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Exam 17: Public Goods and Common Resources

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Question 31

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Use the following to answer question: -(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) B) and D)

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Question 32

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As a big music fan,you want to attend a weekend blues festival in your town.The purchase of a wristband gives you and thousands of other fans access to the very large outdoor concert pavilion,where you all fit comfortably.The blues festival is a good that has the characteristics of being:

A) rival and excludable.
B) nonrival and excludable.
C) rival and nonexcludable.
D) nonrival and nonexcludable.

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

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Question 33

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The marginal social cost of a common resource is _____ than an individual's marginal cost,and without government intervention the market will allow provision of _____ of the common resource than is socially optimal.

A public good is a good or service for which exclusion is _____ and that is _____ in consumption.

Use the following to answer question: 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 forces the private-sector firms to internalize any external costs:

The private market will lead to _____ of clean air because _____.

Which example is BEST characterized as an artificially scarce good?

If the market produces an efficient level of a good,then we know that the good must be _____ and _____ in consumption.

A Pigouvian tax can lead to the efficient level of production and consumption of:

Whether or not they pay for them,people cannot be excluded from receiving the benefits of _____,but they can be excluded from the benefits of _____.

You work in an office and one of your coworkers has announced his retirement.You have offered to purchase the retirement gift,so you place a collection jar in the lunch room for anonymous donations to help pay for the gift.After a week,you find very little money in the jar,so you end up paying for a large share of the retirement gift.You are the victim of the _____ problem.

Use the following to answer question: 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.What is the total social benefit from four units of the public good?

In a market economy,goods that are nonexcludable and nonrival will be produced at inefficiently low levels (if they are produced at all),and goods that are excludable but nonrival in consumption will be produced at inefficiently low consumption levels.

Artificially scarce goods are inefficiently consumed because the market price is zero.

The problem with public goods is similar to the problem with positive externalities: the marginal social benefit exceeds any individual's marginal benefit.

A city government engages in cost-benefit analysis when it estimates the social costs and social benefits of providing trash-collection services.

If policy makers provide only enough tradable permits to provide efficient use of a common resource,only those who _____ will use the resource.

(Figure: Marginal Social Cost and Supply) Use Figure: Marginal Social Cost and Supply.The marginal social cost curve lies above the supply curve: Figure: Marginal Social Cost and Supply

For a public good,which statement(s) accurately describe(s) the marginal social benefit (MSB) ? I.MSB equals the sum of the individual marginal benefits for all of the consumers of that unit. II.MSB equals the sum of each consumer's willingness to pay for that unit. III.MSB is greater than any individual marginal benefit.

An electronic book is an artificially scarce good because the private market _____ prevent consumption by people who do not pay for it.Further,the same e-book _____ be consumed by more than one person at the same time.