Deck 19: Public Goods and Common Resources

Question 1

Private goods are:

A)excludable, but not rival in consumption.
B)rival in consumption and excludable.
C)rival in consumption, but not excludable.
D)neither rival in consumption nor excludable.

Answer 1

rival in consumption and excludable.

Question 2

Which of the following is an excludable good or service?

A)A movie in a theater
B)A city park
C)A rainbow
D)A levee system

Answer 2

A movie in a theater

Question 3

Which of the following goods is likely to cause a market failure and be overconsumed?

A)Cable TV
B)Grazing pasture
C)Public health
D)Education

Answer 3

Grazing pasture

Question 4

Most goods are:

A)exclusive.
B)public goods.
C)rival in consumption.
D)nonrival in consumption.

Question 5

When a good is rival in consumption:

A)one person's consumption of the good prevents or decreases the ability of others to consume it.
B)sellers can prevent people who have not paid for the good from using it.
C)consumers have a perception that the good is scarce.
D)the government enacts specific import policies limiting the good's supply.

Question 6

When faced with a market failure, the government:

A)tries to redistribute existing surplus more fairly.
B)always takes over the market.
C)encourages well-functioning firms to stay through protectionist policy.
D)enacts thoughtful policy in order to create market efficiency.

Question 7

Excludability is important because it:

A)allows sellers to set an enforceable price on a good.
B)allows consumers to control the price of a good.
C)allows sellers to keep prices artificially high.
D)causes buyers to have an inelastic demand for a good.

Question 8

Which of the following goods is most likely to be overconsumed?

A)Sparkling water
B)Irrigation water
C)Bottled water
D)Free water

Question 9

Which of the following goods is likely to cause a market failure and be undersupplied?

A)Research
B)Orange juice
C)River water
D)Grazing pasture

Question 10

When a good is undersupplied, we can assume it is most likely a:

A)common resource.
B)private good.
C)public good.
D)transitory good.

Question 11

Public goods, when left to the private market, will often be:

A)undersupplied.
B)overconsumed.
C)underconsumed.
D)oversupplied.

Question 12

Goods that are considered common resources are commonly:

A)undersupplied.
B)oversupplied.
C)underconsumed.
D)overconsumed.

Question 13

Which of the following is not an excludable good or service?

A)Fish in the ocean
B)A wireless connection to the Internet
C)A movie in a theater
D)A candy bar

Question 14

Which of the following goods is most likely to be overconsumed?

A)Fish in the ocean
B)Chickens on a farm
C)Horses on a ranch
D)Water from a reservoir

Question 15

When a good becomes overconsumed and depleted, we can assume it is most likely a:

A)common resource.
B)private good.
C)public good.
D)scarce good.

Question 16

If you can't prevent people from consuming a good, then:

A)they have little reason to pay for it.
B)the good is not excludable.
C)they will likely use it for free.
D)All of these are true.

Question 17

Which type of good is most likely to be subject to market failure?

A)Public
B)Private
C)Uncommon
D)Factor of production

Question 18

Which of the following goods is most likely to be overconsumed?

A)Fish in a pet store
B)Fresh fish at the grocery store
C)Fish in the ocean
D)Fish in a fishery

Question 19

Which of the following is an excludable good or service?

A)National Defense
B)A public park
C)Ice cream
D)Air

Question 20

When a good is excludable:

A)one person's consumption of the good prevents or decreases the ability of others to consume it.
B)sellers can prevent people who have not paid for the good from using it.
C)consumers have a perception that the good is scarce.
D)the government enacts specific import policies limiting the good's supply.

Question 21

Wikipedia would be considered:

A)a public good.
B)a private good.
C)a common resource.
D)an artificially scarce resource.

Question 22

Which type of good is neither rival in consumption nor excludable?

A)Common resource
B)Private
C)Public
D)Artificially scarce

Question 23

Netflix movies that are viewed by streaming over the Internet would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 24

Which of the following is a good or service that is not rival in consumption?

A)A sports car
B)A paper clip
C)Bottled water
D)Electricity

Question 25

Fish in the ocean would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 26

A smartphone would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 27

Which of the following is a good or service that is rival in consumption?

A)A hamburger
B)Radio signals broadcast over the air
C)National Defense
D)Public utilities

Question 28

Which type of good is rival in consumption and excludable?

A)Common
B)Private
C)Public
D)Artificially scarce

Question 29

Which of the following is a public good?

A)National Defense
B)A library
C)Timber
D)Natural gas

Question 30

A chocolate chip cookie would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 31

A common resource is:

A)rival in consumption and excludable.
B)excludable, but not rival in consumption.
C)rival in consumption, but not excludable.
D)neither rival in consumption nor excludable.

Question 32

An artificially scarce good is:

A)rival in consumption and excludable.
B)excludable, but not rival in consumption.
C)rival in consumption, but not excludable.
D)neither rival in consumption nor excludable.

Question 33

A public good is:

A)rival in consumption and excludable.
B)excludable, but not rival in consumption.
C)rival in consumption, but not excludable.
D)neither rival in consumption nor excludable.

