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ECON 2106 Chapter 18

SI date: Tuesday 11/30

FINAL EXAM 12/9

|1. |Josh has an iPod and frequently downloads songs from the iTunes website. He pays a small fee for each download, but downloading |

| |a song does not remove it from the iTunes inventory. Other consumers can also pay the fee and download a song that Josh might |

| |have already accessed. The iTunes service is best described as: |

|A) |a private good. |

|B) |a public good. |

|C) |an artificially scarce good. |

|D) |a common resource. |

|2. |Which of the following is an example of a private good? |

|A) |traffic lights |

|B) |mountain bike trails in a national forest |

|C) |a fast-food cheeseburger |

|D) |cell phone service |

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|3. |(Table: Total Cost and Total Individual Benefit) The table shows the total cost and total individual benefit of animal control |

| |for residents of a small town. If there are 1,000 residents, what is the total social benefit of three animal control officers? |

|A) |$10 |

|B) |$9,000 |

|C) |$10,000 |

|D) |$90,000 |

|4. |(Table: Total Cost and Total Individual Benefit) The table shows the total cost and total individual benefit of animal control |

| |for residents of a small town. If an individual resident were to decide about hiring and paying for animal control officers on |

| |his or her own, how many officers would that resident hire? |

|A) |0 |

|B) |1 |

|C) |3 |

|D) |5 |

|5. |Whenever a species is threatened with extinction, it is likely that: |

|A) |clearly defined property rights exist. |

|B) |no one has exclusive property rights to it. |

|C) |greedy folks are winning again. |

|D) |it is the result of too much government regulation. |

|6. |Common resources tend to be overused because: |

|A) |individuals tend to ignore the cost their use of the resource has on others. |

|B) |the individual marginal cost is greater than the marginal social cost. |

|C) |common resources are nonrival and nonexcludable. |

|D) |the marginal cost of allowing one more unit of consumption is zero. |

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|7. |(Figure: An Individual's Marginal Benefit from a Public Good) Assume that two individuals will share consumption of a public |

| |good; each individual has the same marginal benefit curve. What is the marginal social benefit from four units of the public |

| |good? |

|A) |$0 |

|B) |$8 |

|C) |$16 |

|D) |$32 |

|8. |(Figure: An Individual's Marginal Benefit from a Public Good) Assume that two individuals will share consumption of a public |

| |good; each individual has the same marginal benefit curve. If the marginal cost of the good is $24, what is the level of this |

| |public good that would maximize society's welfare? |

|A) |0 units |

|B) |8 units |

|C) |12 units |

|D) |16 units |

|9. |No individual is willing to pay for the efficient quantity of a public good, because the marginal benefit to an individual |

| |________ the marginal social benefit. |

|A) |equals |

|B) |exceeds |

|C) |is less than |

|D) |may be equal to or greater than |

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|10. |(Table: Street Cleanings) Peter and Wendy both benefit from having cleaner streets. The table shows the relationship between the|

| |number of street cleanings per month and the total benefit they get. Suppose that the marginal cost of street cleaning is $18 |

| |per cleaning. Then: |

|A) |if the city decides to clean the streets only once per month, Peter would be willing to pay the entire cost of the cleaning. |

|B) |if the city decides to clean the streets only once per month, Wendy would be willing to pay the entire cost of the cleaning. |

|C) |if Wendy and Peter are the only people in society, the efficient number of street cleanings would be one per month. |

|D) |if Wendy and Peter are the only people in society, the efficient number of street cleanings would be at least two per month. |

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Congratulations! This is the last chapter for microeconomics! Unless you’re coming to the final review session, I just wanted to thank you all for coming to SI and making my week so much brighter. It’s been a pleasure meeting and working closely with all of you the past few months and I hope to see you around campus! Good luck! ................
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