1. It would always be a mistake to view
a.
many species of animals as common resources.
b.
a road as a public good.
c.
national defense as a common resource.
d.
a fireworks display as a public good.
2. It would always be a mistake to view
a.
a streetlight as a common resource.
b.
a nontoll road as a public good.
c.
the environment as a common resource.
d.
a lighthouse as a public good.
3. Which of the following statements is correct?
a.
b.
c.
d.
4. Which of the following statements is not correct?
a.
Common resources are rival in consumption but are not excludable.
b.
Uncongested toll roads are examples of club goods.
c.
When African elephants were privatized, the survival of the species deteriorated.
d.
National defense is not rival in consumption, nor is it excludable.
5. Neither public goods nor common resources are
a.
excludable, but only public goods are not rival in consumption.
b.
excludable, but only common resources are not rival in consumption.
c.
rival in consumption, but only public goods are not excludable.
d.
rival in consumption, but only common resources are not excludable.
6. If the use of a common resource is not regulated,
a.
no one can enjoy it.
b.
it will tend to be underused.
c.
property rights will be clearly defined.
d.
it will be overused.
7. Each of the following would be considered a common resource except a
a.
water reservoir.
b.
streetlight.
c.
a congested road.
d.
book from a public library.
8. A textbook is a
a.
private good and the knowledge that one gains from reading the book is a common resource.
b.
private good and the knowledge that one gains from reading the book is a public good.
c.
common resource and the knowledge that one gains from reading the book is a public good.
d.
common resource and the knowledge that one gains from reading the book is a private good.
9. 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 club good.
d.
All of the above are correct.
10. Which of the following is not a common resource?
a.
elephants in the wild
b.
a narrow trail in a park
c.
a neighborhood garden
d.
Neither a nor b is a common resource.
11. Which of the following is not a common resource?
a.
clean air
b.
clean water
c.
open grazing land
d.
national defense
12. Which of the following is not a way for the government to solve the problem of excessive use of common resources?
a.
regulation
b.
taxes
c.
turning the common resource into a public good
d.
turning the common resource into a private good
13. The overuse of a common resource relative to its economically efficient use is called
a.
the free rider problem.
b.
the Tragedy of the Commons.
c.
a public good.
d.
cost-benefit analysis.
14. One economically efficient way to eliminate the Tragedy of the Commons is to
a.
tax the owners of the resource.
b.
prevent anyone from using the resource.
c.
reduce the marginal social benefit of the resource.
d.
establish private ownership of the resource.
15. Which of the following is not a typical solution to the “Tragedy of the Commons?”
a.
taxing the use of the common resource
b.
turning the common resource into a club good
c.
turning the common resource into a private good
d.
regulating the use of the common resource
16. Each of the following is likely to be a successful way for the government to solve the problem of overuse of a
common resource except
a.
regulating the use or consumption of the common resource.
b.
taxing the use or consumption of the common resource.
c.
selling the common resource to a private entity.
d.
asking individuals to voluntarily reduce their use of the resource.
17. Which of the following is most likely to face extinction?
a.
dogs living as pets in households
b.
dairy cows living on farms and producing milk
c.
bald eagles living in zoos
d.
tigers living in the wild
18. Which of the following quotations illustrates the Tragedy of the Commons?
a.
“A bird in the hand is worth two in the bush.”
b.
“The only difference between the rich and other people is that the rich have more money.”
c.
“What is common to many is taken least care of, for all men have greater regard for what is their own than for
what they possess in common with others.”
d.
“Anyone who is not a socialist before he is 30 has no heart; anyone who is still a socialist after he is 30 has no
head.”
19. Which parable describes the problem of wild animals that are hunted to the point of extinction?
a.
Coase theorem
b.
The Tragedy of the Commons
c.
The Wise Woman
d.
The Tortoise and the Hare
20. An overcrowded beach is an example of
a.
a positive externality.
b.
a Tragedy of the Commons.
c.
an environmentally inefficient allocation of resources.
d.
an economically unfair allocation of resources.
21. One way to eliminate the Tragedy of the Commons is to
a.
increase law enforcement in public areas.
b.
limit access to the commons.
c.
increase access to the commons.
d.
decrease taxes.
22. The Tragedy of the Commons results when a good is
a.
rival in consumption and not excludable.
b.
excludable and not rival in consumption.
c.
both rival in consumption and excludable.
d.
neither rival in consumption nor excludable.
23. The Tragedy of the Commons occurs because
a.
common resources are rival in consumption.
b.
government does not efficiently allocate society’s scarce resources.
c.
people consider the value of resources in the future more than in the present.
d.
markets do not account for the presence of property rights.
24. The Tragedy of the Commons occurs because
a.
government property is most heavily used by the wealthy.
b.
everyone deserves an equal share of government property.
c.
social and private incentives differ.
d.
established property rights create competition.
25. The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of
the following except
a.
assigning land property rights.
b.
auctioning off sheep-grazing permits.
c.
taxing sheep flocks.
d.
subsidizing sheep flocks.
26. The Tragedy of the Commons
a.
occurs most often with public goods.
b.
is only applicable to shared grazing rights among sheep herders.
c.
is eliminated when property rights are assigned to individuals.
d.
occurs when social incentives are in line with private incentives.
27. The Tragedy of the Commons can be corrected by
a.
conducting a cost-benefit analysis.
b.
assigning property rights to individuals.
c.
providing government subsidies for the resource.
d.
making certain everyone in the economy has access to the resource.
28. The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to
a destruction of the grazing resource. To correct for this problem, the town could
a.
allow individual shepherds to choose their own flock sizes.
b.
internalize the externality by subsidizing the production of sheep’s wool.
c.
auction off a limited number of sheep-grazing permits.
d.
wait until the market corrects the problem.
