Chapter 11 Quiz
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. Goods that are not excludable include both
a. private goods and public goods.
b. club goods and common resources.
c. common resources and public goods.
d. private goods and club goods.
2. Reggie owns 3 acres of beautiful wooded land. When Reggie decides to move to be closer to his
grandchildren, he donates the land to the state with the understanding that the land will be used as a state park.
This state park is large enough that it is not congested. It is an example of a good that is
a. both rival in consumption and excludable.
b. neither rival in consumption nor excludable.
c. nonrival in consumption and excludable.
d. rival in consumption and nonexcludable.
3. Under which of the following scenarios would a park be considered a common resource?
a. Visitors to the park must pay an admittance fee, but there are always plenty of empty
picnic tables.
b. Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in
use.
c. Visitors can enter the park free of charge and there are always plenty of empty picnic
tables.
d. Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.
4. Consider a public road that anyone is allowed to drive on. If the road is often congested, the road would be
considered a
a. private good.
b. club good.
c. common resource.
d. public good.
5. 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
6. Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people
are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking on summer afternoons.
Otherwise, it is a great place. An efficient solution to the parking problem would be to
a. prohibit parking in the vicinity of the park.
b. charge higher prices for parking at busy times.
c. police the parking area and ticket cars that are parked illegally.
d. do nothing.
Figure 11-1
Rival in Consumption?
Yes
No
Yes
A
B
No
C
D
Excludable?
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7. Refer to Figure 11-1. The box labeled A represents
a. private goods.
b. club goods.
c. common resources.
d. public goods.
____ 8. A city street is
a. always a public good, whether or not it is congested.
b. a public good when it is congested, but it is a common resource when it is not congested.
c. a common resource when it is congested, but it is a public good when it is not congested.
d. always a common resource, whether or not it is congested.
____ 9. On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times,
electric companies may ask people to voluntarily cut back on their use of electricity. An economist would
suggest that
a. every electric customer has an incentive to prevent the system from overloading, so this
voluntary approach is the most efficient.
b. it would be more efficient if the electric company raised its rates for electricity at peak
times.
c. it would be more efficient to have a lottery to decide who had to cut back their use of
electricity at peak times.
d. it would be more efficient to force everyone to cut their usage of electricity by the same
amount.
____ 10. Markets fail to allocate resources efficiently when
a. prices fluctuate.
b. people who have property rights abuse their privileges.
c. property rights are not well established.
d. the government refuses to intervene in private markets.