishes in the cupboard reflect;a. a common resource problem.;b. a problem similar to cost-benefit analysis for public projects.;c. household behavior of the invisible hand.;d. All of the above are correct.;[32]. Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Alta, Utah. If lift lines at the ski resort become more congested when these ten additional people start to ski, then which is NOT true?;a. Use of the ski resort by all of these ten new skiers will yield a negative externality.;b. The ski resort can reduce the congestion externality by raising lift ticket prices.;c. An increase in lift ticket prices could be viewed as a Pigovian tax on the externality of congestion.;d. Everyone would have been better off to stay at home.;[33]. According to experience, the most effective solution to highway congestion is to;a. build more roads.;b. set a price for access to roads, which is paid by those who use them.;c. discourage urban sprawl by subsidizing urban apartment rents.;d. All of the above are correct.;[34]. One of the most pressing concerns associated with implementation of road congestion pricing policies can be resolved by;a. only charging tolls to those users who earn above a certain income.;b. allowing free access to bicyclists and those who use fuel efficient cars.;c. employing bar code and debit card technologies to charge users.;d. only charging tolls to visitors.;[35]. 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;a. international laws making it illegal to sell grizzly bear paws are likely to be very effective at eliminating these offerings at Hong Kong restaurants.;b. penalties for poaching grizzly bears are likely to be very small.;c. there are likely to be very few grizzly bear poachers.;d. allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of extinction to grizzly bear populations.;[36]. Which of the following statements best describes the cause of "overrun and overtrampled" national parks?;a. Park administrators do not use the best science available to manage park resources.;b. National parks are treated as free goods by their visitors.;c. National parks have never increased park visitation fees.;d. The price of entrance to national parks has kept pace with other forms of recreation.;[37]. A common theme among examples of market failure is;a. the good being provided always harms society in some systematic way.;b. some item of value does not have an owner with the legal authority to control it.;c. cost-benefit analysis is likely to lead to implementation policies that promote private provision of goods and services.;d. there are regulations that prohibit the efficient functioning of private markets.;[38]. It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that;a. resources would be used more efficiently if the government produced the weapons.;b. resources would be used more efficiently if private firms provided national defense.;c. weapons are rival and excludable but national defense is not rival and not excludable.;d. who can most efficiently provide a good does not depend on concepts such as rivalry or excludability.;[39]. The town of Sointenly does not have any public snow-plows. Anyone who wants their street cleared of snow must hire a private snow-plow company to do it for $75. Curly, Larry and Moe all live on a dead-end street, with Curly living at the very end of it. Each one values snow removal at $50. At present, the snow is never cleared from the street. We can conclude that;a. the current situation is best because the cost of snow removal exceeds what each of them is willing to pay for it.;b. Larry and Moe should wait for Curly to pay for the service because if the snow is cleared all the way to Curly?s house, Larry and Moe will get the service for free.;c. the fee charged by the snow removal company is unfairly high.;d. Curly, Larry and Moe could all be better off if they acted collectively.;[40]. Which of the following is NOT a reason that the findings of cost-benefit analysis on public goods are only rough approximations?;a. Without prices, it is difficult to be sure how much people really value a good.;b. One can?t be sure that respondents to surveys are telling the truth.;c. Such analysis must include not only the cost of building the project but also the cost of maintenance, if any.;d. People value goods differently if they are publicly, as opposed to privately, provided.;[41]. Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.6 to 1.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed;a. $70,000.;b. $260,000.;c. $190,000.;d. $10,000,000.;[42]. Highway engineers have proposed improving a dangerous stretch of highway at a cost of $2 million. They expect that it will reduce the risk of someone dying in an accident over the life of the highway from 22.1 percent to 5.7 percent. The project would be worth doing as long as a human life is worth at least;a. $328,000.;b. $9.05 million.;c. $10 million.;d. $12.20 million.;[43]. The local fire department wants to buy some new equipment at a cost of $1 million. If a human life is worth $10 million, the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least;a. 1 percentage point.;b. 5 percentage points.;c. 7 percentage points.;d. 10 percentage points.;[44]. You are the mayor of a small town with 2,000 residents. The head of your economic development agency recently conducted a survey in which the 2,000 residents said that a public concert in the center of town would be worth $20 to each of them. Since the concert cost only $5,000 to hold, you organized and held the concert, which everyone in town enjoyed. But when you asked for donations to pay for the concert, you only collected $30. You are convinced that;a. the survey certainly overstated how much the concert was worth to each resident.;b. from the standpoint of total costs and benefits, the cost of the concert certainly exceeded the benefit.;c. the concert was an example of the tragedy of the commons.;d. residents of the town were probably free-riders.;[45]. The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is most likely to be true?;a. The aquifer