The Tragedy of the Commons is a parable that illustrates why?

common resources are overconsumed

private goods are under consumed

natural monopolies overproduce goods.

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ?

that prices are not low enough so firms over produce

that prices are not high enough, so people overconsume

that property rights have not been well established

In the West Women and non-whites on average receive lower incomes than white men because ?

they tend to work in relatively unskilled jobs

firms are reluctant to invest in training

A free rider is a person who ?

pays for a good but fails to receive any benefit from the good

receives the benefits of a good but avoids paying for it.

pays for a good but fails to receive any benefit from the good

fails to produce goods but is allowed to consume goods.

produces a good but fails to receive payment for the good

The marginal revenue product of capital is the ?

change in company’s share price

change in a company’s balance sheet when it acquires new plant

additional value of output from using more capital

change in company’s share price

changing value of the capital stock

By restricting labor supply a trade union can _____ and _______?

maintain the wage, lower employment

increase the wage, increase employment

maintain the wage, increase employment

increase the wage, lower employment

maintain the wage, lower employment

Skilled labor is relatively scarce because ?

teachers’ salaries are too low

too few student places in higher education

it is costly to acquire human capital

teachers’ salaries are too low

Unions achieve a higher wage differential the more _____ and the more ______?

members they have, aggressive they behave

inelastic the demand for labour, they can restrict the supply of labour

members they have, aggressive they behave

the economy is growing, people prefer leisure

the productivity is growing vacancies exist

Top footballers tend to earn more than lecturers because ?

footballers give more entertainment

the labor markets are imperfect

top footballers are relatively scarce in relation to lecturers

According to the signaling view of the education ?

reduces the wage gap between high-skill and low-skill workers.

can make any worker into a superstar

increases human capital and the wages of workers

only helps firms sort workers into high ability and low-ability workers

reduces the wage gap between high-skill and low-skill workers.

Competitive markets tend to ?

increase labour market discrimination because bigoted employers can charge any price they want in a competitive market to cover the cost of their disc

Increase labor market discrimination because some workers can charge more for their services than other workers in a competitive market

have no impact on labour market discrimination

reduce labour market discrimination because non-discrimination firms will employ cheaper labour earn more profits and drive discriminating firms out o

increase labour market discrimination because bigoted employers can charge any price they want in a competitive market to cover the cost of their disc

The opportunity cost of acquiring education is ?

Course fees living expenses and textbook

course fees and living expenses

Course fees living expenses and textbook

Human capital can be described as ?

the tools used by workers to enhance productivity

the stock of expertise accumulated by a worker

Involuntary unemployment exists if workers ?

will not work because the hours are anti-social

will not work at the offered wage

would work at the going wage but can’t find jobs

will not work because the hours are anti-social

Are not prepared to move house to get the job

The value of an asset depends upon ?

the present value of the future stream of income it can earn

The difference between gross investment and net investment is ?

depreciation of the existing capital stock

If workers get a real wage increase this will likely ____ and _____?

encourage the use of less capital, reduce demand for all inputs

encourage the use of more capital in the long run, reduce demand for all inputs

encourage the use of more capital increase demand for all inputs

encourage the use of less capital reduce demand for all inputs

encourage the use of less capital, reduce demand for all inputs

A profit-maximizing firm will hire labour until _____ equals the _______?

marginal revenue, marginal cost

long run marginal revenue, long run marginal cost

labor output ratio, capital output ratio

marginal cost of labor, marginal revenue product

Which of the following professionals is most likely to be able to generate the income of a superstar ?

All of these answers participate in markets that could generate a superstar

According to the human capital view of education ?

can make any worker into a superstar

has no impact on the human capital of workers?

increases human capital and the wages of workers

can make any worker into a superstar

only helps firms sort workers into high ability and low-ability workers.

Suppose each of 20 neighbours on street values street repairs at €3000 the cost of the street repair is €40,000 which of the following statements is true ?

It is efficient for each neighbour to pay €3,000 to repair the section of street in front of his/her home

it is efficient for the government to tax the resident €2,000 each and repair the road

It is efficient for each neighbour to pay €3,000 to repair the section of street in front of his/her home

it is not efficient to have the street repaired

In order for a market to support superstars it must have which of the following characteristics ?

It must be involved in professional athletics

Every customer must be indifferent to the price they pay, and the seller must be a competitor in the market for the product

Every customer must be willing to pay an enormous amount for the product and the product must be a necessity

Every customer must want the good supplied by the best producer and the technology must exist for the best producer to supply every customer at low co

Which of the following is true regarding the earning of attractive versus unattractive workers ?

Attractive people tend to earn more because attractive people usually have greater human capital

Attractive people tend to earn less because attractive people are viewed as shallow and more self-absorbed and therefore, as less productive

Attractive people tend to earn more because they may actually have a larger value of marginal product

Attractive people tend to earn more because attractive people usually have greater human capital

Attractive people tend to earn less because attractive people usually have less human capital

Which of the following explanations of wage differentials is not likely to be true ?

