ECON 232 During the Holy Roman Empire, Germany’s Rhine River

| June 14, 2018

Name: __________________________ Date: _____________1. During the Holy Roman Empire, Germany’s Rhine River was a major trade artery (andprovided tax revenue). The numerous castles along the Rhine were toll stations, withmost merchants having to travel sizable lengths of the river to arrive at their destination.Although the Emperors closely guarded the right to charge a toll, local nobility wouldoccasionally break the law and build a castle along the Rhine to charge a toll (hence theorigin of the phrase, “robber baron”). When possible, such “robber castles” weredestroyed to prevent the tragedy of the commons. What is the commons resource here?A) toll revenueB) tradeC) castlesD) the Rhine2. The lionfish is an invasive species from the Indo-Pacific, now also found in the EastCoast of the United States and in the Caribbean. An exceptional predator thatreproduces year round, the lionfish has wreaked havoc on the natural ecosystem with apopulation more than 10 times higher than in its native environment. With a populationso high, it is unlikely the extermination practices of any one person, or even any oneorganization could eliminate them, though eliminating them would benefit everyone.Therefore, the National Oceanic and Atmospheric Administration (NOAA) launched acampaign highlighting how tasty lionfish are and presenting instructions on how to cookthem. The NOAA’s approach to solving this problem is best described as using theeconomics of:A) public goods to solve nonexcludable goods.B) private goods to solve the tragedy of the commons.C) private goods to solve a public goods free riding problem.D) commons resources to solve forced riding.3. Voting and other democratic procedures:I. provide information about an individual’s preferences for public goods.II. result in an efficient allocation of resources.III. result in the government underproducing public goods, just like the market would.A) I and II onlyB) I and III onlyC) III onlyD) I onlyPage 14. Small tribes may be able to solve the tragedy of the commons by:A) subsidizing the activity that creates the tragedy.B) using social norms to punish and ostracize those that overuse a common resource.C) setting price controls below the equilibrium price to clear the market.D) All of the answers are correct.5. Markets tend to be inefficient when it comes to public goods because:A) the government tends to overproduce the good.B) free riders lead to an underproduction of the good.C) the rival nature of the good makes it hard to collect payment from consumers.D) consumers tend to value these goods less than private goods.6. Which of the following scenarios describes how a tragedy of the commons problemoccurs?A) A radio station goes out of service because it cannot raise enough money fromadvertising.B) Illegal immigrants who do not pay taxes benefit from tax-funded school systems.C) Farmers harvest deer out of season rather than pay the high price of beef.D) The establishment of tradable pollution allowances helps reduce pollution.Use the following to answer question 7:Table: Types of GoodsExcludableNonexcludable13RivalNonrival247. (Table: Types of Goods) Refer to the table. Which of the following statements isTRUE?I. Section 1 may contain fruit, chicken, and underwear.II. Section 2 may contain fish in the ocean, public roads, and public hunting grounds.III. Section 3 may contain Wi-Fi, cable TV, and digital music.IV. Section 4 may contain asteroid deflection, national defense, and radio.A) I, II, and IVB) III and IVC) II onlyD) I, II, III, and IVPage 28. State highways are an example of a:A) private good.B) public good.C) common resource.D) nonrival private good.9. The tragedy of the commons occurs when a good is:A) rival in consumption and excludable.B) rival in consumption and not excludable.C) not rival in consumption and excludable.D) neither rival in consumption nor excludable.10. Which of the following is an example of the tragedy of the commons?A) Tuna in the ocean are being over harvested because it is difficult to prevent anyonefrom fishing for tuna.B) Personal computers have become a commonplace appliance in many homes,causing an expedited tragedy of technology.C) There is an increasing threat to wildlife due to habitat loss in national forests.D) Television’s popularity has become a common tragedy in our society.11. The tragedy of the commons refers to the:A) underproduction of public goods in economic markets.B) underproduction of a common good.C) overuse of a nonrival and nonexcludable good.D) overuse of a rival but nonexcludable good.12. A common resource is:A) likely to be overutilized.B) a good that, when used by one person, leaves less for everyone else.C) rival but nonexcludable.D) All of the answers are correct.13. Which of the following examples specifies the cause of the tragedy of the common?A) People like to eat chicken so demand for chicken has significantly increased.B) The supply of chicken is plentiful, causing the profit margin of selling chicken todecrease.C) Tuna in the ocean are not privately owned so fishermen have an incentive tooverfish.D) The supply of tuna is rare, creating high profit margins and incentives forfishermen to underfish tuna.Page 314. Which of the following is a list of private goods only?A) a watermelon, toll highways, a private beach, a chairB) a watermelon, cable Internet service, a private beach, a pencil, a chairC) a watermelon, a chair, a pencilD) online video games, a watermelon, a private beach, a pencil, a chair15. The incentive to dedicate private resources to maintaining a common resource is lowbecause:A) there is no benefit from maintenance of a common resource.B) entrepreneurs have not found a way to profit from common resources.C) the benefits of maintenance are external, not private benefits.D) maintenance is very expensive.16. Protection provided by the ozone layer is a:A) private good.B) public good.C) common resource.D) nonrival private good.Use the following to answer question 17:Table: Types of GoodsExcludableNonexcludable13RivalNonrival2417. (Table: Types of Goods) Refer to the table. Which of the following statements isTRUE?A) Section 1 includes national defense.B) Section 2 includes a can of soda.C) Section 3 includes cable TV.D) Section 4 includes an MP3 song.Page 418. What quantity