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Exam 11: Public Goods and Common Resources.

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Question 111

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Which of the following statements is not correct?

A) Environmental degradation is an example of the Tragedy of the Commons.
B) Cost-benefit analysis is an important tool that economists use to evaluate the benefits of providing a public good.
C) Some goods, such as lighthouses, may be either private or public goods.
D) The free-rider problem prevents governments from supplying public goods.

E) A) and B)
F) A) and C)

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Question 112

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Which of the following statements is correct?

A) The establishment of property rights sometimes gives rise to market failure.
B) The absence of property rights sometimes gives rise to market failure.
C) In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights.
D) Government regulation of private behavior, in response to market failure, can never improve social well-being.

E) A) and B)
F) A) and C)

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Question 113

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Figure 11-1 -Refer to Figure 11-1.The box labeled B represents

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

Goods that are rival in consumption but not excludable would be considered

Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $75 per day.Then total surplus for the 4 store owners is

Which of the following goods is both excludable and rival in consumption?

When goods do not have a price,which of the following primarily ensures that the good is produced?

Although national defense is currently a public good,economists who advocate small government generally agree that the U.S.should privatize national defense to increase the efficiency of the good.

Which of the following statements is true of the tax on gasoline?

Table 11-5 A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard. -Refer to Table 11-5.Suppose the cost to hire each individual guard is $70 per day.How many guards should be hired to maximize the total surplus of the four store owners?

Some goods can be classified as either public goods or private goods depending on the circumstances.

The greatest difficulty with cost-benefit analysis of a public project is determining

Suppose that everyone prefers to live in a society without poverty.Further suppose that some private charities are successful in reducing poverty.People who do not contribute to the charities

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.On these days,electricity is

Some goods can be either common resources or public goods depending on

The idea that "externalities arise because something of value has no price attached to it" is associated with

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.