Question 1

Social disapproval as a means of changing society's attitudes and fixing the free rider problem is likely to be more effective:

Accepted Answer

A)  in a small town than a large city.
B)  when the government pays for ad campaigns.
C)  than government provision.
D)  when community members do not have close relationships with others in the area.E) C) and D)
F) B) and D)

Question 2

Which of the following is a public good?

Accepted Answer

A)  Health
B)  Cleanliness
C)  Radio signals
D)  All of these are public goods.E) A) and C)
F) A) and B)

Question 3

A road would be considered a public good if it is:

Accepted Answer

A)  used infrequently and charges no tolls.
B)  highly trafficked and congested, and charges tolls.
C)  used infrequently and charges tolls.
D)  highly trafficked and congested, and charges no tolls.E) A) and B)
F) A) and C)

Question 4

Which of the following is not a result of the government privatizing a common resource?

Accepted Answer

A)  Consumers are forced to consider all the costs and benefits of their consumption choices.
B)  The resource gains excludability.
C)  Efficiency is increased.
D)  Undesirable side effects occur more often.E) B) and C)
F) A) and B)

Question 5

When consumers don't have to pay for a common resource, the market experiences:

Accepted Answer

A)  underconsumption.
B)  oversupply.
C)  overconsumption.
D)  irrational consumption.E) A) and D)
F) B) and C)

Question 6

If you can't prevent people from consuming a good, then:

Accepted Answer

A)  they have little reason to pay for it.
B)  the good is not excludable.
C)  they will likely use it for free.
D)  All of these are true.E) B) and C)
F) A) and B)

Question 7

Which type of good is rival in consumption and excludable?

Accepted Answer

A)  Common
B)  Private
C)  Public
D)  Artificially scarceE) A) and B)
F) C) and D)

Question 8

Which type of good is most likely to be subject to market failure?

Accepted Answer

A)  Public
B)  Private
C)  Uncommon
D)  Factor of productionE) B) and D)
F) C) and D)

Question 9

When faced with a market failure, the government:

Accepted Answer

A)  tries to redistribute existing surplus more fairly.
B)  always takes over the market.
C)  encourages well-functioning firms to stay through protectionist policy.
D)  enacts thoughtful policy in order to create market efficiency.E) C) and D)
F) None of the above

Question 10

Without correction, the quantity of a common resource that is exchanged will occur where:

Accepted Answer

A)  the marginal social benefit of additional consumption exceeds the marginal social cost of additional production.
B)  the marginal social benefit is equal to the marginal social cost.
C)  the marginal social benefit of additional consumption is less than the marginal social cost of additional production.
D)  the marginal social benefit is zero.E) A) and C)
F) None of the above

Question 11

The tragedy of the commons is the:

Accepted Answer

A)  undersupply of a public good due to consumers not paying the full value of the good.
B)  disappearance of certain markets due to the public's lack of willingness to pay.
C)  depletion of a common resource due to individually rational, but collectively inefficient, overconsumption.
D)  notion that common resources are generally underconsumed and therefore not regularly produced due to artificially low demand.E) C) and D)
F) B) and D)

Question 12

Which of the following is not a consideration when attempting to eliminate a free rider problem?

Accepted Answer

A)  The social costs must be realized by the individual.
B)  Something must be done to alter individuals' trade-offs.
C)  Market participants must internalize the value of the externality.
D)  Firms must be forced to provide the good or service at a price that is below profit maximizing price.E) A) and C)
F) A) and D)

Question 13

When government bodies use their power to impose limits on how much of a resource is consumed:

Accepted Answer

A)  they can enhance efficiency in markets for common resources.
B)  they will always cause deadweight loss.
C)  they must first decide on the "right" amount for the public to consume.
D)  they often have failed to first attempt the use of social norms to correct the problem.E) C) and D)
F) B) and D)

Question 14

If consumers of common resources were subject to a tax equal to the external costs imposed due to the negative externality created, their demand curve would shift _______ and they would consume _______.

Accepted Answer

A)  upward; more
B)  downward; less
C)  downward; more
D)  upward; lessE) C) and D)
F) B) and D)

Question 15

The depletion of a common resource due to individually rational, but collectively inefficient, overconsumption is called:

Accepted Answer

A)  the free rider problem.
B)  the tragedy of the commons.
C)  rivalry in consumption.
D)  excludability.E) B) and C)
F) A) and D)

Question 16

When the free rider problem is present in a market: what people pay for a good is often less than the real value they place on it. the good will likely be overconsumed. the good is rival in consumption.

Accepted Answer

A)  I only
B)  I and II only
C)  II and III only
D)  I and III onlyE) B) and C)
F) A) and B)

Question 17

Which of the following goods is most likely to be overconsumed?

Accepted Answer

A)  Sparkling water
B)  Irrigation water
C)  Bottled water
D)  Free waterE) C) and D)
F) All of the above

Question 18

The marginal social benefit of a public good is the:

Accepted Answer

A)  benefit gained by the last user.
B)  sum of the marginal benefit gained by each individual user.
C)  difference between the benefit gained by users and the cost paid by society.
D)  sum of the benefit gained by the government.E) B) and C)
F) A) and D)

Question 19

Which of the following is a good or service that is rival in consumption?

Accepted Answer

A)  A hamburger
B)  Radio signals broadcast over the air
C)  National Defense
D)  Public utilitiesE) A) and C)
F) C) and D)

Question 20

Netflix movies that are viewed by streaming over the Internet would be considered:

Accepted Answer

A)  a common resource.
B)  a private good.
C)  a public good.
D)  an artificially scarce good.E) A) and B)
F) A) and C)

Exam 19: Public Goods and Common Resources

The tragedy of the commons is the:

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Which of the following is not a result of the government privatizing a common resource?

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The depletion of a common resource due to individually rational, but collectively inefficient, overconsumption is called:

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Which of the following goods is most likely to be overconsumed?

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When faced with a market failure, the government:

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Which of the following is a good or service that is rival in consumption?

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Which of the following is not a consideration when attempting to eliminate a free rider problem?

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When consumers don't have to pay for a common resource, the market experiences:

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Which type of good is rival in consumption and excludable?

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If consumers of common resources were subject to a tax equal to the external costs imposed due to the negative externality created, their demand curve would shift _______ and they would consume _______.

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When the free rider problem is present in a market: what people pay for a good is often less than the real value they place on it. the good will likely be overconsumed. the good is rival in consumption.

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Which type of good is most likely to be subject to market failure?

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A road would be considered a public good if it is:

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The marginal social benefit of a public good is the:

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Which of the following is a public good?

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If you can't prevent people from consuming a good, then:

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Netflix movies that are viewed by streaming over the Internet would be considered:

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Without correction, the quantity of a common resource that is exchanged will occur where:

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When government bodies use their power to impose limits on how much of a resource is consumed:

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Social disapproval as a means of changing society's attitudes and fixing the free rider problem is likely to be more effective:

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If consumers of common resources were subject to a tax equal to the external costs imposed due to the negative externality created, their demand curve would shift _ and they would consume _.

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