Men have more job experience than women

Men have more human capital than women

Employers in competitive markets are bigots

Men have more job experience than women

If one person’s consumption of a good diminishes other people’s use of the good, the good is said to be ?

a good produced by a natural monopoly

When government employ cost-benefit analysis to help them decide whether to provide a public good, measuring benefits is difficult because ?

there are no benefits to the public since a public good is not excludable

the benefits are infinite because a public good is not rival and an infinite amount of people can consume it at the same time

one can never place a value on human life or the environment

respondents to naires have little incentive to tell the truth.

Which of the following are potential solutions to the problem of air pollution?

Grant right of the clean air to citizens so that firms must purchase the right to pollute

Auctions off pollution permits.

Regulate the amount of pollutants that firms can put in the air

Which of the following is an example of a public good ?

apples on a tree in a public park

Different capital intensity in different industries is mainly explained by _______ and ________?

government grants, international competition

wage differentials, skill levels

technology, the ease of factor substitution

government grants, international competition

The participation rate in the labour force is affected by ?

changes in tastes between leisure and work

Land will be allocated between competing uses so that ?

the equilibrium rental rate equilibrium total demand with supply

A congested toll road is ?

a good produced by a natural monopoly

82 + Mcqs in Public Goods in Economics Mcqs Page 1 McqOptions

1.	The Tragedy of the Commons is a parable that illustrates why?
A.	common resources are overconsumed
B.	public goods are underproduced
C.	private goods are under consumed
D.	natural monopolies overproduce goods.
Answer» B. public goods are underproduced

2.	When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ?
A.	government regulation
B.	that prices are not low enough so firms over produce
C.	that prices are not high enough, so people overconsume
D.	that property rights have not been well established
Answer» E.

3.	In the West Women and non-whites on average receive lower incomes than white men because ?
A.	they tend to work in relatively unskilled jobs
B.	educational disadvantage
C.	firms are reluctant to invest in training
D.	all of the above
Answer» E.

4.	The most important source of wage differentials are ?
A.	regional variation
B.	unionization
C.	relative danger
D.	skills
Answer» E.

5.	Efficiency wages are ____ that raise _____?
A.	low wages, employment
B.	high wages, labor supply
C.	high wages, productivity
D.	high wages, employment
Answer» D. high wages, employment

6.	If a person can be prevented from using a good, the good is said to be ?
A.	excludable
B.	a common resource
C.	a public goods
D.	rival
Answer» B. a common resource

7.	Which of the following is an example of a common resource ?
A.	a firework displays
B.	national defense
C.	iron one
D.	a national park
Answer» E.

9.	A negative externality affect market efficiency in a manner similar to ?
A.	an excludable good.
B.	a private good
C.	a common resource
D.	a public good.
Answer» D. a public good.

10.	the cost of using capital services is the ?
A.	wage rate of capital
B.	interest charges
C.	marginal capital cost
D.	rental rate for capital
Answer» E.

11.	A positive externality affects market efficiency in a manner similar to a ?
A.	rival good
B.	public good
C.	private good
D.	common resource
Answer» C. private good

12.	Public goods are difficult for a private market to provide due to ?
A.	the rivalness problem
B.	the public goods problem
C.	the Tragedy of the Commons.
D.	The free-rider problem.
Answer» E.

36.	Suppose that requiring motorcycle riders to wear helmets reduces the probability of a motorcycle fatality from 0.3 percent to 0.2 percent over the lifetime of a motorcycle rider and that the cost of lifetime supply of helmets is Rs5000. It is efficient for the government to require riders to wear helmets if human life is valued at ?
A.	Rs 150 or more
B.	Rs 500,000 or more
C.	Rs50,000 or more
D.	Rs500 or more
E.	Rs100 or more
Answer» C. Rs50,000 or more

13.	In the short run, the supply of capital is ________ and in the long run will depend on _______?
A.	variable, technology
B.	fixed, expectations
C.	fixed, rental rate of capital
D.	variable, interest rates
Answer» D. variable, interest rates

16.	Skilled labor is relatively scarce because ?
A.	there are too few teachers
B.	too few student places in higher education
C.	it is costly to acquire human capital
D.	teachers’ salaries are too low
Answer» D. teachers’ salaries are too low

18.	Top footballers tend to earn more than lecturers because ?
A.	footballers give more entertainment
B.	lecturers are lazy
C.	the labor markets are imperfect
D.	top footballers are relatively scarce in relation to lecturers
Answer» E.

