Question 1

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Accepted Answer

No one owns the wild salmon, while priva...

Question 2

A congested toll road is

Accepted Answer

A)   a good produced by a natural monopoly.
B)   a private good.
C)   a public good.
D)   a common resource.E) None of the above
F) A) and B)

Question 3

Which of the following could be a merit good?

Accepted Answer

A)   education.
B)   national defence.
C)   police service.
D)   flood control schemes.E) A) and D)
F) A) and C)

Question 4

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Accepted Answer

A)   government regulation.
B)   that prices are not low enough so firms overproduce.
C)   that prices are not high enough so people over consume.
D)   that property rights have not been well established.E) A) and D)
F) None of the above

Question 5

Merit goods are

Accepted Answer

A)   not supplied by the price sector.
B)   always free to the consumer.
C)   considered over or under consumed by the government.
D)   are not excludable.E) None of the above
F) All of the above

Question 6

The Tragedy of the Commons is a parable that illustrates why

Accepted Answer

A)   common resources are over consumed.
B)   public goods are under produced.
C)   private goods are under consumed.
D)   natural monopolies overproduce goods.E) A) and D)
F) B) and D)

Question 7

What is meant by goods which are excludable and rival?

Accepted Answer

A good is excludable if it is possible t...

Question 8

A club good produced by a natural monopoly is

Accepted Answer

A)   rival but not excludable.
B)   neither rival nor excludable.
C)   not rival but excludable.
D)   both rival and excludable.E) All of the above
F) A) and B)

Question 9

An overcrowded beach is an example of

Accepted Answer

A)   a positive externality.
B)   a tragedy of the commons.
C)   environmentally inefficient allocation.
D)   economically unsound allocation.E) All of the above
F) A) and B)

Question 10

Common resources are overused because common resources are free to the consumer.

Accepted Answer

A) True 
 B)False  True

Question 11

A merit good cannot be provided by the private sector.

Accepted Answer

A) True 
 B)False

Question 12

A negative externality affects market efficiency in a manner similar to

Accepted Answer

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

Question 13

Merit goods are goods that governments feel without subsidies or extra taxes would be under or over consumed.

Accepted Answer

A) True 
 B)False

Question 14

A common resource is

Accepted Answer

A)   not rival but excludable.
B)   both rival and excludable.
C)   rival but not excludable.
D)   neither rival nor excludable.E) B) and D)
F) B) and C)

Question 15

What are the characteristics of common resources and why do governments seek to limit the use of common resources?

Accepted Answer

Common resources are rival but not exclu...

Question 16

Why might merit goods be under-consumed if left to the market and so what can be done to correct this problem?

Accepted Answer

Merit goods maybe under-consumed because consumers may have imperfect information about the benefits of these goods and are not able to value them appropriately as a result. They also make decisions only based on the private benefit and not the social benefit. If the market signal does not fully convey the value of the benefits to consumers then they are likely to under invest in these goods. For example sacrificing a job now for studying a degree is made in the belief that it will provide a greater future benefit in both income and through having more rewarding jobs, but that is in the future and its exact nature is not specific. The information to base this decision on is imperfect. Also the social benefit of gaining a degree is ignored when making a decision because the consumer is only interested in the private benefit from education. This social benefit of adding to the human capital of the country is important to the government and hence a government may subsidise higher education or offer loans that will be repayable from future incomes.

Question 17

Public goods are difficult for a private market to provide due to

Accepted Answer

A)   the rivalness problem.
B)   the public goods problem.
C)   the Tragedy of the Commons.
D)   the free-rider problem.E) C) and D)
F) None of the above

Question 18

Governments can improve market outcomes for

Accepted Answer

A)   public goods but not common resources.
B)   common resources but not public goods.
C)   both public goods and common resources.
D)   neither public goods nor common resources.E) None of the above
F) A) and C)

Question 19

A public good is both rival and excludable.

Accepted Answer

A) True 
 B)False

Question 20

Which merit good is likely to be under consumed when left to the market mechanism?

Accepted Answer

A)   tobacco
B)   alcohol
C)   education
D)   heroinE) All of the above
F) A) and B) C

Exam 10: Public Goods, Common Resources and Merit Goods

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Correct Answer
verified
No one owns the wild salmon, while priva...
View Answer

A congested toll road is

Correct Answer
verified

Which of the following could be a merit good?

Correct Answer
verified

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Correct Answer
verified

Merit goods are

Correct Answer
verified

The Tragedy of the Commons is a parable that illustrates why

Correct Answer
verified

What is meant by goods which are excludable and rival?

Correct Answer
verified
A good is excludable if it is possible t...
View Answer

A club good produced by a natural monopoly is

Correct Answer
verified

An overcrowded beach is an example of

Correct Answer
verified

Common resources are overused because common resources are free to the consumer.

Correct Answer
verified
True

A merit good cannot be provided by the private sector.

Correct Answer
verified

A negative externality affects market efficiency in a manner similar to

Correct Answer
verified

Merit goods are goods that governments feel without subsidies or extra taxes would be under or over consumed.

Correct Answer
verified

A common resource is

Correct Answer
verified

What are the characteristics of common resources and why do governments seek to limit the use of common resources?

Correct Answer
verified
Common resources are rival but not exclu...
View Answer

Why might merit goods be under-consumed if left to the market and so what can be done to correct this problem?

Public goods are difficult for a private market to provide due to

Correct Answer
verified

Governments can improve market outcomes for

Correct Answer
verified

A public good is both rival and excludable.

Correct Answer
verified

Which merit good is likely to be under consumed when left to the market mechanism?

Correct Answer
verified
C

Exam 10: Public Goods, Common Resources and Merit Goods

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Correct AnswerverifiedNo one owns the wild salmon, while priva...View AnswerShow Answer

A congested toll road is

Correct AnswerverifiedShow Answer

Which of the following could be a merit good?

Correct AnswerverifiedShow Answer

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually

Correct AnswerverifiedShow Answer

Merit goods are

Correct AnswerverifiedShow Answer

The Tragedy of the Commons is a parable that illustrates why

Correct AnswerverifiedShow Answer

What is meant by goods which are excludable and rival?

Correct AnswerverifiedA good is excludable if it is possible t...View AnswerShow Answer

A club good produced by a natural monopoly is

Correct AnswerverifiedShow Answer

An overcrowded beach is an example of

Correct AnswerverifiedShow Answer

Common resources are overused because common resources are free to the consumer.

Correct AnswerverifiedTrue

A merit good cannot be provided by the private sector.

Correct AnswerverifiedShow Answer

A negative externality affects market efficiency in a manner similar to

Correct AnswerverifiedShow Answer

Merit goods are goods that governments feel without subsidies or extra taxes would be under or over consumed.

Correct AnswerverifiedShow Answer

A common resource is

Correct AnswerverifiedShow Answer

What are the characteristics of common resources and why do governments seek to limit the use of common resources?

Correct AnswerverifiedCommon resources are rival but not exclu...View AnswerShow Answer

Why might merit goods be under-consumed if left to the market and so what can be done to correct this problem?

Public goods are difficult for a private market to provide due to

Correct AnswerverifiedShow Answer

Governments can improve market outcomes for

Correct AnswerverifiedShow Answer

A public good is both rival and excludable.

Correct AnswerverifiedShow Answer

Which merit good is likely to be under consumed when left to the market mechanism?

Correct AnswerverifiedC

Correct Answer
verified
No one owns the wild salmon, while priva...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A good is excludable if it is possible t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Common resources are rival but not exclu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C