Question 1

Government agencies subsidise basic research because:

Accepted Answer

A)  the private market devotes too few resources to basic research
B)  the general knowledge developed through basic research can be used without charge
C)  the social benefit of additional knowledge is perceived to be greater than the cost of subsidies
D)  all of the above are trueE) A) and D)
F) A) and C)

Question 2

A natural monopoly is:

Accepted Answer

A)  provided by the government
B)  excludable but not rival
C)  rival but not excludable
D)  often targeted by free ridersE) B) and D)
F) A) and C)

Question 3

If people can be prevented from using it, the good is:

Accepted Answer

A)  rival
B)  excludable
C)  normal
D)  exhaustibleE) C) and D)
F) None of the above

Question 4

Even economists who advocate small government agree that national defence is a good that the government should provide.

Accepted Answer

A) True 
 B)False

Question 5

When one person uses a common resource, she diminishes other people's enjoyment of it.This is an example of:

Accepted Answer

A)  a market force
B)  a negative externality
C)  the 'invisible hand
D)  excludabilityE) All of the above
F) B) and D)

Question 6

In the 1950s in Australia, estuarine crocodiles were hunted almost to extinction for their leather.This means the crocodiles were a:

Accepted Answer

A)  private good
B)  public good
C)  common resource
D)  none of the aboveE) C) and D)
F) B) and C)

Question 7

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Accepted Answer

A) True 
 B)False

Question 8

Only goods that are produced in markets have value to society.

Accepted Answer

A) True 
 B)False

Question 9

A good that is not subject to property rights is often:

Accepted Answer

A)  overused
B)  stolen
C)  underutilised
D)  taxedE) A) and B)
F) C) and D)

Question 10

Private ownership of a common resource works well when the resource is scarce.

Accepted Answer

A) True 
 B)False

Question 11

It is common knowledge that many national parks have become overused.One possible solution to this problem is to:

Accepted Answer

A)  assign rights to park entrances
B)  build more roads to other natural attractions
C)  introduce a quota on household visits to the park
D)  vary entrance fees according to whether it is peak holiday season, a low season or a special eventE) C) and D)
F) A) and C)

Question 12

The Australian patent system:

Accepted Answer

A)  makes both general and technical knowledge excludable
B)  makes only technical knowledge excludable
C)  creates a disincentive to invent
D)  does all of the aboveE) A) and B)
F) B) and C)

Question 13

Tolls can be used to alter people's incentives to drive during rush hour.

Accepted Answer

A) True 
 B)False

Question 14

Tim works for the government and is implementing a new government policy to set up spacious yoga studios at all state primary schools.The general public will be able to attend classes in the studios but Tim is still is trying to decide on a pricing structure.What pricing structure should Tim suggest the government adopt for the studios and why?

Accepted Answer

A)  participants shouldn't pay for their own class because a yoga class is a private good
B)  participants should pay for the classes out of their taxes because yoga classes are a public good
C)  participants shouldn't pay for their own class because a yoga class is a common resource
D)  participants should each pay for their own class because yoga classes are excludable and rivalE) A) and B)
F) A) and C)

Question 15

Cost-benefit analysis always fails to include free goods like clean air as benefits.

Accepted Answer

A) True 
 B)False

Question 16

A common theme among examples of market failure is that:

Accepted Answer

A)  the good being provided always harms society in some systematic way
B)  some item of value does not have an owner with the legal authority to control it
C)  cost-benefit analysis is likely to lead to implementation policies that promote private provision of goods and services
D)  there are regulations that prohibit the efficient functioning of private marketsE) A) and C)
F) A) and B)

Question 17

A ship's captain who doesn't want to pay for a lighthouse service, must derive no benefit from the lighthouse.

Accepted Answer

A) True 
 B)False

Question 18

The free-rider problem is a problem of:

Accepted Answer

A)  too many people needing the same good
B)  common resource goods not being subject to property rights
C)  incentives
D)  people not revealing their true preferencesE) A) and D)
F) A) and C)

Question 19

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would be considered a private good?

Accepted Answer

A)  a telecommunications service
B)  a mobile phone advertisement
C)  a mobile phone case
D)  a telecommunications towerE) All of the above
F) A) and B)

Exam 11: Public Goods and Common Resources

A common theme among examples of market failure is that:

Correct Answer
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One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Correct Answer
verified

Which of the following would be considered a private good?

Correct Answer
verified

If people can be prevented from using it, the good is:

Correct Answer
verified

Government agencies subsidise basic research because:

Correct Answer
verified

A ship's captain who doesn't want to pay for a lighthouse service, must derive no benefit from the lighthouse.

Correct Answer
verified

When one person uses a common resource, she diminishes other people's enjoyment of it.This is an example of:

Correct Answer
verified

A good that is not subject to property rights is often:

Correct Answer
verified

Correct Answer
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If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Correct Answer
verified

Tolls can be used to alter people's incentives to drive during rush hour.

Correct Answer
verified

Only goods that are produced in markets have value to society.

Correct Answer
verified

In the 1950s in Australia, estuarine crocodiles were hunted almost to extinction for their leather.This means the crocodiles were a:

Correct Answer
verified

Cost-benefit analysis always fails to include free goods like clean air as benefits.

Correct Answer
verified

The free-rider problem is a problem of:

Correct Answer
verified

The Australian patent system:

Correct Answer
verified

A natural monopoly is:

Correct Answer
verified

Even economists who advocate small government agree that national defence is a good that the government should provide.

Correct Answer
verified

It is common knowledge that many national parks have become overused.One possible solution to this problem is to:

Correct Answer
verified

Private ownership of a common resource works well when the resource is scarce.

Correct Answer
verified

Exam 11: Public Goods and Common Resources

A common theme among examples of market failure is that:

Correct AnswerverifiedShow Answer

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Correct AnswerverifiedShow Answer

Which of the following would be considered a private good?

Correct AnswerverifiedShow Answer

If people can be prevented from using it, the good is:

Correct AnswerverifiedShow Answer

Government agencies subsidise basic research because:

Correct AnswerverifiedShow Answer

A ship's captain who doesn't want to pay for a lighthouse service, must derive no benefit from the lighthouse.

Correct AnswerverifiedShow Answer

When one person uses a common resource, she diminishes other people's enjoyment of it.This is an example of:

Correct AnswerverifiedShow Answer

A good that is not subject to property rights is often:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Correct AnswerverifiedShow Answer

Tolls can be used to alter people's incentives to drive during rush hour.

Correct AnswerverifiedShow Answer

Only goods that are produced in markets have value to society.

Correct AnswerverifiedShow Answer

In the 1950s in Australia, estuarine crocodiles were hunted almost to extinction for their leather.This means the crocodiles were a:

Correct AnswerverifiedShow Answer

Cost-benefit analysis always fails to include free goods like clean air as benefits.

Correct AnswerverifiedShow Answer

The free-rider problem is a problem of:

Correct AnswerverifiedShow Answer

The Australian patent system:

Correct AnswerverifiedShow Answer

A natural monopoly is:

Correct AnswerverifiedShow Answer

Even economists who advocate small government agree that national defence is a good that the government should provide.

Correct AnswerverifiedShow Answer

It is common knowledge that many national parks have become overused.One possible solution to this problem is to:

Correct AnswerverifiedShow Answer

Private ownership of a common resource works well when the resource is scarce.

Correct AnswerverifiedShow Answer

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