of public goods should the government produce?A) the quantity that maximizes the sum of producer and consumer surplusB) the quantity where consumer surplus is maximizedC) the quantity where consumer surplus is maximized and producer surplus isminimizedD) the quantity where the total benefits equal the total costs19. Goods that are not excludable include both:A) common resources and public goods.B) private and public goods.C) natural monopolies and common resources.D) only public goods, since no other goods are not excludable.20. In the long run, individual transferable quotas ______ the fishing catch in New Zealand.A) decreasedB) did not affectC) increasedD) had an indeterminate effect upon21. Most nonrival private goods are priced ______ marginal cost.A) aboveB) belowC) atD) indeterminately compared with22. Individual transferable quotas (ITQs) are like a ________, allowing ________.A) subsidy; the internal benefit of fishing to be externalizedB) corrective tax; fishermen a tax write-off for capital purchasesC) permit; fishermen the right to catch a limited number of fishD) cartel; fisherman to raise market prices by limiting competition23. Which of the following scenarios best describes a tragedy of the commons problem?A) Neighborhood residents discover strawberry plants in the flower beds at the citypark.B) Illegal immigrants who do not pay taxes benefit from tax-funded police patrols.C) Pacifists become forced riders in tax hikes to fund national defense plans.D) There is overcrowding on otherwise nice public beaches.Page 524. Which of the following is a list of nonexcludable, nonrival only?A) national defense, a lighthouse, smog reductionB) a public beach, soup kitchen meals, public roadsC) online video games, a public beach, national defense, a lighthouseD) a public beach, a lighthouse, toll highways, public roads25. Goods that are rival in consumption include both:A) public goods and common resources.B) common resources and natural monopolies.C) common resources and private goods.D) public goods and private goods.26. Which of the following is a list of rival, excludable goods only?A) a watermelon, toll highways, a private beach, a chairB) a watermelon, cable Internet service, a private beach, a pencil, a chairC) a watermelon, a chair, a pencilD) online video games, a watermelon, a private beach, a pencil, a chair27. During the Middle Ages, many villages had areas reserved for families to take theircows or sheep to graze. All families were welcome to use this land without charge. Theland for grazing can be characterized as a:A) public good.B) private good.C) natural resource.D) common resource.28. Which of the following is a list of public goods only?A) a public beach, soup kitchen meals, public roadsB) online video games, a public beach, national defense, a lighthouseC) a public beach, a lighthouse, toll highways, public roadsD) national defense, a lighthouse, smog reduction29. Google provides a(n) ________ good but uses advertising to make its good ________.A) excludable; nonexcludableB) common; more scarceC) nonexcludable; excludableD) public; privatePage 630. Which of the following statements is TRUE?I. In order for society to have a sufficient level of national defense, the government musttax the public to raise funds for a standing army.II. For every 100 people that use a public good, approximately 500 people are preventedfrom using it.III. People do not have an incentive to voluntarily pay for nonexcludable goods.A) I and II onlyB) III onlyC) I and III onlyD) I, II, and III31. Which of the following statements is TRUE?A) A forced rider is someone who helps pay for a public good but doesn’t get anybenefit from it.B) Public schooling is a private good.C) Public goods should be produced up to the point where consumer surplus equalsproducer surplus.D) The government cannot produce private goods.32. Which of the following is rival and NOT excludable?A) cable TVB) lobsters in the oceanC) national defenseD) clothing33. Tuna in the ocean is a common resource because:A) it is difficult to prevent people from fishing in the ocean and every time someonecatches tuna there is less tuna for someone else.B) all tuna are identical (i.e., a homogenous good) and sold in competitive markets.C) there is an abundance of tuna and no one fisherman can affect the marketequilibrium output.D) None of the answers is correct.34. Digital music is an example of a:A) private goodB) public good.C) common resource.D) nonrival private good.Page 735. Toilet paper is a rival good because:A) there is a lot of competition in the toilet paper market.B) it is a substitute good for a bidet.C) one person’s use of toilet paper reduces the ability of another person to use thesame sheets.D) it is made from natural resources.36. If a consumer could pay $100 for a new pair of jeans or $100 toward asteroid deflection,what would that consumer likely choose?I. purchase the jeansII. purchase asteroid deflectionIII. purchase both the jeans and asteroid deflectionA) I onlyB) II onlyC) III onlyD) I and II only37. Mosquito control must be provided by the government because if:A) a lot of people free ride then mosquito control would be overprovided by themarket.B) a lot of people free ride then mosquito control would be underprovided by themarket.C) only few people are benefited then mosquito control would be overprovided by themarket.D) only few people are benefited then mosquito control would be underprovided bythe market.38. Asteroid defense is likely to be ______ by the market because ______.A) efficiently provided; there are low transaction costs to collecting the operationalfunding, as suggested by the Coase theorem.B) overprovided; of the market power of the military-industrial complex.C) either overprovided or underprovided; it is a common good.D) underprovided; there is an incentive to free ride.39. When it comes to national defense, antiwar protesters are:A) latent payers.B) reserved funders.C) forced riders.D) free riders.Page 840. The tragedy of the commons is the tendency for any good which is:A) rival and excludable to be underused and overmaintained.B) nonrival and nonexcludable to be underused and overmaintained.C) rival and nonexcludable to be overused and undermaintained.D) nonrival and excludable to be overused and undermaintained.

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