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ECON 528: ECONOMICS / ECON 528 FINAL EXAM
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ECON 528: ECONOMICS / ECON 528 FINAL EXAM|ECON 528: ECONOMICS / ECON 528 FINAL EXAM
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ECON 528 FINAL EXAMMr. Leghorn lives next door to Mr. Fudd. During hunting season, Mr. Fudd likes to shoot rabbits
in his backyard, which activity he values at $900. The noise from the shooting disturbs Mr.
Leghorn and prevents him from taking afternoon naps, which he values at $500. If Mr. Leghorn
has the legal right to stop Mr. Fudd from hunting, the socially optimal outcome is for:
Select one:
a. Mr. Fudd to pay Mr. Leghorn less than $500 to continue hunting
b. Mr. Fudd to pay Mr. Leghorn between $500 and $900 to continue hunting
c. Mr. Fudd to stop hunting
d. Mr. Leghorn to pay $500 or less to get Mr. Fudd to stop hunting
Which of the following statements is (are) TRUE?
I.
Public goods tend to be underprovided.
II.
One person's consumption of a public good diminishes its use to another person.
III.
The marginal cost of providing a public good to another consumer is infinite.
Select one:
a. I and III
b. II and III
c. I, II, and III
d. I
Which of the following is a source of market failure?
Select one:
a. incomplete property rights or inability to enforce property rights
b. unforeseen circumstances which leads to the bankruptcy of many firms
c. a lack of government intervention in a market
, d. an inequitable income distribution
Which of the following activities create a negative externality?
Select one:
a. keeping a junked car parked on your front lawn
b. cleaning up the sidewalk on your block
c. repainting the house you live in to improve its appearance
d. graduating from college
In the city of Alvarez, with the exception of guide dogs for blind people, all dogs are banned
from its three public parks, regardless of whether the animals are leashed. Many residents are
pushing for a change in policy. Canine lover Sara Northridge observed, "There are 800 or more
homes here. There are three parks within 10 minutes, and almost everyone has a dog, but we
can't take our dogs there." Others fear that allowing dogs would detract from their enjoyment
of the parks. Tim Cortis retorted, "We're not preventing dog lovers from enjoying the park, just
come without your dog." Which of the following is a way of dealing with the problem by
assigning property rights to a particular group?
Select one:
a. dedicate some parks, or at least one park, exclusively for the use of visitors bringing dogs
to the park
b. impose a two-tier entry fee system - a lower fee for non-dog owners and a higher fee for dog
owners
c. impose a fee only for dog-owners to use the public parks; non dog owners do not pay a fee
d. allow dog owners to bring their dogs to the park but insist that they keep watch over their
dogs
Which of the following criteria should be used to evaluate if government intervention in a
market for the purpose of environmental protection is justified?
Select one:
a. Is the intervention program economically efficient?
b. Is the damage to the environment from government intervention as small as possible?
c. Does the intervention program make the amount of economic surplus as large as possible?
d. Does the intervention program reduce pollution to zero using the least costly method?
In economics, the term "free rider" refers to
Select one:
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