Deck 17: Public Goods and Common Resources

Question 1

Consider an economy with three consumers, each with a marginal benefit for a public good of MB = 10 - q.What is society's marginal benefit (MB_T) for the public good?

A)MB_T = 10 - 3q
B)MB_T =30- 3q
C)MB_T =10 - 1/3.q
D)MB_T =30 - 1/3q
E)None of the above.

Answer 1

MB_T =30- 3q

Question 2

Consider an economy with two consumers, each with a marginal benefit for a public good of MB = 20 - 1/2q.The marginal cost of providing the good is $10 per unit.How many units are supplied in the private-sector market?

A)0
B)10
C)20
D)40
E)5

Answer 2

0

Question 3

A public good is:

A)A good that is both rival and excludable.
B)A good that is rival and non-excludable.
C)A good that is non-excludable and non-rival.
D)A good that is both excludable and non-rival.
E)Any good provided by the government.

Answer 3

A good that is non-excludable and non-rival.

Question 4

Consider an economy with two consumers, each with a marginal benefit for a public good of MB = 20 - 1/2q.If the marginal cost of provision is $30 per unit, what is the efficient level of output?

A)0
B)10
C)20
D)40
E)5

Question 5

Consider an economy with two consumers, each with a marginal benefit for a public good of MB = 20 - 1/2q.If the marginal cost of provision is $30 per unit, what is DWL in the market outcome?

A)10
B)20
C)30
D)40
E)50

Question 6

The tragedy of the common arises when:

A)A good is rival but non-excludable.
B)Property rights can be used to allocate good or services via the price mechanism.
C)A good is non-rival and non-excludable.
D)A good is rival but non-excludable
E)None of the above.

Question 7

An inefficiency can arise in the provision of public good:

A)Because the good is non-rival.
B)As a private sector firm cannot enforcement payment for the good.
C)Because the marginal benefit curve for society is the vertical summation of individual MB curves.
D)a and C

Question 8

Consider an economy with three consumers, each with a marginal benefit for a public good of MB = 10 - q.If the marginal cost of providing the good is $0 per unit, what is the DWL arising in the market outcome?

A)DWL = $150
B)DWL = $75
C)DWL = $50
D)DWL = $300
E)DWL = $200

Question 9

Consider an economy with three consumers, each with a marginal benefit for a public good of MB = 10 - q.If the marginal cost of providing the good is $15 per unit, what is the efficient level of output?

A)30
B)20
C)10
D)5
E)15

Question 10

Consider an economy with two consumers, each with a marginal benefit for a public good of MB = 20 - 1/2q.What is society's marginal benefit (MB_T) for the public good?

A)MB_T = 10 - q
B)MB_T =40- 2q
C)MB_T =40 - q
D)MB_T =20 - 1/2q
E)None of the above.