is a public good which must be publicly owned to be used efficiently.;b. The aquifer is a private good which must be privately owned to be used efficiently.;c. The aquifer is a common property resource, which will be overused if nobody owns it.;d. The aquifer is a natural monopoly, which should be left as it is.;[46]. The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. We might expect that;a. over time, the aquifer is likely to be overused.;b. each farmer has sufficient incentive to use the water efficiently.;c. individual states have an incentive to insure that their farmers do not overuse the water.;d. resources would be used more efficiently if the government paid for the pumps farmers use to get the water.;[47]. A stairwell in a certain office building is always congested at 12:00 p.m. and 5:00 p.m. The congestion is so bad that people have been complaining to the building?s owner. Which of the following methods would be the most efficient way of reducing congestion?;a. Charge everyone who uses the stairwell when it is congested a fee based on their income, with richer people paying more than poorer people.;b. Encourage people to voluntarily keep off the stairwell during peak times.;c. Charge everyone who uses the stairwell when it is congested the same fee. People who value the use of the stairs the most will be the ones who use the stairwell at peak times.;d. Hold a lottery to determine who wins the right to use the stairwell at peak times.;[48]. On hot summer days, electric-generating capacity is sometimes stretched to the limit. At these times, electric companies sometimes ask people to voluntarily cut back on their use of electricity. An economist might say that;a. every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient.;b. it would be more efficient if the electric company raised its rates for electricity at peak times.;c. it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times.;d. it would be more efficient to force everyone to cut their usage of electricity by the same amount.;[49]. Consider the following problems: Overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems all have in common?;a. Private markets could easily solve them if governments let the markets function.;b. They would all go away if an intensive public-information campaign were made.;c. They are all the result of a failure to establish clear property rights over something of value.;d. They are all the necessary result of market economies.;True/False;[50]. There are no goods in this day and age that can be consumed without paying for them.;[51]. Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.;[52]. When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.;[53]. Government policy is of little use for properly allocating those goods that do not have prices attached to them.;[54]. When one person enjoys the benefit of national defense, he (or she) reduces the benefit to others.;[55]. A fireworks display is not excludable because it is virtually impossible to prevent someone from seeing the show.;[56]. A free-rider is someone who receives the benefit of a good but avoids paying for it.;[57]. In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.;[58]. Even economists who advocate small government agree that national defense is a good that the government should provide.;[59]. The government developed the patent system so that private inventors could make a reasonable profit from their own inventions.;[60]. Advocates of antipoverty programs claim that fighting poverty is a public good.;[61]. Some goods can switch between being public goods and private goods depending on the circumstances.;[62]. Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.;[63]. The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.;[64]. Apparently, human life does have an implicit dollar value, due to the observable fact that people take voluntary risks every day.;[65]. If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.;[66]. One person?s use of common resources does not reduce the enjoyment other people receive from the resource.;[67]. If Toby and Pete are the only two fishermen in town, and neither is bothered by the other?s fishing, the lake they fish in is not a common resource.;[68]. One possible solution to the problem of protecting a common resource is to convert that resource to a private good.;[69]. Clean air and clean water are both public goods.;[70]. In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government did not intervene.;[71]. Roads can be considered either public goods or common resources, depending on how congested they are.;[72]. Tolls could not be used to alter people?s incentives to drive during rush hour.;[73]. Historically speaking, when a city builds more roads its traffic problems decrease.;[74]. Road tolls have allowed Singapore to enjoy uncongested roads and practically no auto-induced pollution problems.;[75]. The profit motive that stems from private ownership has proven to be detrimental to elephant populations.;[76]. Depending on congestion, national parks can be either a common resource or a public good.;Short Answer;[77]. Rival?;Rival?;Yes;No;Excludable?;Yes;Private Goods;Natural Monopolies;No;Common Resources;Public Goods;Given the table, place each of the following in the correct location in the table.;a. Congested toll roads;b. Knowledge;c. Fish in the ocean;d. National defense;e. Congested nontoll roads;f. Cable TV;g. The environment;h. Fire protection;i. Ice-cream cones;j. Uncongested toll roads;k. Clothing;l. Uncongested nontoll roads;[78]. The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?;[79]. Some advocates of antipoverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. What does this have to do with the need for government intervention?;[80]. The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic on the road without the help of government?;[81]. Why do salmon populations face the threat of extinction while goldfish populations are in no such danger?


Paper#35589 | Written in 18-Jul-2015

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