Question 1

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is not correct?

Accepted Answer

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 C)
F) C) and D)

Question 3

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Accepted Answer

A) True 
 B)False

Question 4

Natural monopolies are both

Accepted Answer

A)  excludable and nonrival in consumption.
B)  nonexcludable and rival in consumption.
C)  excludable and rival in consumption.
D)  nonexcludable and nonrival in consumption.E) All of the above
F) A) and B)

Question 5

Which of the following is an example of the free-rider problem?

Accepted Answer

A)  Both Fred and Wilma receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care.
B)  Elmer receives a free lunch from the local "Meals on Wheels" program because of his low monthly income.Yet his next door neighbor, Dorothy, is not eligible for the free lunch.
C)  Max owns Fido, a large dog who barks whenever anyone walks near his house.Sally lives next to Max, and Fido's barking can be heard whenever anyone walks near her house, too.Thus, Sally receives free protection from burglars because of Fido's barking.
D)  Both David and Carolyn can enjoy a beautiful sunset from the porches of their adjacent houses, yet neither of them pays to watch the sunset.E) None of the above
F) All of the above

Question 6

The Occupational Safety and Health Administration (OSHA) has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks.The cost of imposing a regulation that would ban the chemical is $10 million.OSHA has calculated that each person saved by this regulation has a value equal to $10 million.If the benefits are exactly equal to the costs,what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

Accepted Answer

A)  0.001
B)  0.01
C)  0.1
D)  1.0E) None of the above
F) A) and C)

Question 7

Which of the following statements concerning Yellowstone National Park is not correct?

Accepted Answer

A)  Entrance fees have not kept pace with inflation over the last century.
B)  When the park gets too crowded, no more visitors are allowed.
C)  The park does not take advantage of the free market to correct for overcrowding.
D)  Additional federal funding would reduce overcrowding.E) B) and C)
F) A) and C)

Question 8

One of the least regulated common resources today is

Accepted Answer

A)  U.S.national parks.
B)  the ocean.
C)  U.S.government land in the West.
D)  the Great Lakes.E) All of the above
F) B) and C)

Question 9

If people prefer to live in a society without poverty,then fighting poverty can be thought of as a public good.Why can't the private sector provide sufficient "poverty reduction"?

Accepted Answer

A)  Because people who do not donate to private charities can "free ride" off those who do.
B)  The private marketplace can provide a socially optimal quantity of these programs with no government interference.
C)  Because the Food Stamp program is more efficient than private food pantries run by charities.
D)  Both a and b are correct.E) A) and D)
F) A) and C)

Question 10

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Accepted Answer

A) True 
 B)False

Question 11

Advocates of antipoverty programs claim that fighting poverty is a public good.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  negative externality.
B)  positive externality.
C)  Pigovian externality.
D)  free-rider problem with rush hour drivers stuck in traffic.E) None of the above
F) All of the above

Question 13

London charges drivers driving in "congestion zones" a tax in order to reduce traffic congestion.

Accepted Answer

A) True 
 B)False

Question 14

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of diet soft drinks is 0.0005.The cost of imposing a regulation that would ban the chemical is $18 million.If the value of a human life is equal to $10 million,how many people must the policy affect in order for the benefits to exceed the costs?

Accepted Answer

A)  301
B)  601
C)  1801
D)  3601E) B) and D)
F) A) and B)

Question 15

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.An economist would suggest that

Accepted Answer

A)  every electric customer has an incentive to prevent the system from overloading, so this voluntary approach is the most efficient.
B)  it would be more efficient if the electric company raised its rates for electricity at peak times.
C)  it would be more efficient to have a lottery to decide who had to cut back their use of electricity at peak times.
D)  it would be more efficient to force everyone to cut their usage of electricity by the same amount.E) A) and C)
F) A) and B)

Question 16

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Accepted Answer

A) True 
 B)False

Question 17

San Francisco is considering a plan used in London to reduce congestion on busy streets called

Accepted Answer

A)  road-fee pricing.
B)  congestion charging zones.
C)  tip-top tolls.
D)  "share the road, not the smog."E) B) and C)
F) A) and B)

Question 18

The ocean remains one of the largest unregulated resources for each of the following reasons except

Accepted Answer

A)  many countries have access to the ocean.
B)  it is difficult to get international cooperation among countries that hold different values.
C)  the oceans are so vast that enforcing any agreements would be difficult.
D)  All of the above are reasons the ocean remains one of the largest unregulated resources.E) A) and B)
F) A) and C)

Question 19

One economically efficient way to eliminate the Tragedy of the Commons is to

Accepted Answer

A)  tax the owners of the resource.
B)  prevent anyone from using the resource.
C)  reduce the marginal social benefit of the resource.
D)  establish private ownership of the resource.E) None of the above
F) C) and D)

Question 20

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Accepted Answer

A)  Moscow
B)  New York City
C)  Beijing
D)  LondonE) All of the above
F) C) and D)

Exam 11: Public Goods and Common Resources

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Correct Answer
verified

One of the least regulated common resources today is

Correct Answer
verified

Which of the following is an example of the free-rider problem?

Correct Answer
verified

Which of the following statements concerning Yellowstone National Park is not correct?

Correct Answer
verified

San Francisco is considering a plan used in London to reduce congestion on busy streets called

Correct Answer
verified

The ocean remains one of the largest unregulated resources for each of the following reasons except

Correct Answer
verified

Natural monopolies are both

Correct Answer
verified

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Correct Answer
verified

If people prefer to live in a society without poverty,then fighting poverty can be thought of as a public good.Why can't the private sector provide sufficient "poverty reduction"?

Correct Answer
verified

London charges drivers driving in "congestion zones" a tax in order to reduce traffic congestion.

Correct Answer
verified

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.An economist would suggest that

Correct Answer
verified

One economically efficient way to eliminate the Tragedy of the Commons is to

Correct Answer
verified

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct Answer
verified

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct Answer
verified

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

Correct Answer
verified

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct Answer
verified

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Exam 11: Public Goods and Common Resources

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Correct AnswerverifiedShow Answer

One of the least regulated common resources today is

Correct AnswerverifiedShow Answer

Which of the following is an example of the free-rider problem?

Correct AnswerverifiedShow Answer

Which of the following statements concerning Yellowstone National Park is not correct?

Correct AnswerverifiedShow Answer

San Francisco is considering a plan used in London to reduce congestion on busy streets called

Correct AnswerverifiedShow Answer

The ocean remains one of the largest unregulated resources for each of the following reasons except

Correct AnswerverifiedShow Answer

Natural monopolies are both

Correct AnswerverifiedShow Answer

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial,legal,and entertainment district?

Correct AnswerverifiedShow Answer

If people prefer to live in a society without poverty,then fighting poverty can be thought of as a public good.Why can't the private sector provide sufficient "poverty reduction"?

Correct AnswerverifiedShow Answer

London charges drivers driving in "congestion zones" a tax in order to reduce traffic congestion.

Correct AnswerverifiedShow Answer

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.An economist would suggest that

Correct AnswerverifiedShow Answer

One economically efficient way to eliminate the Tragedy of the Commons is to

Correct AnswerverifiedShow Answer

If we can conclude that human life has a finite value,cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Correct AnswerverifiedShow Answer

Advocates of antipoverty programs claim that fighting poverty is a public good.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Correct AnswerverifiedShow Answer

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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