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Exam 17: Public Goods and Common Resources

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Question 1

Multiple Choice

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No individual is willing to pay for the efficient quantity of a public good because the marginal benefit to an individual _____ the marginal social benefit.

A) equals
B) exceeds
C) is less than
D) may be equal to or greater than

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

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Question 2

Multiple Choice

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Use the following to answer questions : $\begin{array}{l}\text { Table: Total Cost and Total Individual Benefit }\\\begin{array} { l c c } \begin{array} { l } \text { Quantity of Animal } \\\text { Control Officers }\end{array} & \text { Total Cost } & \begin{array} { c } \text { Total Individual } \\\text { Benefit }\end{array} \\\hline 0 & \$ 0 & \$ 0 \\1 & 20000 & 40 \\2 & 40000 & 70 \\3 & 60000 & 90 \\4 & 80000 & 100 \\5 & 100000 & 105 \\\hline\end{array}\end{array}$ -(Table: Total Cost and Total Individual Benefit) Use Table: Total Cost and Total Individual Benefit.If there are 1 000 residents and they all have the same total individual benefit,as shown in the table,what is the marginal social benefit of the fourth animal control officer?

A) $10
B) $9 000
C) $10 000
D) $90 000

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

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Question 3

Multiple Choice

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If the market supply and demand curves for a common resource include all costs and benefits to society from production and consumption,the common resource will:

If a good has a marginal cost of production of zero and an inefficiently low level of consumption,the good must be a(n) :

Which good is MOST likely a common resource?

Economic policymaking is _____ in consumption and _____.

For a nonexcludable good like national defence,the private market will lead to _____ of the good.

A(n) _____ is nonexcludable and nonrival in consumption.

An artificially scarce good is a good or service for which exclusion is _____ and that is _____ in consumption.

The BEST example of a private good is:

Use the following to answer questions : Figure: Demand and Marginal Revenue -(Figure: Demand and Marginal Revenue) Use Figure: Demand and Marginal Revenue.The figure refers to a software upgrade.The producer incurred fixed costs of $10 million to produce the upgrade;the marginal cost of allowing consumers to download the upgrade is zero.What is the efficient level of output for the upgrade?

Use the following to answer questions : Figure: Correcting for Market Failure -(Figure: Correcting for Market Failure) Use Figure: Correcting for Market Failure.There is an external cost in the market illustrated in the figure,and the two upward-sloping lines reflect private and social marginal costs.If the government intervenes to correct for the external cost,the new _____ will now reflect _____ costs.

Which good is MOST likely a public good?

Use the following to answer questions : Figure: An Individual's Marginal Benefit from a Public Good -(Figure: An Individual's Marginal Benefit from a Public Good) Use Figure: An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good;each individual has the marginal benefit curve shown in the figure.If the marginal cost of the good is $24,how many units of the public good will be provided by the private market?

For nonrival goods like pay-per-view television programmes,the private market will lead to _____ from a social perspective.

When a good is nonexcludable:

An e-book is similar to a published book in that it is _____,but it is also similar to national defence in that it is _____.

Use the following to answer questions : $\text {Table: Marginal Benefit, Cost, }$ $\text {and Consumer Surplus}$ $\begin{array}{l} \begin{array}{lr}\hline&\text { Individual }\\\text { Consumer } & \text { Marginal Benefit } \\\hline \text { Adriana } & \$ 2 \\\text { Bhagesh } & 15 \\\text { Chizuko } & 1 \\\text { Denzel } & 10 \\\text { Emma } & 5 \\\text { Frank } & 4\end{array}\end{array}$ -(Table: Marginal Benefit,Cost,and Consumer Surplus) Use Table: Marginal Benefit,Cost,and Consumer Surplus.The table shows six consumers' willingness to pay for one iTunes download.If the marginal social cost is constant at _____,then _____ consumers will purchase this good,and consumer surplus is _____.

A common resource is _____ in consumption.

An example of a common resource is: