Question 1

When the free rider problem is present in a market, the good:

Accepted Answer

A)  will be oversupplied.
B)  will be underconsumed.
C)  is rival in consumption.
D)  is not excludable.E) A) and C)
F) None of the above

Question 2

Which of the following does not factor into the cost that individuals breaking a government ban expect to face?

Accepted Answer

A)  The punishment associated with breaking the ban
B)  The likelihood of being caught breaking the ban
C)  The likelihood of being punished if caught breaking the ban
D)  The ability of the person breaking the ban to pay for the costsE) B) and D)
F) B) and C)

Question 3

When a good is nonexcludable and rival in consumption:

Accepted Answer

A)  the free rider problem may arise.
B)  the tragedy of the commons may arise.
C)  it is likely private.
D)  it is likely a common resource.E) A) and B)
F) A) and D)

Question 4

If consumers of common resources were subject to a tax equal to the external costs imposed due to the negative externality created:

Accepted Answer

A)  an efficient level would be reached.
B)  total surplus would be maximized for society.
C)  individuals would consume less.
D)  All of these are true.E) None of the above
F) All of the above

Question 5

To combat the undersupply of public goods, a government might:

Accepted Answer

A)  step in and provide the good directly.
B)  place a quota on consumption of the good.
C)  change social norms around consumption of the good.
D)  put a quota on the amount that sellers must produce.E) None of the above
F) All of the above

Question 6

Which of the following is a good or service that is not rival in consumption?

Accepted Answer

A)  A sports car
B)  A paper clip
C)  Bottled water
D)  ElectricityE) None of the above
F) B) and C)

Question 7

Nonexcludability, in the case of rival goods, causes _______ demand.

Accepted Answer

A)  inefficiently high
B)  inefficiently low
C)  efficiently high
D)  efficiently lowE) B) and C)
F) A) and D)

Question 8

When a government wants to solve the tragedy of the commons by banning a good:

Accepted Answer

A)  the cost of breaking the ban needs to be sufficiently low in order to be effective.
B)  it needs to change the trade-offs that producers face.
C)  the ban will only be effective if it can be easily enforced.
D)  it should obtain approval from the community before exacting the ban to be more effective.E) A) and B)
F) All of the above

Question 9

When a good is undersupplied, we can assume it is most likely a:

Accepted Answer

A)  common resource.
B)  private good.
C)  public good.
D)  transitory good.E) None of the above
F) B) and C)

Question 10

When fishing at a pond, catching and keeping one fish means that this fish is no longer available for another person to catch. This is an example of:

Accepted Answer

A)  rivalry.
B)  the free rider problem
C)  excludability.
D)  All of these are exemplified by the scenario provided.E) A) and D)
F) A) and C)

Question 11

Most goods are:

Accepted Answer

A)  exclusive.
B)  public goods.
C)  rival in consumption.
D)  nonrival in consumption.E) A) and B)
F) All of the above

Question 12

Bans are typically enacted to:

Accepted Answer

A)  solve common resource problems.
B)  reduce the inefficiency created by overuse.
C)  respond when the optimal quantity of consumption for a good is zero.
D)  All of these are true.E) A) and C)
F) B) and C)

Question 13

Which of the following goods is likely to cause a market failure and be overconsumed?

Accepted Answer

A)  Cable TV
B)  Grazing pasture
C)  Public health
D)  EducationE) A) and B)
F) A) and C)

Question 14

Which of the following is a "design principle" that makes informal, community-based solutions to common-resource problems more effective?

Accepted Answer

A)  Clear distinctions between who is and is not allowed to access the resource
B)  The participation of resource users in setting the rules for use
C)  The ability of users to monitor one another
D)  All of these are principles that improve the effectiveness of community-based solutions.E) A) and B)
F) A) and C)

Question 15

Excludability is important because it:

Accepted Answer

A)  allows sellers to set an enforceable price on a good.
B)  allows consumers to control the price of a good.
C)  allows sellers to keep prices artificially high.
D)  causes buyers to have an inelastic demand for a good.E) A) and B)
F) A) and C)

Question 16

When consumers don't have to pay for a common resource:

Accepted Answer

A)  it is rational to overconsume.
B)  it is irrational to overconsume.
C)  it is rational to underconsume.
D)  there is zero demand for the good.E) None of the above
F) A) and B)

Question 17

The tragedy of the commons arises when a good is:

Accepted Answer

A)  nonrival and nonexcludable.
B)  nonrival and excludable.
C)  rival and nonexcludable.
D)  rival and excludable.E) C) and D)
F) A) and C)

Question 18

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

Accepted Answer

A)  Fish in a pet store
B)  Fresh fish at the grocery store
C)  Fish in the ocean
D)  Fish in a fisheryE) A) and D)
F) A) and C)

Question 19

When a government tries to change social norms, it:

Accepted Answer

A)  might run an extensive ad campaign.
B)  attempts to change people's opinions about their actions.
C)  wants consumers to internalize the cost or benefit caused by their market decisions.
D)  All of these are true.E) A) and B)
F) B) and C)

Question 20

Using a common resource:

Accepted Answer

A)  creates a positive externality for others.
B)  maximizes total surplus.
C)  is an irrational decision.
D)  imposes a negative externality on others.E) B) and C)
F) A) and D)

Exam 19: Public Goods and Common Resources

Most goods are:

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

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Excludability is important because it:

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When a government tries to change social norms, it:

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When fishing at a pond, catching and keeping one fish means that this fish is no longer available for another person to catch. This is an example of:

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Which of the following is a good or service that is not rival in consumption?

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Using a common resource:

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Bans are typically enacted to:

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Which of the following goods is likely to cause a market failure and be overconsumed?

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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:

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Which of the following is a "design principle" that makes informal, community-based solutions to common-resource problems more effective?

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When a good is undersupplied, we can assume it is most likely a:

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When consumers don't have to pay for a common resource:

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Which of the following does not factor into the cost that individuals breaking a government ban expect to face?

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When a good is nonexcludable and rival in consumption:

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The tragedy of the commons arises when a good is:

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To combat the undersupply of public goods, a government might:

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Nonexcludability, in the case of rival goods, causes _______ demand.

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When the free rider problem is present in a market, the good:

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When a government wants to solve the tragedy of the commons by banning a good:

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