Final Exam Microeconomics Principles Fall 2017 LTIPLE CHOICE. Choose the 1) Poll

Question

Final Exam Microeconomics Principles Fall 2017 LTIPLE CHOICE. Choose the 1) Pollution is an example of a A) negative externality 1) B) public good. D) positive externality C) private cost. 2) Which of the following is an example of a positive externality? 2) A) permitting smoking on commercial airplanes B) a police department stops enforcing DUI laws C) raising the speed limit to 60 mph in school zones D) planting trees along a sidewalk which add beauty and create shade 3) A product is considered to be rival if 3) A) you can keep those who did not pay for the item from enjoying its benefits. B) your consumption of the product reduces the quantity available for others to consume. C) it is jointly owned by all members of a community. D) you cannot keep those who did not pay for the item from enjoying its benefits. 4) A product is considered to be nonexcludable if A) you cannot keep those who did not pay for the item from enjoying its benefits B) it is jointly owned by all members of a community C) your consumption of the product reduces the quantity available for others to consume. D) you can keep those who did not pay for the item from enjoying its benefits. 5) Which of the following displays these two characteristics: nonrivalry and nonexcludability in 5) A) public goods C) quasi-public goods B) private goods D) common resources 6) Which of the following displays these two characteristics: rivalry and nonexcludability? 6) A) a public good C) a quasi-public good B) a common resource D) a private good 7) 7) Common resources differ from public goods in that A) common resources are resources that cannot be renewed but the production of public goods can be increased any time. B) common resources are non-excludable while public goods are excludable to those who do not pay for the good. C) common resources are collectively owned by a group of people while public goods are government owned D) unlike public goods, common resources are rival in consumption. 8) In economics, the term free rider" refers to A) one who waits for others to produce a good and then enjoys its benefits without paying for it. B) one who volunteers her services a supervisor who delegates menial time-consu ming activities to others

Explanation / Answer

Ans1) A is the correct option. Negative externality. negative externality is a cost that is suffered by a third party as a result of an economic transaction.

Ans2) D is the correct option. Planting tress along sidewalk which add beauty and create shade. A positive externality is a benefit that is enjoyed by a third-party as a result of an economic transaction.

Ans3) B is the correct option. Your consumption of the product reduces the quantity availabile for others to consume. A rival good is a good when its consumption by one consumer prevents simultaneous consumption by other consumers.

Ans4) A is the correct option. You Cannot keep those who did not pay for the item from enjoying the benefits. good or service is non-excludable if non paying consumers cannot be prevented from accessing it.

Ans5) A is the correct option. Public goods. A public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Ans6) B is the correct option. A common resource. Common resource is a good which is rival but non excludable meaning consumption of a good by one person decreases the consumption for others but people can't be excluded by deriving the benefits

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