Question 1

Provision of electricity is a natural monopoly but after a certain point it becomes a private good.

Accepted Answer

A) True 
 B)False

Question 2

Basic research is a public good because it:

Accepted Answer

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 goodE) B) and D)
F) B) and C)

Question 3

Because of the free-rider problem, respondents to cost-benefit surveys:

Accepted Answer

A)  are unable to evaluate the effect of the project on their personal satisfaction.
B)  are typically not benefited directly by government projects
C)  have a difficult time identifying explicit costs
D)  have little incentive to tell the truthE) A) and B)
F) A) and C)

Question 4

Markets may allocate natural resources wastefully if:

Accepted Answer

A)  people get too greedy
B)  property rights are neither well defined nor enforced
C)  catching poachers is very easy
D)  All of the above are possibleE) B) and D)
F) All of the above

Question 5

The Tragedy of the Commons occurs because:

Accepted Answer

A)  a common resource is under-utilised
B)  a common resource is rival in consumption
C)  crimes are committed in public places
D)  common resources are subject to exclusionary rulesE) B) and D)
F) B) and C)

Question 6

When an infinite value is placed on human life which of the following represents policymakers who rely on cost-benefit analysis?
(i)  they are forced to pursue any project in which a single human life is saved
(ii)  they are likely to make decisions that optimally allocate society's scarce resources
(iii)  they are left with nonsensical results

Accepted Answer

A)  (i)  and (ii) 
B)  (ii)  and (iii) 
C)  (i)  and (iii) 
D)  (i) , (ii)  and (iii) E) None of the above
F) A) and B)

Question 7

In the market for a good such as ice-cream cones:

Accepted Answer

A)  an inefficient number of ice-cream cones will be produced
B)  the sum of producer surplus and consumer surplus is minimised
C)  price adjusts to balance supply and demand
D)  people's wants are not met adequatelyE) None of the above
F) A) and B)

Question 8

Private market failure to optimally allocate common resources is a problem that has only become evident in the last few centuries.

Accepted Answer

A) True 
 B)False

Question 9

Proposals to use road tolls in an effort to reduce traffic congestion are often rejected by the public because:

Accepted Answer

A)  there is no longer sufficient government intervention
B)  they tax only those who chose to drive on the toll roads
C)  they allow the rich to drive more than the poor
D)  all of the above are trueE) A) and B)
F) A) and C)

Question 10

To determine if a good is a common resource or a public good, we need to know:

Accepted Answer

A)  if the good is provided by the government
B)  if my use of the good reduces its availability to you
C)  if the good can be patented
D)  if the good is very expensive to produceE) A) and B)
F) B) and D)

Question 11

Cost-benefit analysis for a private good is facilitated by which of the following facts?
(i)  buyers of a private good reveal the value they place on a good by the prices they are willing to pay
(ii)  a private good cannot be rival
(iii)  sellers of a private good are likely to purchase inputs in regulated markets
(iv)  sellers of private goods reveal their costs by the prices they are willing to accept

Accepted Answer

A)  (i) , (ii) , (iii)  and (iv) 
B)  (i)  and (iv)  only
C)  (ii)  and (iii)  only
D)  (i) , (ii)  and (iv)  onlyE) C) and D)
F) None of the above

Question 12

Due to the externalities associated with public goods and common resources:

Accepted Answer

A)  private markets will lead to an efficient allocation of resources
B)  government intervention can potentially raise economic wellbeing
C)  private markets will correct for the gain or loss to consumer surplus
D)  all of the above are trueE) A) and B)
F) All of the above

Question 13

For both public goods and common resources, an externality arises because:

Accepted Answer

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 greater than market equilibrium
D)  all of the above are trueE) A) and B)
F) None of the above

Question 14

It is sometimes possible for households to use their neighbours' wireless internet without permission.What type of problem is encountered in this situation and what might be done about it?

Accepted Answer

A)  Without a password the internet is a public good and the neighbours should impose a password to make it more like a private good
B)  Without a password the internet is a common resource and the neighbours should impose a password to make it more like a club good
C)  Without a password the internet is a common resource and the neighbours should demand the government impose a tax on wifi
D)  The neighbours should ascertain who has the property rights in order to figure out the optimal solutionE) A) and C)
F) B) and C)

Question 15

The efficient provision of public goods is difficult because:

Accepted Answer

A)  governments can't directly observe users' willingness to pay for the good
B)  some users may exaggerate the benefits in a questionnaire
C)  information on costs is poor because prices aren't directly observed
D)  all of the aboveE) A) and D)
F) A) and C)

Question 16

Some villages in Papua New Guinea farm rare butterfly species for collectors.What outcome would you expect from this policy?

