Question 1

The most effective ways to solve highway congestion is to:

Accepted Answer

A)   to increase tolls as roads become busier and reduce tolls as the roads become less busy
B)   to have a standard toll price
C)   have an inner-city rail network
D)   to reduce tolls as roads become busier and increase tolls as the roads become less busyE) A) and D)
F) A) and C)

Question 2

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?

Accepted Answer

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 consumptionE) B) and D)
F) A) and D) C

Question 3

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Accepted Answer

A) True 
 B)False

Question 4

If a road is uncongested, then use of that road by an additional person would lead to a:

Accepted Answer

A)   negative externality
B)   positive externality
C)   natural monopoly problem
D)   it would have no effectE) A) and B)
F) A) and C)

Question 5

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) None of the above
F) B) and D)

Question 6

A museum exhibition is excludable because it is possible to prevent someone from seeing the show.

Accepted Answer

A) True 
 B)False

Question 7

A policy that allows landowners to raise and kill elephants on their own properties is trying to:

Accepted Answer

A)   reduce the elephant population from becoming too large
B)   regulate the elephant hunting market so that only the best quality tusks are sold to consumers
C)   make sure the common resource that is elephants continues to grow
D)   convert elephants to a private good so that wild populations do not become extinctE) None of the above
F) A) and B)

Question 8

A good is rival if:

Accepted Answer

A)   one person's use of the good diminishes another person's enjoyment of it
B)   the government regulates its availability
C)   it is not a normal good
D)   people can be prevented from using itE) A) and C)
F) A) and B)

Question 9

Suppose the owners of a lighthouse demand payments from a nearby port for the lighthouse service, threatening to turn off the lighthouse otherwise. The lighthouse is now closer to a private good.

Accepted Answer

A) True 
 B)False  True

Question 10

Oil deposits are often considered a common resource. If this is true, then for a group of land owners over an oil pool:

Accepted Answer

A)   oil pools are an excludable good
B)   each land owner has an incentive to extract as much oil as they can, without considering the effect on other land-owners
C)   oil extraction should be subsidised
D)   all of the above are trueE) C) and D)
F) All of the above

Question 11

If the use of a common resource is not regulated, it:

Accepted Answer

A)   is a natural monopoly
B)   is a public good
C)   is a private good
D)   will be overusedE) A) and B)
F) None of the above

Question 12

The government is deciding whether to build a new $2 billion highway from one side of the city to the other. Some business and consumer groups are questioning the value that such an expensive highway will bring to the city. The government says that it has done a cost-benefit analysis which shows that the highway will bring a slightly positive return, and therefore the highway should be built. Which of the following statements is true?

Accepted Answer

A)   Cost-benefit analyses always provide an accurate valuation of a project, so the highway should be built.
B)   Cost-benefit analyses do not always reflect people's true valuation of a project, so the highway should not be built.
C)   It is not possible to put a dollar value on a highway, so the highway should be built.
D)   Cost-benefit analyses are rough approximations at best, so the highway should only be built if very strong evidence in favour is provided.E) None of the above
F) A) and B)

Question 13

Which of the following statements is true?

Accepted Answer

A)   no single individual can eliminate poverty because the problem is so large
B)   private charities use taxes to escape the free-rider problem
C)   there would be no poverty problem if it was left up to private charity
D)   everyone agrees on what role the government should play in fighting povertyE) A) and C)
F) A) and B) A

Question 14

Roads can be considered either public goods or common resources, depending on how congested they are.

Accepted Answer

A) True 
 B)False

Question 15

An example of a market failure associated with the provision of public good in the private market is:

Accepted Answer

A)   free-riders pay too much for the good, so it is undersupplied
B)   free-riders don't pay for the good, so it is undersupplied
C)   free-riders pay too much for the good, so it is oversupplied
D)   free-riders don't pay for the good, so it is oversuppliedE) A) and C)
F) B) and C)

Question 16

Jack, Aaron and Katie have a new television, which has stopped working. For a long time, no one takes the television to be fixed. Why might this have occurred?

Accepted Answer

A)   The television is considered a private good but they can't remember who it belongs to
B)   The television is considered a public good and they are each worried the others will free ride if they pay the repair fee
C)   The television is considered a common resource and they are worried it will break again from being used too much
D)   The television is considered a club good and they are worried about the negative externality from watching too much televisionE) A) and C)
F) B) and C)

Question 17

It is often important in cost-benefit analysis to distinguish between non-market values and direct values attached to direct use. Why is it important to include non-market values in an analysis?

