Question 1

When Rick uses a common resource and diminishes other people's enjoyment of it,he creates
A) a free rider problem.
B) an externality.
C) a nonrenewable resource.
D) general knowledge.

Accepted Answer

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates an externality, which is a negative impact on a third party from the actions of an economic agent. In this case, Rick's use of the resource has a negative impact on others who also want to use it. The free rider problem refers to the issue of people benefiting from a resource without contributing to its upkeep or maintenance. Nonrenewable resources refer to materials that are finite in quantity and will eventually be exhausted. General knowledge refers to information that is widely available and not subject to private ownership or control.

Question 2

Why is the commercial value of ivory a threat to the elephant,while the commercial value of beef is the cow's guardian?
A) Elephants live in Africa,whereas cows live in the United States.
B) Elephants are a common resource.
C) Cows are a common resource.
D) Cows are a public good.

Accepted Answer

The commercial value of ivory is a threat to the elephant because it leads to poaching and illegal killing of elephants for their tusks. Elephants are not a common resource and their population size is declining rapidly due to poaching. On the other hand, the commercial value of beef is not a threat to cows because they are a common resource and their population size is maintained through breeding and farming practices.

Question 3

Elephants are endangered,but cows are not because
A) cows are not as valuable as elephants.
B) elephants are a common resource,while cows are private goods.
C) cows are a common resource,while elephants are private goods.
D) it is legal to kill cows but not elephants.

Accepted Answer

Endangerment of a species depends on its status as a common resource or a private good. Common resources, like elephants, are usually not owned by anyone and are accessible to anyone who wants to hunt or use them. Over hunting and excessive use of these resources cause endangerment. On the other hand, cows are usually owned by individuals and are considered as private goods. The owners of cows usually protect them, which reduces the chances of endangerment.

Question 4

One proposed solution to overused,deteriorating national parks would be to
A) increase the number of bears through breeding programs.
B) have Congress increase the entrance fees.
C) decrease management and maintenance of facilities.
D) reduce the number of improved camping facilities.

Accepted Answer

The answer of One proposed solution to overused,deteriorating national parks...

Question 5

Which of the following statements is true of the tax on gasoline?
A) The cost of collecting a gasoline tax outweighs the revenues raised by the tax.
B) It is preferred to tolls as the best solution to road congestion.
C) It discourages driving on noncongested roads,even though there is no congestion externality for these roads.
D) Both b and c are correct.

Accepted Answer

The gasoline tax only creates an externality when there is congestion, as it encourages drivers to switch to alternative modes of transportation during times of congestion. However, it does not provide any such benefit for non-congested roads. Therefore, it can discourage driving on non-congested roads unnecessarily. The cost of collecting the tax may be high, but it is not mentioned in the statement that it outweighs the revenues raised by the tax. Tolls and gasoline taxes are both methods of funding roads, but the gasoline tax is not preferred over tolls to address congestion. Therefore, only option C is true.

Question 6

Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket.Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers.Which of the following statements is not correct?
A) Use of the beach by the nine new beachgoers will yield a negative externality.
B) The town can reduce the congestion externality by raising the fee to access the beach.
C) An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion.
D) Each of the nine friends would have been better off staying at home.

Accepted Answer

This statement is not necessarily true as the friends may still enjoy their vacation even with the increased congestion on the beach. Additionally, the cost of the house rental was equally shared among all nine friends, so they may still feel that they received value for their money even with the external congestion. Therefore, option D is the correct answer as it does not necessarily follow from the information given in the scenario.

Question 7

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

Accepted Answer

The answer of The ocean remains one of the largest...

Question 8

Why do elephants face the threat of extinction while cows do not?
A) Cattle are a valuable source of income for many people,while elephants have no market value.
B) There is a high demand for products that come from cows,whereas there is no demand for products that come from elephants.
C) There are still lots of cattle that roam free,while all elephants live in zoos.
D) Cattle are owned by ranchers,while elephants are owned by no one.

Accepted Answer

The answer of Why do elephants face the threat of...

Question 9

One of the least regulated common resources today is
A) state parks.
B) the ocean.
C) forest preserves.
D) the Great Lakes.

Accepted Answer

The ocean is one of the least regulated common resources today, with few restrictions on fishing, shipping, and other activities that can harm marine ecosystems. There are some international treaties and national regulations in place, but enforcement is often weak and there is little coordination among different countries and agencies. This has led to overfishing, pollution, climate change, and other threats to the health and integrity of the ocean and its biodiversity.

Question 10

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75.This toll bought the drivers who paid it a 27 minute time savings.Which of the following is correct?
A) For some consumers,the toll was less than the opportunity cost of the time they would have spent in traffic.
B) For some consumers,the toll was more than the opportunity cost of the time they would have spent in traffic.
C) No consumers would find this toll worth the time saved in traffic.
D) Both a and b are correct.

Accepted Answer

The answer of A variable toll on a road in...

Question 11

The U.S.government protects fish,a common resource,by
A) subsidizing the fishing industry.
B) heavily taxing competing industries.
C) selling fishing licenses and regulating fish lengths.
D) None of the above is correct.

Accepted Answer

The U.S. government protects fish as a common resource by selling fishing licenses and regulating fish lengths. This helps to control the amount of fishing that takes place and ensure that fish populations are sustainable for future generations. Subsidizing the fishing industry or heavily taxing competing industries would not necessarily protect fish populations in the same way.

Question 12

Because elephants roam freely in many countries in Africa,each individual African elephant poacher has
A) a strong incentive to kill as many elephants as he can find.
B) a strong incentive to protect the elephants.
C) the ability to save the elephants.
D) None of the above is correct.

Accepted Answer

The unrestricted movement of elephants in Africa means that poachers have access to a large number of elephants to kill and sell their ivory for profits. Therefore, they have a strong incentive to kill as many elephants as possible.

Question 13

Elephant populations in some African countries have started to rise because
A) poachers and environmentalists are working together to save the elephants.
B) new laws make killing elephants and selling their ivory illegal.
C) some elephants have been made a private good,and people are allowed to kill elephants on their own property.
D) high ivory taxes make it hard to earn a decent return on elephant tusks.

Accepted Answer

The answer of Elephant populations in some African countries have...

Question 14

It is common knowledge that many U.S.national parks have become overused.One possible solution to this problem is to
A) increase entrance fees.
B) decrease camping permit fees.
C) require all visitors to register upon entering the park.
D) sell the land that the parks currently occupy.

Accepted Answer

Increasing entrance fees will deter some visitors from entering the park and generate additional revenue to help manage and preserve the park. Decreasing camping permit fees may actually encourage more people to camp, exacerbating the problem of overuse. Requiring visitors to register upon entering the park may help with management but does not address the issue of overuse. Selling the land is not a desirable solution, as national parks are important public assets that provide recreation, education, and ecological benefits.

Question 15

Excessive fishing occurs because
A) each individual fisherman has little incentive to maintain the species for the next year.
B) fishermen rely on government managers to worry about fish populations.
C) fishermen are unionized,so they are not concerned with externalities.
D) fishermen have other marketable skills and do not fear exploitation of fish reserves.

Accepted Answer

Excessive fishing occurs because each individual fisherman has little incentive to maintain the species for the next year. This is because they always want to catch as much as they can in the current season in order to earn more money. They do not consider the long-term effects of overfishing and depletion of the fish population.

Question 16

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?
A) Cows reproduce at a high rate and have adapted well to their environment.
B) Public policies protect cows from predators and diseases.
C) Cows are privately owned,whereas many endangered species are owned by no one.
D) There is a natural ecological balance between the birth rate of cows and human consumption.

Accepted Answer

The answer of Many species of animals are common resources,and...

Question 17

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?
A) Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products.
B) Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price.
C) Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered.
D) American drivers and Soviet shoppers have nothing in common.

Accepted Answer

American drivers on congested roads are consuming the benefits of using the road without paying the full social cost of their use, while Soviet shoppers waiting in line to purchase clothing are paying artificially low prices due to government subsidies, leading to an inefficient allocation of resources. Both situations involve the consumption of products at prices that do not reflect their full costs.

Question 18

Four roommates share an off-campus house and equally share the cost of rent.Everyone says that she values a clean house,yet the house is usually dirty.To an economist,a clean house in this case represents
A) a common resource problem.
B) a public good.
C) a natural monopoly.
D) All of the above are correct.

Accepted Answer

A clean house in this case represents a common resource problem, where each roommate has an incentive to use resources (such as cleaning supplies or their own time) to maintain cleanliness, but there is no clear ownership or responsibility for doing so. This can lead to a tragedy of the commons situation, where everyone assumes someone else will clean and the house remains dirty despite everyone valuing cleanliness. A public good or natural monopoly do not accurately describe the situation, as they involve different types of goods and services.

Question 19

Using a toll to reduce traffic when congestion is greatest is an example of a
A) regulation solution.
B) command-and-control policy.
C) corrective tax.
D) Coase theorem solution.

Accepted Answer

A toll to reduce traffic is an example of a corrective tax, where the tax is used to correct the negative externality of congestion. This is different from a command-and-control policy, where the government sets specific rules and regulations, and from a Coase theorem solution, where private parties negotiate to internalize the externality.

Question 20

The goal of requiring licenses for hunting and fishing is
A) to reduce the use of a common resource.
B) to ensure that the people hunting and fishing are qualified.
C) to generate revenue for the government.
D) to monitor compliance with federal gun laws.

Accepted Answer

The answer of The goal of requiring licenses for hunting...

Quiz 11: Public Goods and Common Resources

When Rick uses a common resource and diminishes other people's enjoyment of it,he creates

Why is the commercial value of ivory a threat to the elephant,while the commercial value of beef is the cow's guardian?

Elephants are endangered,but cows are not because

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

Which of the following statements is true of the tax on gasoline?

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

Why do elephants face the threat of extinction while cows do not?

One of the least regulated common resources today is

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75.This toll bought the drivers who paid it a 27 minute time savings.Which of the following is correct?

The U.S.government protects fish,a common resource,by

Because elephants roam freely in many countries in Africa,each individual African elephant poacher has

Elephant populations in some African countries have started to rise because

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

Excessive fishing occurs because

Many species of animals are common resources,and many must be protected by law to keep them from extinction.Why is the cow not one of these endangered species even though there is such a high demand for beef?

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Four roommates share an off-campus house and equally share the cost of rent.Everyone says that she values a clean house,yet the house is usually dirty.To an economist,a clean house in this case represents

Using a toll to reduce traffic when congestion is greatest is an example of a

The goal of requiring licenses for hunting and fishing is