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Exam 17: Public Goods and Common Resources

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Question 51

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Which of the following goods is most likely a public good?

A) the Internet
B) a public park
C) a pair of pants
D) fire protection provided by the local fire department

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Question 52

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Common resource goods are similar to:

A) public goods because they are both nonexcludable and nonrival in consumption.
B) goods with negative externalities because not all users take into account the external costs imposed on society.
C) private goods because they are both excludable and rival.
D) artificially scarce goods because they are both are excludable and nonrival in consumption.

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Question 53

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When the allocation of resources is such that a different allocation would increase society's welfare, economists say:

Figure: Demand and Marginal Revenue (Figure: Demand and Marginal Revenue) The figure Demand and Marginal Revenue 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?

A small public park in a large town with many other parks often has very few visitors because of its size.There is no fee to enter the park, but few people visit it, since other parks have more amenities.This park is:

Figure: An Individual's Marginal Benefit from a Public Good (Figure: An Individual's Marginal Benefit from a Public Good) Look at the 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 same marginal benefit curve as the one shown in the figure.If the marginal cost of the good is $24, what is the level of this public good that would maximize society's welfare?

Scenario: Ben and Nick Two individuals, Ben and Nick, are the only members of a hypothetical community.They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known.In addition, the marginal social cost (MSC) of the public good is known and is constant. (Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben and Nick.At all levels of public good provision:

Airplane seats are rival in consumption. False

The best example of a good whose consumption is not excludable is:

Public goods should be produced up to the point at which the marginal cost of production equals:

One way the government of Alaska could prevent an inefficiently large production of crab fishing would be to:

For a public good, the marginal social benefit will be higher than any individual's marginal benefit of consumption.False

Whether or not they pay for them, people cannot be excluded from receiving the benefits of:

If a good is nonrival in consumption and a positive price is charged by the supplier, then:

(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay (his or her individual marginal benefit) for one iTunes download of a Jack Johnson song.If the marginal social cost is constant at ________, then consumers will purchase this good and consumer Surplus is _.

Scenario: Ben and Nick Two individuals, Ben and Nick, are the only members of a hypothetical community.They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known.In addition, the marginal social cost (MSC) of the public good is known and is constant. (Scenario: Ben and Nick) Refer to the information and figure in the scenario Ben and Nick.Q4:

Some public goods would not be provided without government intervention because:

Figure: Market Failure (Figure: Market Failure) Look at the figure Market Failure.Suppose it represents the demand and marginal cost of pounds of shrimp in the bay.The additional cost of the shrimp due to the depletion of the common resource is equal to AC.The efficient price of shrimp is

The tendency of people to avoid paying for a good's benefits when the benefits can be obtained free is called the:

A common resource is a good or service for which exclusion is: