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Exam 11: Public Goods and Common Resources.

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Question 151

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You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.Because the cost to build the library is only $500,000,you arrange to have the library built.Everyone in town enjoys the library,but when you asked for donations to pay for the library,you only collected $100,000.You are convinced that

A) the survey must have overstated how much the library was worth to each resident; otherwise, you would have collected $500,000 in donations.
B) the cost of the library exceeded the social benefits.
C) the library was an example of the Tragedy of the Commons.
D) most residents of the town are probably free-riders at the library.

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

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Question 152

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The U.S.patent system

A) makes general knowledge excludable.
B) makes specific, technical knowledge excludable.
C) creates a disincentive to invent.
D) Both a and b are correct.

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

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Question 153

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The Tragedy of the Commons occurs because

Table 11-2 Consider a small town with only three families, the Johnson family, the Marshall family, and the Walker 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 $300 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Marshall's like the town to install?

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

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?

Markets may fail to allocate resources efficiently when property rights are not well established.

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

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

The Pennsylvania Turnpike is a tolled freeway running through the state of Pennsylvania.Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway.Suppose that despite the tolls,many motorists in the urban areas use the Turnpike causing traffic to slow during peak times.What type of good would the Turnpike be classified as in this case?

Because public goods are

Figure 11-1 -Refer to Figure 11-1.Once good x is provided,policymakers need to be concerned about how much of it is used.Good x is an example of the type of good represented by Box

Which of the following statements is correct?

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

Without government intervention,public goods tend to be

Most goods in our economy are allocated in markets,where buyers pay for what they receive and sellers are paid for what they provide.

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

Pay-per-view broadcasts are

A view of a spectacular sunset along a private beach is an example of a

One proposed solution to overused,deteriorating national parks would be to