Ch 11 and 13 Econ Quiz

A free rider is a person who

• can produce a good at no cost.

• receives the benefit of a good but avoids paying for it.

• will only purchase a product on sale.

• rides public transit regularly.

A good is excludable if

• the government can regulate its availability.

• it is not a normal good.

• people can be prevented from using it.

• one person's use of the good diminishes another person's enjoyment of it.

A traffic light at an intersection is

• rival and excludable in consumption.

• not rival and not excludable in consumption.

• not rival but excludable in consumption.

• rival but not excludable in consumption.

Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except

• when one person eats, he may not take into account how his choice affects his friends.

• each dish would be both excludable and rival in consumption.

• there is an externality associated with eating the food on the table.

• each person has an incentive to eat as much as possible since their individual rate of consumption will not affect their individual cost.

Governments can improve market outcomes for

• neither public goods nor common resources.

• common resources but not public goods.

• public goods but not common resources.

• both public goods and common resources.

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.016. The cost of imposing a regulation that would ban the chemical is $32 million. If the value of a human life is equal to $5 million, how many people must the policy affect in order for the benefits to exceed the costs?

• 4001

• 3201

• 256

• 401

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?

• Club good

• Common resource

• Private good

• Public good

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

• people can be prevented from using it.

• if too many people use it, one person's use diminishes other peoples' use.

• anyone can use it without affecting anyone else.

• access is limited due to driving distances.

Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park. Refer to Table 11-1. Suppose the cost to build the park is $23 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?

• 4 acres

• 2 acres

• 3 acres

• 1 acre

Which of the following is not a reason why government agencies subsidize basic research?

• The general knowledge developed through basic research can be used without charge.

• The social benefit of additional knowledge is perceived to be greater than the cost of the subsidies.

• The government wants to attract the brightest researchers away from private research firms.

• The private market devotes too few resources to basic research.