21.	The opportunity cost of acquiring education is ?
A.	course fees
B.	course fees and living expenses
C.	the earnings foregone
D.	Course fees living expenses and textbook
Answer» D. Course fees living expenses and textbook

22.	Human capital can be described as ?
A.	the tools used by workers to enhance productivity
B.	a person inherited ability
C.	the stock of expertise accumulated by a worker
D.	education
Answer» D. education

24.	The value of an asset depends upon ?
A.	its scrap values
B.	its depreciation
C.	the present value of the future stream of income it can earn
D.	the cost of loans
Answer» D. the cost of loans

25.	The difference between gross investment and net investment is ?
A.	depreciation of the existing capital stock
B.	productive investment
C.	dwellings
D.	inventories
Answer» B. productive investment

28.	Which of the following professionals is most likely to be able to generate the income of a superstar ?
A.	the best professor
B.	the best writer
C.	All of these answers participate in markets that could generate a superstar
D.	The best accountant
E.	the best medical doctor
Answer» C. All of these answers participate in markets that could generate a superstar

31.	If two jobs require the same amount of skills and experience the job that pays the most is most likely to be the one that is ?
A.	unpleasant
B.	all these answers
C.	safe
D.	fun
E.	easy
Answer» B. all these answers

35.	Which of the following is not a reason why some workers are paid above the equilibrium wage ?
A.	minimum-wage laws
B.	efficiency wages
C.	unions
D.	beauty
Answer» E.

Explore topic-wise MCQs in Economics Mcqs.

The Tragedy of the Commons is a parable that illustrates why?

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ?

In the West Women and non-whites on average receive lower incomes than white men because ?

The most important source of wage differentials are ?

Efficiency wages are ____ that raise _____?

If a person can be prevented from using a good, the good is said to be ?

Which of the following is an example of a common resource ?

A free rider is a person who ?

A negative externality affect market efficiency in a manner similar to ?

the cost of using capital services is the ?

A positive externality affects market efficiency in a manner similar to a ?

Public goods are difficult for a private market to provide due to ?

In the short run, the supply of capital is ________ and in the long run will depend on _______?

The marginal revenue product of capital is the ?

By restricting labor supply a trade union can _____ and _______?

Skilled labor is relatively scarce because ?

Unions achieve a higher wage differential the more _____ and the more ______?

Top footballers tend to earn more than lecturers because ?

According to the signaling view of the education ?

Competitive markets tend to ?

The opportunity cost of acquiring education is ?

Human capital can be described as ?

Involuntary unemployment exists if workers ?

The value of an asset depends upon ?

The difference between gross investment and net investment is ?

If workers get a real wage increase this will likely ____ and _____?

A profit-maximizing firm will hire labour until _____ equals the _______?

Which of the following professionals is most likely to be able to generate the income of a superstar ?

According to the human capital view of education ?

Suppose each of 20 neighbours on street values street repairs at €3000 the cost of the street repair is €40,000 which of the following statements is true ?

If two jobs require the same amount of skills and experience the job that pays the most is most likely to be the one that is ?

In order for a market to support superstars it must have which of the following characteristics ?

Which of the following is true regarding the earning of attractive versus unattractive workers ?

Which of the following explanations of wage differentials is not likely to be true ?

Which of the following is not a reason why some workers are paid above the equilibrium wage ?

If one person’s consumption of a good diminishes other people’s use of the good, the good is said to be ?

When government employ cost-benefit analysis to help them decide whether to provide a public good, measuring benefits is difficult because ?

Which of the following are potential solutions to the problem of air pollution?

Which of the following is an example of a public good ?

A common resource is ?

Different capital intensity in different industries is mainly explained by _______ and ________?

A private good is ?

The functional distribution of income shows how national income is divided between ?

A public good is ?

A person who regularly watches BBC television programs in the UK but fails to pay their TV licence fee is known as ?

The participation rate in the labour force is affected by ?

Land will be allocated between competing uses so that ?

A good produced by a natural monopoly is ?

A congested toll road is ?

Efficiency wages are that raise _?

In the short run, the supply of capital is __ and in the long run will depend on _?

By restricting labor supply a trade union can _ and ___?

Unions achieve a higher wage differential the more _ and the more __?

If workers get a real wage increase this will likely and _?

A profit-maximizing firm will hire labour until _ equals the ___?

Different capital intensity in different industries is mainly explained by _ and __?

40.	Which of the following is an example of a public good ?
A.	hot dogs at a picnic
B.	Whales in the ocean
C.	national defense
D.	apples on a tree in a public park
Answer» D. apples on a tree in a public park

41.	A common resource is ?
A.	not rival but excludable
B.	both rival and excludable
C.	rival but not excludable
D.	neither rival nor excludable
Answer» D. neither rival nor excludable

44.	The functional distribution of income shows how national income is divided between ?
A.	employees
B.	the population
C.	the factors of production
D.	the working population
Answer» D. the working population

45.	A public good is ?
A.	neither rival nor excludable
B.	rival but not excludable.
C.	both rival but excludable
D.	not rival but excludable
Answer» B. rival but not excludable.

46.	A person who regularly watches BBC television programs in the UK but fails to pay their TV licence fee is known as ?
A.	excess baggage
B.	a free rider
C.	a costly rider
D.	a common resource
E.	an unwelcome rider
Answer» C. a costly rider

47.	The participation rate in the labour force is affected by ?
A.	higher real wages
B.	lower fixed costs of working
C.	lower non-labour income
D.	changes in tastes between leisure and work
E.	all of the above
Answer» F.

48.	Land will be allocated between competing uses so that ?
A.	housing gets priority
B.	industry gets priority
C.	farming gets priority
D.	the equilibrium rental rate equilibrium total demand with supply
Answer» E.