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Which of the following goods is the best example of a public good?


A) garbage-collection services that are provided by a municipal government
B) music that is broadcast over the airwaves by a privately-owned FM radio station
C) electricity that is provided to farmhouses by a rural electric cooperative
D) cable TV services that are provided by a privately-owned firm that is regulated by the government of the city in which it operates

E) B) and C)
F) C) and D)

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Table 11-2 Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight. Table 11-2 Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight. -Refer to Table 11-2. Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. If the residents choose to install the number of streetlights that will maximize total surplus from the streetlights, how much total surplus will the Greene family receive? A) -$80 B) $320 C) $360 D) $480 -Refer to Table 11-2. Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. If the residents choose to install the number of streetlights that will maximize total surplus from the streetlights, how much total surplus will the Greene family receive?


A) -$80
B) $320
C) $360
D) $480

E) A) and B)
F) None of the above

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Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?


A) reduced travel time during peak hours
B) reduced need for public transportation
C) improved environmental quality
D) improved valuation of a common resource

E) A) and C)
F) All of the above

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Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners -- Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners -- Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. -Refer to Table 11-4. Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split all tree-planting costs equally. How many trees would Adams prefer to plant? A) 0 B) 1 C) 2 D) 3 -Refer to Table 11-4. Suppose the cost to plant each tree is $120 and the 4 homeowners have agreed to split all tree-planting costs equally. How many trees would Adams prefer to plant?


A) 0
B) 1
C) 2
D) 3

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

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Under which of the following scenarios would a park be considered a common resource?


A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Visitors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

E) B) and C)
F) All of the above

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Are public goods excludable? Are they rival in consumption?

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No, public goods are...

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Is a congested nontoll road excludable? Is it rival in consumption? How do we classify a congested nontoll road in terms of the four types of goods?

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A congested nontoll road is no...

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Most lighthouses are operated by the government because


A) of the free-rider problem.
B) lighthouses are no longer valued by society.
C) most lighthouses are only tourist attractions in state and national parks.
D) shipping companies would not be able to afford maintenance fees for lighthouses.

E) A) and D)
F) A) and B)

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A good that is excludable is one that someone can be prevented from using if she did not pay for it.

A) True
B) False

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A free-rider is someone who receives the benefit of a good but avoids paying for it.

A) True
B) False

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A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population. Which of the following statements is not correct?


A) Lobsters are rival but not excludable.
B) The lobster population is an example of the tragedy of the commons.
C) Reducing the quota on the number of lobsters any fisher can catch would have a protective effect on the lobster population.
D) If left unregulated, the lobster population will likely increase.

E) A) and D)
F) A) and C)

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Which of the following represents a potential solution to the problem of environmental pollution?


A) corrective taxes
B) well established property rights
C) government regulation
D) All of the above are correct.

E) A) and D)
F) A) and C)

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Which of the following statements is not correct?


A) A free rider is a person who benefits from something for which he or she does not have to pay.
B) The creation of general knowledge is a public good.
C) The Tragedy of the Commons illustrates the underuse of a common resource.
D) A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.

E) A) and C)
F) A) and D)

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Figure 11-1 Figure 11-1 -Refer to Figure 11-1. To which of the boxes - A, B, C, or D - does the phenomenon of free riding most clearly apply? -Refer to Figure 11-1. To which of the boxes - A, B, C, or D - does the phenomenon of free riding most clearly apply?

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The phenomenon of fr...

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Under which of the following scenarios would a park be considered a public good?


A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

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

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Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is not excludable and not rival in consumption?


A) tablet computer, gym membership at a gym that always has plenty of open equipment and classes
B) tablet computer, national defense
C) congested nontoll road, national defense
D) online music subscription, streetlight

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

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A lighthouse is typically considered to be a public good because


A) the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.
B) there is rarely another lighthouse nearby to provide competition.
C) a nearby port authority cannot avoid paying fees to the lighthouse owner.
D) all passing ships are able to enjoy the benefits of the lighthouse without paying.

E) C) and D)
F) B) and D)

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A free rider is a person who pays for a good but does not receive the benefit of it.

A) True
B) False

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It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that


A) resources would be used more efficiently if the government produced the weapons.
B) resources would be used more efficiently if private firms provided national defense.
C) weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable.
D) national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable.

E) All of the above
F) B) and C)

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When an infinite value is placed on human life, policymakers who rely on cost-benefit analysis


A) are forced to pursue any project in which a single human life is saved.
B) are likely to make decisions that optimally allocate society's scarce resources.
C) would not pursue any public project that would not save human life.
D) would be forced to rely on private markets to provide public goods.

E) None of the above
F) A) and B)

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