Accepted Answer

A)   non-market values are easier to estimate than direct use values
B)   non-market values are more accurate than market values
C)   non-market values reflect supply and demand more accurately
D)   non-market values reflect the costs and benefits to society, not just to private individualsE) A) and C)
F) A) and D)

Question 18

Once a common resource is available for consumption, policymakers need to be concerned with:

Accepted Answer

A)   making sure everyone gets a fair chance to consume
B)   how much is consumed
C)   creating laws that will completely forbid consumption, because the environment is priceless
D)   none of the above, because common resources are optimally provided in private marketsE) C) and D)
F) A) and D)

Question 19

Apparently, human life does have an implicit dollar value, due to the observable fact that people take voluntary risks every day.

Accepted Answer

A) True 
 B)False

Question 20

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government does not intervene.

Accepted Answer

A) True 
 B)False

Exam 11: Public Goods and Common Resources

The most effective ways to solve highway congestion is to:

Correct Answer
verified

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?

Correct Answer
verified
C

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Correct Answer
verified

If a road is uncongested, then use of that road by an additional person would lead to a:

Correct Answer
verified

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

Correct Answer
verified

A museum exhibition is excludable because it is possible to prevent someone from seeing the show.

Correct Answer
verified

A policy that allows landowners to raise and kill elephants on their own properties is trying to:

Correct Answer
verified

A good is rival if:

Correct Answer
verified

Suppose the owners of a lighthouse demand payments from a nearby port for the lighthouse service, threatening to turn off the lighthouse otherwise. The lighthouse is now closer to a private good.

Correct Answer
verified
True

Oil deposits are often considered a common resource. If this is true, then for a group of land owners over an oil pool:

Correct Answer
verified

If the use of a common resource is not regulated, it:

Correct Answer
verified

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified
A

Roads can be considered either public goods or common resources, depending on how congested they are.

Correct Answer
verified

An example of a market failure associated with the provision of public good in the private market is:

Correct Answer
verified

Jack, Aaron and Katie have a new television, which has stopped working. For a long time, no one takes the television to be fixed. Why might this have occurred?

Correct Answer
verified

It is often important in cost-benefit analysis to distinguish between non-market values and direct values attached to direct use. Why is it important to include non-market values in an analysis?

Correct Answer
verified

Once a common resource is available for consumption, policymakers need to be concerned with:

Correct Answer
verified

Apparently, human life does have an implicit dollar value, due to the observable fact that people take voluntary risks every day.

Correct Answer
verified

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government does not intervene.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

The most effective ways to solve highway congestion is to:

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedC

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Correct AnswerverifiedShow Answer

If a road is uncongested, then use of that road by an additional person would lead to a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A museum exhibition is excludable because it is possible to prevent someone from seeing the show.

Correct AnswerverifiedShow Answer

A policy that allows landowners to raise and kill elephants on their own properties is trying to:

Correct AnswerverifiedShow Answer

A good is rival if:

Correct AnswerverifiedShow Answer

Suppose the owners of a lighthouse demand payments from a nearby port for the lighthouse service, threatening to turn off the lighthouse otherwise. The lighthouse is now closer to a private good.

Correct AnswerverifiedTrue

Oil deposits are often considered a common resource. If this is true, then for a group of land owners over an oil pool:

Correct AnswerverifiedShow Answer

If the use of a common resource is not regulated, it:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedA

Roads can be considered either public goods or common resources, depending on how congested they are.

Correct AnswerverifiedShow Answer

An example of a market failure associated with the provision of public good in the private market is:

Correct AnswerverifiedShow Answer

Jack, Aaron and Katie have a new television, which has stopped working. For a long time, no one takes the television to be fixed. Why might this have occurred?

Correct AnswerverifiedShow Answer

It is often important in cost-benefit analysis to distinguish between non-market values and direct values attached to direct use. Why is it important to include non-market values in an analysis?

Correct AnswerverifiedShow Answer

Once a common resource is available for consumption, policymakers need to be concerned with:

Correct AnswerverifiedShow Answer

Apparently, human life does have an implicit dollar value, due to the observable fact that people take voluntary risks every day.

Correct AnswerverifiedShow Answer

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government does not intervene.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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C

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True

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Correct Answer
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Correct Answer
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A

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Correct Answer
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