Question 34

Which of the following is a public good?

A)Health
B)Cleanliness
C)Radio signals
D)All of these are public goods.

Question 35

Which type of good is rival in consumption, but not excludable?

A)Common resource
B)Private
C)Public
D)Artificially scarce

Question 36

A road would be considered a public good if it is:

A)used infrequently and charges no tolls.
B)highly trafficked and congested, and charges tolls.
C)used infrequently and charges tolls.
D)highly trafficked and congested, and charges no tolls.

Question 37

Traffic lights would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 38

Which type of good is excludable, but not rival in consumption?

A)Common resource
B)Private
C)Public
D)Artificially scarce

Question 39

Which of the following is a good that is rival in consumption?

A)A sweater
B)Bottled water
C)Tap water
D)All of these are goods that are rival in consumption.

Question 40

Fireworks would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 41

Local governments, rather than private citizens, are typically the providers of large fireworks displays. This is because fireworks displays: suffer from the free rider problem. are non-excludable. are rival in consumption.

A)II only
B)I and II only
C)I and III only
D)I, II, and III

Question 42

Markets work well for allocating _______ efficiently, but not always so well for allocating _______.

A)private goods; public goods
B)public goods; private goods
C)common resources; public goods
D)public goods; common resources

Question 43

The free rider problem is caused by the/a good's _______, which leads to the/an ________ of the good.

A)nonexcludability; undersupply
B)"nonrivalness" in consumption; oversupply
C)"rivalness" in consumption; overconsumption
D)"rivalness" in consumption; undersupply

Question 44

One way to solve the free rider problem is to:

A)have the government provide the good at a certain cost.
B)make the good or service more excludable.
C)tax those who truly value the good.
D)tax everyone an equal amount for the good.

Question 45

When what people pay for a good does not necessarily reflect the real value they place on it, it is likely that the good:

A)is nonrivalrous.
B)will be undersupplied.
C)is easily excludable.
D)is not socially desirable.

Question 46

A government will use its power to make up for the inadequate supply of a good to:

A)establish a presence as a producer in virtually every market.
B)enhance efficiency in markets for public goods.
C)compete with local businesses.
D)None of these statements is true.

Question 47

Which of the following is not a solution to the market failure that occurs with public goods?

A)Changing social norms
B)Government regulation of the market
C)Privatization of the good
D)Setting a very specific quota on consumption

Question 48

Which of the following is not a consideration when attempting to eliminate a free rider problem?

A)The social costs must be realized by the individual.
B)Something must be done to alter individuals' trade-offs.
C)Market participants must internalize the value of the externality.
D)Firms must be forced to provide the good or service at a price that is below profit maximizing price.

Question 49

Social disapproval carries a higher cost when you:

A)don't really know the people around you.
B)don't care about the opinions of community members.
C)rarely expect to interact with the people around you again.
D)have very close interactions with community members.

Question 50

When the free rider problem is present in a market, the good:

A)will be oversupplied.
B)will be underconsumed.
C)is rival in consumption.
D)is not excludable.

Question 51

When what people pay for a good does not necessarily reflect the real value they place on it, it is likely that the:

A)free rider problem exists.
B)good will be oversupplied.
C)tragedy of the commons problem exists.
D)good is nonrivalrous.

Question 52

When we consider solving a free rider problem by changing social norms, it is helpful to remember that:

A)all costs aren't financial.
B)social disapproval can be considered a cost.
C)conflict with those in your community can be considered a cost.
D)All of these are true.

Question 53

Which of the following statements describes a similarity between markets for common resources and markets with externalities?

A)The equilibrium quantity is too high.
B)The price that competitive firms charge does not capture the true costs and benefits of consumption.
C)Government involvement is needed in order to reach an efficient outcome.
D)Generally, the good or service is oversupplied in the market.

Question 54

Free riders receive _______ externalities from _______.

A)negative; others' choices to pay for a good
B)positive; others' choices to pay for a good
C)positive; consumers who receive subsidies
D)positive; goods they choose to buy

Question 55

The free-rider problem exists when a good is:

A)nonexcludable.
B)rival in consumption.
C)excludable and rival in consumption.
D)excludable and nonrival in consumption.

Question 56

All solutions to market failures in markets for public goods:

A)try to force the correction of externalities.
B)must be provided by the government.
C)are not perfect, and total surplus cannot be maximized in these markets.
D)need to be accepted by the affected parties to be effective.

Question 57

When a government tries to change social norms, it:

A)might run an extensive ad campaign.
B)attempts to change people's opinions about their actions.
C)wants consumers to internalize the cost or benefit caused by their market decisions.
D)All of these are true.

Question 58

When a good is not easily excludable, what people pay for it will:

A)reflect the real value they place on it.
B)exactly equal the social benefit of the good.
C)not necessarily reflect the real value they place on it.
D)be greater than the social benefit of the good.