Accepted Answer

A)  there will be less butterflies because of the Tragedy of the Commons
B)  there will be more butterflies because people have property rights to the insects
C)  there will be less butterflies because of the free-rider problem
D)  none of the aboveE) A) and B)
F) None of the above

Question 17

Government may be able to solve the problem of overuse of a common resource by:

Accepted Answer

A)  regulating the use or consumption of the common resource
B)  taxing the use or consumption of the common resource
C)  selling the common resource to a private entity
D)  doing all of the aboveE) None of the above
F) C) and D)

Question 18

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Accepted Answer

A) True 
 B)False

Question 19

Assuming that everyone prefers to live in a society without poverty, which of the following statements are true of private anti-poverty programs?
(i)  people who don't contribute still receive benefits from the general reduction in poverty
(ii)  the socially optimal level of charitable donations is greater than those actually received, because of the free-rider problem
(iii)  there is no individual incentive to contribute to private anti-poverty programs since the government is the sole supplier

Accepted Answer

A)  (i)  and (ii) 
B)  (i)  and (iii) 
C)  (ii)  and (iii) 
D)  (i) , (ii)  and (iii) E) A) and B)
F) None of the above

Question 20

Many special interest groups assert that the environment should be protected irrespective of the cost.This would imply that the environment is priceless - it has infinite value.If this is true, which of the following policies would be passed by a cost-benefit analysis?

Accepted Answer

A)  banning international transport by sea to protect endangered whales from fatal ship-collisions
B)  banning fishing to prevent turtles or dolphins being caught as by-catch
C)  banning wind-power plants to prevent rare birds getting killed in the blades
D)  all of the aboveE) C) and D)
F) B) and C)

Exam 11: Public Goods and Common Resources

Some villages in Papua New Guinea farm rare butterfly species for collectors.What outcome would you expect from this policy?

Correct Answer
verified

The Tragedy of the Commons occurs because:

Correct Answer
verified

Correct Answer
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To determine if a good is a common resource or a public good, we need to know:

Correct Answer
verified

Many special interest groups assert that the environment should be protected irrespective of the cost.This would imply that the environment is priceless - it has infinite value.If this is true, which of the following policies would be passed by a cost-benefit analysis?

Correct Answer
verified

It is sometimes possible for households to use their neighbours' wireless internet without permission.What type of problem is encountered in this situation and what might be done about it?

Correct Answer
verified

Proposals to use road tolls in an effort to reduce traffic congestion are often rejected by the public because:

Correct Answer
verified

Government may be able to solve the problem of overuse of a common resource by:

Correct Answer
verified

The efficient provision of public goods is difficult because:

Correct Answer
verified

Because of the free-rider problem, respondents to cost-benefit surveys:

Correct Answer
verified

In the market for a good such as ice-cream cones:

Correct Answer
verified

Due to the externalities associated with public goods and common resources:

Correct Answer
verified

For both public goods and common resources, an externality arises because:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Private market failure to optimally allocate common resources is a problem that has only become evident in the last few centuries.

Correct Answer
verified

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Correct Answer
verified

Markets may allocate natural resources wastefully if:

Correct Answer
verified

Basic research is a public good because it:

Correct Answer
verified

Provision of electricity is a natural monopoly but after a certain point it becomes a private good.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

Some villages in Papua New Guinea farm rare butterfly species for collectors.What outcome would you expect from this policy?

Correct AnswerverifiedShow Answer

The Tragedy of the Commons occurs because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To determine if a good is a common resource or a public good, we need to know:

Correct AnswerverifiedShow Answer

Many special interest groups assert that the environment should be protected irrespective of the cost.This would imply that the environment is priceless - it has infinite value.If this is true, which of the following policies would be passed by a cost-benefit analysis?

Correct AnswerverifiedShow Answer

It is sometimes possible for households to use their neighbours' wireless internet without permission.What type of problem is encountered in this situation and what might be done about it?

Correct AnswerverifiedShow Answer

Proposals to use road tolls in an effort to reduce traffic congestion are often rejected by the public because:

Correct AnswerverifiedShow Answer

Government may be able to solve the problem of overuse of a common resource by:

Correct AnswerverifiedShow Answer

The efficient provision of public goods is difficult because:

Correct AnswerverifiedShow Answer

Because of the free-rider problem, respondents to cost-benefit surveys:

Correct AnswerverifiedShow Answer

In the market for a good such as ice-cream cones:

Correct AnswerverifiedShow Answer

Due to the externalities associated with public goods and common resources:

Correct AnswerverifiedShow Answer

For both public goods and common resources, an externality arises because:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Private market failure to optimally allocate common resources is a problem that has only become evident in the last few centuries.

Correct AnswerverifiedShow Answer

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Correct AnswerverifiedShow Answer

Markets may allocate natural resources wastefully if:

Correct AnswerverifiedShow Answer

Basic research is a public good because it:

Correct AnswerverifiedShow Answer

Provision of electricity is a natural monopoly but after a certain point it becomes a private good.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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