ECO 450 Week 4 Quiz – Strayer
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Quiz 3 Chapter 4 and 5
Chapter
4
Public
Goods
True/False Questions
1. Bread is an
example of a good that is nonrival in consumption.
2. A pure public
good is one for which it is easy to exclude consumers from benefits if they
refuse to pay.
3. The marginal social cost of producing another
unit of a pure public good will always be positive.
4. To obtain a
demand curve for a pure public good, the marginal benefit of each consumer must
be summed for each possible quantity produced per time period.
5. If the
efficient amount of a pure public good is produced, each person consumes it up
to the point at which his or her marginal benefit equals the marginal social
cost of the good.
6. In a Lindahl
equilibrium, each consumer of a pure public good consumes the same quantity and
pays a tax share per unit of the good equal to his or her marginal
benefit.
7. If the
marginal social cost of a pure public good exceeds its marginal social benefit,
additional units of the good can still be financed by voluntary
contributions.
8. The free-rider
problem is less acute in small groups than it is in large groups.
9. A congestible
public good is one for which the marginal cost of allowing an additional
consumer to enjoy the benefits of a given quantity is always zero.
10. Television
programming is a good example of a price-excludable public good.
11. It is possible
to price a pure public good and sell it by the unit.
12. The demand
curve for a pure public good is obtained by adding the quantities demanded by
each individual consumer at each possible price.
13. A Lindahl
equilibrium usually has each participant paying the same tax share per unit of
a public good even though their marginal benefit of that unit varies.
14. Internet
service is an example of a price-excludable public good.
15. Clubs are a
means of providing congestible public goods through markets.
16. A common way to fund a public good is
through a government that raises funds through taxation.
17. Private education is an example of a
price-excludable public good.
18. A congestible good has no limits in
how much it can be consumed.
Multiple
Choice Questions
1. A pure public
good is:
a. one
that can easily be sold by the unit.
b. one
that is nonrival in consumption.
c. one
whose benefits are not subject to exclusion.
d. both
(b) and (c)
2. The marginal
cost of providing a certain quantity of a pure public good to an additional
consumer after it is provided to any one consumer is:
a. zero.
b. positive
and increasing.
c. positive
and decreasing.
d. positive
and constant.
3. The nonrival
property of pure public goods implies that the:
a. benefits
enjoyed by existing consumers decline as more consumers enjoy a given quantity
of the good.
b. benefits
enjoyed by existing consumers are unaffected as more consumers enjoy a given
quantity of the good.
c. good
cannot be priced.
d. marginal
cost of producing the good is zero.
4. The demand
curve for a pure public good is:
a. a
horizontal line.
b. obtained
by adding the quantities individual consumers would purchase at each possible
price.
c. obtained
by adding the marginal benefit obtained by each consumer at each possible
quantity.
d. the
marginal cost curve for the pure public good.
5. The efficient output of a pure public
good is achieved at the point at which:
a. the
marginal benefit obtained by each consumer equals the marginal social cost of
producing the good.
b. the
sum of the marginal benefits of all consumers equals the marginal social cost
of producing the good.
c. the
marginal benefit of each consumer equals zero.
d. the
marginal social cost of producing the good is zero.
e. both
(c) and (d)
6. The monthly
rental rate for a satellite dish antenna is $200. The maximum marginal benefit
that any resident of a condominium community will obtain per month from
the antenna is $50. There are 100 residents in the community, none of whom
values the antenna at less than $25 per month. Assuming that the antenna is a
pure public good for residents of the community,
a. each
resident of the community will rent his own antenna.
b. it
is inefficient for the community to rent an antenna.
c. it
is efficient for the members of the community to rent an antenna for their
common use.
d. it
is efficient for each resident to rent his own antenna.
7. In a Lindahl
equilibrium,
a. each
consumer purchases a pure public good up to the point at which his or her
marginal benefit equals the marginal social cost of the good.
b. each
person pays a tax per unit of the pure public good equal to his or her marginal
benefit.
c. the
sum of the marginal benefits of all consumers equals the marginal social cost
of the good.
d. both
(a) and (c)
e. both
(b) and (c)
8. The free-rider
problem:
a. becomes
more serious as the number of persons involved in voluntarily financing a pure
public good decreases.
b. becomes
more serious as the number of persons involved in voluntarily financing a pure
public good increases.
c. is
independent of the number of persons involved in a scheme to voluntarily
finance a pure public good.
d. does
not prevent voluntary cooperation from efficiently providing pure public goods.
9. The marginal
cost of making a given quantity of a congestible public good available to more
consumers is:
a. always
zero.
b. positive
and increasing.
c. positive
and decreasing.
d. zero
at first but eventually becomes positive and increasing.
10. Cable TV
programming is an example of a:
a. congestible
public good.
b. price-excludable
public good.
c. pure
public good.
d. pure
private good.
11. A major distinction between pure public goods and pure
private goods is that:
a. pure
private goods can easily be priced and sold in markets.
b. pure
public goods can easily be divided into units.
c. pure
public goods can only be collectively consumed.
d. both
(a) and (c)
12. The principle
of nonexclusion for pure public goods means that the benefits of the good:
a. are
shared.
b. can
be priced.
c. cannot
be withheld from consumers even if they refuse to pay.
d. are
not reduced to any one consumer when a given quantity is consumed by another.
13. Which of the
following is true in a Lindahl equilibrium for cooperative supply of a pure
public good?
a. The
sum of the tax shares per unit paid by each consumer is equal to the marginal
social cost of the public good.
b. The
sum of the tax shares per unit paid by each consumer is equal to the marginal
social benefit of the good.
c. The
sum of the tax shares per unit paid by each consumer is maximized.
d. both
(a) and (b)
14. Which of the
following is a good example of a congestible public good?
a. TV
programming
b. a
road
c. a
loaf of bread
d. homeland
security
15. Education is:
a. a
pure public good.
b. a
pure private good.
c. a
good that has characteristics of both public goods and private goods.
d. not
subject to the exclusion principle.
16. An example of
an undesirable public good (or public “bad”) is:
a. government.
b. private
trash hauling.
c. poor
air quality.
d. private
property.
17. Public
transportation is:
a. a congestible good.
b. a
pure private good.
c. a
good without limits to the number of consumers who desire to use it.
d. not
subject to the exclusion principle.
18. A baseball
field is:
a. a
pure public good.
b. a
pure private good.
c. a
good that has characteristics of both public goods and private goods.
d. not
subject to the exclusion principle.
19. A means of
creating a price-excludable public good is:
a. allowing
food and beverages when entering.
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