Question 59

When the free rider problem is present in a market: what people pay for a good is often less than the real value they place on it. the good will likely be overconsumed. the good is rival in consumption.

A)I only
B)I and II only
C)II and III only
D)I and III only

Question 60

Social disapproval as a means of changing society's attitudes and fixing the free rider problem is likely to be more effective:

A)in a small town than a large city.
B)when the government pays for ad campaigns.
C)than government provision.
D)when community members do not have close relationships with others in the area.

Question 61

Which of the following is a public good that is difficult to make excludable?

A)Sewer systems
B)Fire protection
C)National Defense
D)All of these are nonexcludable public goods.

Question 62

The depletion of a common resource due to individually rational, but collectively inefficient, overconsumption is called:

A)the free rider problem.
B)the tragedy of the commons.
C)rivalry in consumption.
D)excludability.

Question 63

What result can we expect to see when goods are nonexcludable?

A)Consumers demand a higher quantity than they would if they had to pay for what they consumed.
B)Consumers demand a lower quantity than they would if they had to pay for what they consumed.
C)Firms supply a lower quantity than they would if they incurred the full costs of the provision of the good.
D)Firms supply a higher quantity than they would if they had to pay for what they supplied.

Question 64

Which of the following is a public good that is difficult to make excludable?

A)Toll roads
B)City buses
C)State universities
D)Police protection

Question 65

Which of the following is not a public good that the government can make excludable?

A)Toll roads
B)City buses
C)State colleges
D)National Defense

Question 66

If the government is supplying a public good, the efficient quantity occurs where the:

A)total social benefit equals the cost.
B)marginal social benefit is greater than the cost.
C)marginal social benefit equals the cost.
D)total social benefit outweighs the total cost.

Question 67

The tragedy of the commons is the:

A)undersupply of a public good due to consumers not paying the full value of the good.
B)disappearance of certain markets due to the public's lack of willingness to pay.
C)depletion of a common resource due to individually rational, but collectively inefficient, overconsumption.
D)notion that common resources are generally underconsumed and therefore not regularly produced due to artificially low demand.

Question 68

When a good is nonexcludable and rival in consumption:

A)the free rider problem may arise.
B)the tragedy of the commons may arise.
C)it is likely private.
D)it is likely a common resource.

Question 69

One way the government decides how to pay for public goods is by:

A)identifying how easy it is to exclude people who don't pay.
B)determining who uses the good the most and increasing their property taxes.
C)comparing individuals' marginal benefits.
D)polling the public about the most appropriate funding measures.

Question 70

What determines how a government will pay for a public good?

A)The ease of collecting payout
B)If the good can be made excludable
C)The transfer of surplus
D)All of these affect how a government allocates payment of public goods.

Question 71

Which of the following public goods would be the easiest for the government to make excludable?

A)City buses
B)Sewer systems
C)Police protection
D)National Defense

Question 72

The marginal social benefit of a public good is the:

A)benefit gained by the last user.
B)sum of the marginal benefit gained by each individual user.
C)difference between the benefit gained by users and the cost paid by society.
D)sum of the benefit gained by the government.

Question 73

When choosing the right amount of a public good to supply, the government often:

A)guesses, because people have an incentive to overstate a good's value.
B)provides too much, because people have an incentive to understate a good's value.
C)provides too little, because people have an incentive to overstate a good's value.
D)fails to provide it, because people have an incentive to understate a good's value.

Question 74

The tragedy of the commons arises when a good is:

A)nonrival and nonexcludable.
B)nonrival and excludable.
C)rival and nonexcludable.
D)rival and excludable.

Question 75

To combat the undersupply of public goods, a government might:

A)step in and provide the good directly.
B)place a quota on consumption of the good.
C)change social norms around consumption of the good.
D)put a quota on the amount that sellers must produce.

Question 76

In a functioning market, people will buy a good up to the point where:

A)the marginal benefit of each unit is equal to the marginal cost of each unit.
B)the total benefit of the good is equal to the total cost of the good.
C)the marginal benefit of the last unit is equal to the marginal cost of that unit.
D)they can no longer afford to consume any more units.

Question 77

The free rider problem arises when a good is _______ and the tragedy of the commons arises when a good is ________________.

A)nonexcludable; both rival and nonexcludable
B)rival; both rival and nonexcludable
C)both rival and nonexcludable; rival
D)both rival and nonexcludable; excludable

Question 78

The combination of inefficiently high demand and dwindling quantity leads to what is called:

A)the free rider problem.
B)nonexcludable consumption.
C)rivalry in consumption.
D)the tragedy of the commons.

Question 79

Nonexcludability, in the case of rival goods, causes _______ demand.

A)inefficiently high
B)inefficiently low
C)efficiently high
D)efficiently low

Question 80

Without correction, the quantity of a public good that is exchanged will occur where:

A)the marginal social benefit of additional consumption exceeds the marginal social cost of additional production.
B)the marginal social benefit is equal to the marginal social cost.
C)the marginal social benefit of additional consumption is less than the marginal social cost of additional production.
D)the marginal social cost is zero.