Question 1

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.

Accepted Answer

Since any farmer with land above the aquifer can pump water out of it, there is no limit on how much water can be extracted. This could lead to overuse, especially if farmers prioritize their current needs over long-term sustainability.

Question 2

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

Accepted Answer

London is the only city in the given options that charges drivers a congestion charge to enter the city center. This charge is aimed at reducing traffic congestion and improving air quality in the heart of the city's financial, legal, and entertainment district.

Question 3

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.

Accepted Answer

The Ogallala aquifer is a common resource, meaning that it is owned by no one in particular and can be accessed by anyone. However, since it is a finite resource, it is subject to the tragedy of the commons, where individuals will overuse the resource in order to maximize their individual benefit. In order to prevent overuse and depletion of the aquifer, some form of ownership or regulation is necessary.

Question 4

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.

Accepted Answer

The tragedy of the commons occurs when a shared resource, such as space in Earth's orbit for satellites, is overused and eventually depleted or damaged. As more and more satellites are launched, the likelihood of collisions and other negative impacts increases, leading to the tragedy of the commons. The other options provided are not examples of the tragedy of the commons as they do not involve overuse or depletion of a shared resource.

Question 5

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.

Accepted Answer

The answer of Which of the following is correct regarding...

Question 6

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.

Accepted Answer

The answer of The sign on a church in your...

Question 7

A tax on gasoline often reduces road congestion because gasoline
A)and driving are complements.
B)and driving are substitutes.
C)is a normal good, while driving is an inferior good.
D)is an inferior good, while driving is a normal good.

Accepted Answer

The answer of A tax on gasoline often reduces road...

Question 8

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.

Accepted Answer

A toll on a congested road is a corrective tax, as it is designed to discourage people from driving on the road during peak hours when traffic is heavy. The toll is higher during these times as a way to incentivize drivers to use alternative routes or travel at different times. It is not an interstate highway tax, a Department of Motor Vehicles tax, or a gasoline tax, as these taxes are collected for different purposes.

Question 9

Variable tolls on roads
A)are politically unpopular because people do not like the idea of paying for a good that they used to consume without paying for it directly.
B)rise when traffic volume increases to ensure the speed on the road is kept high.
C)are an effective way of correcting the common resource problem on roads.
D)All of the above are correct.

Accepted Answer

The answer of Variable tolls on roads
A)are politically unpopular because...

Question 10

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.

Accepted Answer

The answer of A toll collected from each car traveling...

Question 11

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
D)improved valuation of a common resource

Accepted Answer

Congestion charges are intended to reduce the number of cars on busy streets, so the option of reduced need for public transportation is not an advantage as it conflicts with the purpose of the charges. The other options (A, C, and D) are all advantages of congestion charges.

Question 12

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.

Accepted Answer

Option B, a variable toll for the bridge payable only by vehicles crossing the bridge during the congested commute times, would likely be the most effective policy in alleviating congestion. By charging a higher fee during peak hours, drivers have a financial incentive to adjust their departure time and avoid the congestion. Options A and C may discourage some drivers, but a fixed toll or a one-time fee would not necessarily alleviate congestion during peak hours. Option D relies on appeal to citizens, which might not be effective.

Question 13

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.

Accepted Answer

An overcrowded picnic area is an example of the Tragedy of the Commons, which occurs when a shared resource is overused and depleted because individuals prioritize their own self-interest over the common good. In this case, the picnic area is a common resource that is being used by too many people, causing it to become overcrowded and less enjoyable for everyone. This is a classic example of the Tragedy of the Commons. A private good would be something like a sandwich that only one person can consume, a club good would be something like a private golf course accessible to members only, and a public good would be something like clean air that benefits everyone regardless of who uses it.

Question 14

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.

Accepted Answer

The degradation of the environment from littered cigarette butts is an example of the Tragedy of the Commons, which occurs when individuals overuse or exploit common resources (in this case, public spaces) for their own benefit, leading to environmental degradation. The proposed deposit on cigarette butts aims to address this issue by creating a financial incentive for individuals to take responsibility for their cigarette butt disposal and prevent further degradation of the environment.

Question 15

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.

Accepted Answer

The degradation of the environment from litter is both a negative externality and an example of the Tragedy of the Commons. It is a negative externality because the costs from the litter (such as cleaning it up or damage to the environment) are not directly borne by those who produce the litter, but by society as a whole. It is also an example of the Tragedy of the Commons because the environment is a shared resource, and individuals have little incentive to take responsibility for their own litter, leading to the overuse and degradation of the resource.

Question 16

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

Accepted Answer

The answer of What causes the Tragedy of the Commons?
(i)Social...

Question 17

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

Accepted Answer

Toll charges on congested roads are an example of government intervention to solve a Tragedy of the Commons problem. In this situation, too many people are using a common resource (the road) without paying for the cost that their use imposes on others (congestion). By imposing a toll, the government can reduce the number of people using the road to a sustainable level and generate revenue to be used for maintenance and improvement. Subsidizing basic research, building lighthouses, and cost-benefit analysis are not directly related to solving a Tragedy of the Commons problem.

Question 18

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.

Accepted Answer

The Tragedy of the Commons is the overuse of a common resource relative to its economically efficient use, which results in depletion or degradation of the resource over time. This concept highlights the need for government intervention or collective action in managing and regulating the use of common resources. Choice A is related to externalities, while the Tragedy of the Commons is focused on the overuse of resources. Choice C describes the nonrivalry feature of a common resource, while the Tragedy of the Commons is concerned with the negative consequences of overuse. Choice D is related to cost-benefit analysis, which is not directly related to the Tragedy of the Commons.

Question 19

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?
A)Both the American drivers and the Soviet shoppers are consuming products at prices that do not represent the full costs of the products.
B)Both the American drivers and the Soviet shoppers can purchase as much as they want at the market price.
C)Both the American drivers and the Soviet shoppers could avoid waiting if the prices were lowered.
D)American drivers and Soviet shoppers have nothing in common.

Accepted Answer

Both the American drivers and Soviet shoppers are experiencing a form of market failure where they are consuming products or services (e.g. road space, clothing) at prices that do not reflect the full cost of producing those goods or services. American drivers benefit from using roads without paying for externalities like pollution and congestion, while Soviet shoppers benefit from buying goods at artificially low prices due to the centralized planning of the Soviet economy.

Question 20

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.

Accepted Answer

The Tragedy of the Commons actually illustrates the overuse and depletion of a common resource due to individuals' self-interested behavior.

Quiz 11: Public Goods and Common Resources

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

Which city currently charges drivers a "congestion toll" to drive into the heart of the city's financial, legal, and entertainment district?

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?

Which of the following is an example of the Tragedy of the Commons?

Which of the following is correct regarding road tolls as a way to reduce traffic?

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 tax on gasoline often reduces road congestion because gasoline

A toll on a congested road is in essence

Variable tolls on roads

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

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

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

The degradation of the environment from litter is a

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.

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?

The Tragedy of the Commons describes

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Which of the following statements is not correct?