Question 1

When choosing the right amount of a public good to supply,the government:

Accepted Answer

A)  often guesses,because people have an incentive to overstate a good's value.
B)  often provides too much,because people have an incentive to understate a good's value.
C)  often provides too little,because people have an incentive to overstate a good's value.
D)  often fails to provide it,because people have an incentive to understate a good's value.E) A) and B)
F) C) and D)

Question 2

If the government runs an ad campaign to shame litterers,they are:

Accepted Answer

A)  wasting a lot of money.
B)  trying to get individuals to internalize the negative externality created by their decision to litter.
C)  using protectionist policy to help the trash-collecting industry.
D)  All of these statements are true.E) A) and B)
F) None of the above

Question 3

A public good is:

Accepted Answer

A)  rival in consumption and excludable.
B)  not rival in consumption,but excludable.
C)  rival in consumption,but not excludable.
D)  not rival in consumption and not excludable.E) None of the above
F) C) and D)

Question 4

When goods are subject to market failure,one possible solution is to:

Accepted Answer

A)  change social norms.
B)  have government either regulate the market or provide the good.
C)  privatize the good.
D)  All of these are possible solutions.E) A) and B)
F) None of the above

Question 5

A smart phone 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 D)
F) A) and C)

Question 6

When someone does not have to pay for a good:

Accepted Answer

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

Question 7

The combination of inefficiently high demand and dwindling quantity leads to what is called:

Accepted Answer

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

Question 8

Cookies would be considered:

Accepted Answer

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

Question 9

The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________

Accepted Answer

A)  nonexcludable;both rivalrous and nonexcludable.
B)  rivalrous;both rivalrous and nonexcludable.
C)  both rivalrous and nonexcludable;rivalrous.
D)  both rivalrous and nonexcludable;excludable.E) A) and B)
F) None of the above

Question 10

In 2009,the Nobel Prize in economics was awarded for work on the effectiveness of social norms in the management of commonly held property to:

Accepted Answer

A)  Arthur Pigou.
B)  Gary Becker.
C)  Elinor Ostrom.
D)  Ronald Coase.E) B) and D)
F) A) and B)

Question 11

Markets work well for allocating ____________ efficiently,but not always so well for allocating ______________________.

Accepted Answer

A)  private goods;public goods
B)  public goods;private goods
C)  common resources;public goods
D)  public goods;common resourcesE) A) and D)
F) All of the above

Question 12

When a good is both rivalrous and nonexcludable:

Accepted Answer

A)  the free rider problem may arise.
B)  the tragedy of the commons may arise.
C)  the good is likely a private good.
D)  the good is likely an artificially scarce good.E) None of the above
F) A) and C)

Question 13

One way the government decides how to pay for a public good is:

Accepted Answer

A)  if they can make the good excludable and charge its users.
B)  the ease of collecting payout.
C)  the transfer of surplus.
D)  All of these are ways the government allocates payment of public goods.E) C) and D)
F) A) and B)

Question 14

The free rider problem is caused by:

Accepted Answer

A)  the nonexcludability of a good leading to the undersupply of it.
B)  the incentive to oversupply the good since it is nonrival in consumption.
C)  the rivalness in consumption of a good leading to the overconsumption of that good.
D)  the rivalness in consumption of a good leading to the undersupply of it.E) C) and D)
F) A) and B)

Question 15

Goods that are neither rival in consumption nor excludable are:

Accepted Answer

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

Question 16

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created:

Accepted Answer

A)  an efficient level would be reached.
B)  total surplus would be maximized for the whole society.
C)  individuals would consume less.
D)  All of these statements are true.E) All of the above
F) C) and D)

Question 17

One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is:

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 important to the effectiveness of community-based solutions.E) None of the above
F) All of the above

Question 18

One way the government can enhance efficiency through the management of public goods and common resources is by:

Accepted Answer

A)  banning the good.
B)  setting quotas for the good.
C)  government provision of the good.
D)  All of these can be effective and efficiency-enhancing solutions.E) A) and C)
F) A) and B)

Question 19

One way to solve the free-rider problem is:

Accepted Answer

A)  have the government provides the good at a certain cost.
B)  make the good or service more excludable.
C)  tax those who truly value the good.
D)  tax everyone an equal amount for the good.E) A) and B)
F) None of the above

Question 20

When the government bans a good:

Accepted Answer

A)  it is an easy,but often ineffective,solution to the nonexcludability problem.
B)  it creates a more efficient solution than any other to the nonexcludability problem.
C)  it increases surplus more than any other solution to the nonexcludability problem.
D)  it is the easiest and most effective solution to the nonexcludability problem.E) A) and C)
F) B) and D)

Exam 19: Public Goods and Common Resources

One way to solve the free-rider problem is:

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One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is:

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A smart phone would be considered:

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The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________

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When the government bans a good:

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When someone does not have to pay for a good:

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One way the government can enhance efficiency through the management of public goods and common resources is by:

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Goods that are neither rival in consumption nor excludable are:

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One way the government decides how to pay for a public good is:

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Cookies would be considered:

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When goods are subject to market failure,one possible solution is to:

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The free rider problem is caused by:

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When choosing the right amount of a public good to supply,the government:

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Markets work well for allocating ____________ efficiently,but not always so well for allocating ______________________.

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If the government runs an ad campaign to shame litterers,they are:

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If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created:

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In 2009,the Nobel Prize in economics was awarded for work on the effectiveness of social norms in the management of commonly held property to:

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The combination of inefficiently high demand and dwindling quantity leads to what is called:

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A public good is:

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When a good is both rivalrous and nonexcludable:

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The free rider problem is triggered when a good is ,and the tragedy of the commons arises when a good is __

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Markets work well for allocating efficiently,but not always so well for allocating __________.

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