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Chapter 8.5
Economics
| Question | Answer |
|---|---|
| Goods can be classified on the basis of whether their consumption is | rival and excludable |
| ________ is an example of a common pool resource | Water |
| Which of the following displays these two characteristics: rivalry and nonexcludability? | A common resource |
| product is considered to be nonexcludable if | you cannot keep those who did not pay for the item from enjoying its benefits. |
| A good is non-rival in consumption if ________. | one person's use of the good does not preclude consumption by others |
| In economics, the term "free rider" refers to | one who waits for others to produce a good and then enjoys its benefits without paying for it. |
| Which of the following is an example of a quasi-public good? | Cable Television |
| Space on a popular, public beach is ________ in consumption | non-excludable but rival |
| Which of the following displays these two characteristics: nonrivalry and excludability? | quasi-public goods |
| Which of the following is an example of a public good? | A radio broadcast |
| Private producers have no incentive to provide public goods because | once produced, it will not be possible to exclude those who do not pay for the good |
| The social benefit of a given level of a public good is the vertical sum of all private benefits for that level. | True |
| For-profit producers will produce only private goods because | buyers will be willing to pay for the goods since the benefits are excludable |
| How does the construction of a market demand curve for a private good differ from that for a public good? | The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quant. |
| One difference between the demand for a private good and that for a public good is that | with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity |
| The "tragedy of the commons" refers to the phenomenon where | people overuse a common resource. |
| Haiti was once a heavily forested country. Today, 80 percent of Haiti's forests have been cut down, primarily to be burned to create charcoal. The reduction in the number of trees has lead to devastating floods when it rains heavily. This is an example of | the tragedy of the commons |
| Which of the following is an example of a common resource? | sea otters in the coastal waters of the Pacific Ocean |
| A green pasture has turned barren due to overgrazing. This happened because the pasture was ________. | non-excludable but rival |
| A retired athlete built a gym near his house that could be used for free by all the residents in the neighborhood. However, the overuse of the facilities soon led to irreparable damages. This is an example of the ________. | tragedy of the commons |
| Which of the following exemplifies the tragedy of the commons? | The Malaysian tapir, distinguished for its unusual coloration, is a target for poachers who hunt it for its tough and leathery hide |
| Which of the following is an example of a common resource | elephants in the wild |
| Overfishing leading to a rapid depletion of the stock of fish is an example of ________. | the tragedy of the commons |
| tragedy of the commons occurs when a resource is | rival and non-excludable. |
| each village had an area of pasture on which any family in the village was allowed to graze its cows and sheep without charge. Eventually, the grass in the pasture would be depleted and no family's cow or sheep would get enough to eat | the area of pasture was nonexcludable and the consumption of the grass was rival. |
| The government can be relied on to efficiently solve problems associated with pollution through (Pigovian) taxes. | False |
| The best solution to water pollution is to make the responsible people clean the water and return it to its natural state. | False |
| One problem with using taxes to solve economic externalities is that politicians may spend the money on things they like, rather than things their constituents want | True |
| The possibility of “government failures” should be evaluated before getting the government involved in addressing “market failures.” | True |
| Key limitations on the government correcting “market failures” include: | Information Misaligned incentives between the government and citizens The incentive of the government to tax and spend to help politicians get elected or re-elected. |
| Beginning in the 1950s economists began to investigate incentives within government. They found that: | One should be cautious in calling on the government to improve economic performance |
| The central question In trying to determine whether to involve the government in an economic issue is | Determining whether or not the government can be relied on to make things better |
| The key problem(s) with externalities is that | Private costs do not equal social costs. Private benefits do not equal social benefits |
| Sewage treatment is an example of | An externality |
| The point of the video is that the government can seldom enhance economic efficiency | False |
| According to the video, the government should ban smoking in restaurants because of the diseases caused by passive smoking | False |
| The social problem of smoking in restaurants is caused because smokers want to pollute the air, causing harm to people around them | False |
| The social problem of smoking in restaurants because smokers and nonsmokers want to use the air in different ways | True |
| The key to solving problems associated with smoking in restaurants is to | Assign property rights to restaurant owners. |
| Restaurant owners have an incentive to | Fully account for the value impact of restaurant smoking on nonsmokers. Fully account for the value of restaurant smoking to smokers. Take into account how smoking shifts the overall demand curve for restaurant meals |
| Banning smoking in restaurants is clearly economically efficient because passive smoke is harmful | False |
| According to the video, W. Kip Viscusi studied tobacco smoking and concluded that | None of the above |
| According to the video, the key to Viscusi’s findings about the net impact of smoking on healthcare costs is that | People who smoke need more medical care, but they also (unfortunately) tend to die younger, and that creates an offsetting reduction in health care costs |
| A key advantage of assigning property rights to owners of restaurants is that | Smokers and nonsmokers are likely to be able to eat meals the way they like |
| The net effect of smoking in a restaurant is to | It depends - there is no general answer |
| Recycling is not an economic problem because there is only so much land on Earth | False |
| Recycling is an economic problem because the land is substantially damaged by the creation of garbage dumps | False |
| To evaluate recycling, you must consider | The demand for recycled products, The incremental costs to society for recycling products, The value of the land used for landfills |
| The opportunity cost of using land for a landfill is determined by | The value of the land before the landfill was developed, minus the cost of the land after the landfill is full |
| The appropriate charge for trash disposal should be set by | The opportunity cost of using the landfill, The cost of the trucks and labor needed to haul trash away |
| The economically efficient amount of recycling will occur if | Recyclers pay the full cost of picking up recycled products |
| The use of landfills means the land will lose all its value for subsequent use | False |
| Economics shows that it is inefficient to recycle plastic bottles because they have little value | False |
| The video indicated that there is a significant difference between recycling fluorescent lights and plastic bottles | True |
| Recycling is an economic issue because the goods that are recycled, the land for landfills, and the trucks and labor needed for both recycling and trash disposal are all examples of scarce resources | True |
| Which of the following statements refers to rent seeking? | "Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws." |
| Which of the following is not an example of rent-seeking behavior? | engaging in aggressive advertising that slams a competitor's product |
| The public choice model assumes that government policymakers | are likely to pursue their own self-interests, even if their self-interests conflict with the public interest |
| Rent-seeking behavior, unlike profit-maximizing behavior in competitive markets, wastes society's scarce resources | True |
| Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are | examples of rent seeking |
| The U.S. government has imposed quotas on the importation of sugar that makes sugar prices higher because | Sugar farmers lobbied for regulation that would increase their profits by limiting competition |
| Economists often analyze the interaction of individuals and firms in markets. Also examine the actions of individuals and firms as they attempt to use government to make themselves better off at the expense of others, a process that is referred to as | Rent Seeking |
| What is regulatory capture? | It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest |
| Megan McArdle argues that regulatory capture happens for all of the following reasons except | Regulators want the regulated industry to spend a lot of time and effort on compliance |
| According to public choice theory, policymakers | are likely to pursue their own self-interest, even if their self-interest conflicts with the public interest |
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annalise123