29. The parable called the Tragedy of the Commons applies to goods such as
a.
fire protection and cable TV.
b.
tornado sirens and basic research.
c.
clean air and clean water.
d.
antipoverty programs and national defense.
30. In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have
dealt with the problem in much the same way that modern society deals with
a.
fire protection.
b.
poverty.
c.
pollution.
d.
national defense.
31. 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.
32. Three business people meet for lunch at an Indian restaurant. 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.
When the food is delivered to the table, each person faces incentives similar to the
a.
consumption of a common resource good.
b.
production of a public good.
c.
consumption of a club good.
d.
production of a private good.
33. 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
a.
each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect
their individual cost.
b.
there is an externality associated with eating the food on the table.
c.
when one person eats, he may not take into account how his choice affects his friends.
d.
each dish would be both excludable and rival in consumption.
34. A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed
the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following
could solve this example of the Tragedy of the Commons?
a.
The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot.
b.
The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to
willing buyers and reinvests the proceeds into the garden for the next year.
c.
The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the
produce.
d.
Both a and b are possible solutions to this example of the Tragedy of the Commons
35. The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any
farmer with land above the aquifer can at present pump water out of it. We might expect that
a.
over time, the aquifer is likely to be overused.
b.
each farmer has a sufficient incentive to conserve the water.
c.
state governments have an incentive to insure that their farmers do not overuse the water.
d.
resources would be used more efficiently if the government paid for the pumps farmers use to get the water.
36. The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any
farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the
aquifer is correct?
a.
The aquifer is a public good which must be publicly owned to be used efficiently.
b.
The aquifer is a private good which must be privately owned to be used efficiently.
c.
The aquifer is a common resource which will be overused if no one owns it.
d.
The aquifer is a club good which should be left as it is.
37. On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit
or value of picnicking diminishes to zero. An overcrowded picnic area is an example of
a.
a private good.
b.
a club good.
c.
a Tragedy of the Commons.
d.
public good.
38. The degradation of the environment from litter is a
a.
a negative externality.
b.
free rider problem.
c.
Tragedy of the Commons.
d.
Both a and c are correct.
39. The sign on a church in your neighborhood reads “All are welcome at Sunday Service.” Because the church has
limited seating and is usually full, the Sunday Service is
a.
a private good.
b.
a public good.
c.
a club good.
d.
a common resource.
40. A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive
to (1) not toss cigarette butts onto public streets and sidewalks, and (2) pick butts up to redeem them for the cash. The
degradation of the environment from littered cigarette butts is a
a.
private goods problem.
b.
Nash equilibrium.
c.
Tragedy of the Commons.
d.
cost-benefit equilibrium.
41. Which of the following is an example of the Tragedy of the Commons?
a.
The number of professional football teams increases to the point where the quality of the games decreases, as
does television viewership.
b.
The number of satellites increases to the point where they begin running into each other.
c.
Disney World becomes so crowded that it institutes a lottery for admissions.
d.
A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that
visitors can view the cats.
42. Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?
a.
subsidizing basic research
b.
building lighthouses
c.
toll charges on congested roads
d.
cost-benefit analysis
43. Which of the following statements is not correct?
a.
A free rider is a person who benefits from something for which he or she does not have to pay.
b.
The creation of general knowledge is a public good.
c.
The Tragedy of the Commons illustrates the underuse of a common resource.
d.
A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.
44. The Tragedy of the Commons describes
a.
government regulation that is necessary to combat externalities.
b.
overuse of a common resource relative to its economically efficient use.
c.
the nonrivalry feature of a common resource.
d.
an effective cost-benefit analysis.
45. What causes the Tragedy of the Commons?
(i)
Social and private incentives differ.
(ii)
Common resources are not rival in consumption and are not excludable.
(iii)
Common resources are not excludable but are rival in consumption.
a.
(i) only
b.
(ii) only
c.
(i) and (ii) only
d.
(i) and (iii) only
46. A toll on a congested road is in essence
a.
an interstate highway tax.
b.
a Department of Motor Vehicles tax.
c.
a gasoline tax.
d.
a corrective tax.
47. A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy
of the Commons for all of the following reasons except the toll provides an incentive for commuters to
a.
drive at times other than rush hour.
b.
use public transit rather than driving.
c.
drive more fuel-efficient cars.
d.
car-pool.
48. The town of Isle is on a small island connected to Big City by a single bridge. Most of the residents of Isle work in
Big City. As a result, the bridge becomes very congested for 2 hours each day at the typical morning and evening
commute times. Which of the following policies considered by the mayor of Isle would likely be most effective in
alleviating the congestion?
a.
A fixed toll for the bridge payable by every vehicle crossing the bridge at all days and times.
b.
A variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute
times.
c.
Any vehicle crossing the bridge at any time must have a sticker paid for with a one-time fee of $25.
d.
A press conference in which the mayor requests that people try to cross the bridge earlier or later than the
typical commute times.
49. Which city currently charges drivers a “congestion toll” to drive into the heart of the city’s financial, legal, and
entertainment district?
a.
Washington, D.C.
b.
Sydney
c.
Tokyo
d.
London
50. Which of the following is correct regarding road tolls as a way to reduce traffic?
a.
They can vary based on the amount of traffic that is present.
b.
They reduce drivers’ explicit cost of driving but increase drivers’ implicit cost.
c.
Some drivers can be made better off, but some drivers will inevitably made worse off.
d.
They are the solution to the free rider problem that occurs on roads.
51. Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?
a.
reduced travel time during peak hours
b.
reduced need for public transportation
c.
improved environmental quality