Deck 11: Public Goods and Common Resources

Question 1

Even economists who advocate small government agree that national defence is a good that the government should provide.

Answer 1

True

Question 2

Prices are the signals that guide the decisions of buyers and sellers in the markets.

Answer 2

True

Question 3

Government policy is of little use for properly allocating those goods that do not have prices attached to them.

Answer 3

False

Question 4

Prices will always regulate consumption adequately because of the different types of goods in the economy.

Question 5

When one person enjoys the benefit of the legal system, he reduces its benefit to others.

Question 6

A free rider is someone who receives the benefit of a good and pays for it through taxes.

Question 7

The government subsidises basic research in mathematics, physics, economics and other fields in order to correct for private market failure.

Question 8

Unemployment benefits are an example of a private good.

Question 9

A museum exhibition is excludable because it is possible to prevent someone from seeing the show.

Question 10

Raising the living standards of the poor is a public good if people are not concerned about poverty.

Question 11

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Question 12

In modern industrialised economies there are goods that can be consumed without paying for them.

Question 13

In nearly all cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Question 14

The private market fails to correct for the positive externalities associated with basic research.

Question 15

Businesses that buy illegally harvested timber products from tropical rainforests are influenced by the external effect of their decision.

Question 16

A picnic table is an example of a public good.

Question 17

The government developed the patent system so that private inventors could make a reasonable profit from otherwise rival goods.

Question 18

Only goods that are produced in markets have value to society.

Question 19

General scientific knowledge is so valuable, that a private company generating this knowledge would never need a government subsidy to be profitable.

Question 20

A fireworks display is a rival good because one person's enjoyment of the fireworks does not reduce anyone else's enjoyment.

Question 21

A ship's captain who doesn't want to pay for a lighthouse service, must derive no benefit from the lighthouse.

Question 22

If Jack and Joe are the only two fishermen in town and neither is bothered by the other's fishing, the fishing lake is not a common resource.

Question 23

Cost-benefit analysis is a simple way of determining the value provision a good brings to society.

Question 24

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem, if government does not intervene.

Question 25

When a common resource like grazing land, is plentiful and everyone can get all the good grazing land they want, a tragedy of the commons exists.

Question 26

If cutting down a native forest causes many rare animals to become extinct, a cost-benefit analysis would still class this as a cost, even if there is no market price for species survival.

Question 27

All animals with a commercial value are protected from extinction by market forces.

Question 28

A poor way to value human life is to measure how much extra money a person needs to be paid to take on a risky job.

Question 29

Government needs only to point out which goods the private markets are failing to provide efficiently and then allow the private markets to correct themselves.

Question 30

Cost-benefit analysis always fails to include free goods like clean air as benefits.

Question 31

Private ownership of a common resource works well when the resource is scarce.

Question 32

The efficient provision of public goods is more difficult than the efficient provision of private goods.

Question 33

Suppose the owners of a lighthouse demand payments from a nearby port for the lighthouse service, threatening to turn off the lighthouse otherwise.The lighthouse is now closer to a private good.

Question 34

Apparently, human life does have an implicit dollar value, due to the observable fact that people take voluntary risks every day.

Question 35

Private market failure to optimally allocate common resources is a problem that has only become evident in the last few centuries.

Question 36

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

Question 37

Clean air and clean water are both public goods.

Question 38

Some goods can switch between being public goods and private goods, depending on the circumstances.

Question 39

A New Zealand private nature reserve that holds deer for tourism and hunting, has converted a common resource into a private good.

Question 40

If an entrepreneur provides a service that people enjoy without paying for but can be excluded from the service, these people are known as free riders.

Question 41

Markets work well for some goods but poorly for others.For which of the following goods would markets be expected to work well?

A)clean air
B)restaurants
C)wild elephants
D)public healthcare

Question 42

Government intervention becomes increasingly necessary to solve the problem of common resources as the population grows larger.

Question 43

The fact that cows are not extinct proves that they are a common resource.

Question 44

Historically speaking, when a city builds more roads, its traffic problems decrease.

Question 45

If people can be prevented from using it, the good is:

A)rival
B)excludable
C)normal
D)exhaustible

Question 46

More roads do not solve traffic problems because they encourage people to live farther from work and thus use more road space.

Question 47

Fish are public goods because there are always enough left to keep reproducing and thus stocks never run out.

Question 48

In the market for a good such as ice-cream cones:

A)an inefficient number of ice-cream cones will be produced
B)the sum of producer surplus and consumer surplus is minimised
C)price adjusts to balance supply and demand
D)people's wants are not met adequately

Question 49

Private markets ensure that the air we breathe is clean and that our country is defended against foreign aggressors.

Question 50

Tolls can be used to alter people's incentives to drive during rush hour.

Question 51

Provision of electricity is a natural monopoly but after a certain point it becomes a private good.

Question 52

Countries that have completely outlawed domestic elephant hunting are finally seeing elephant populations start to rise.

Question 53

Free-to-air television is an example of a club good.

Question 54

Roads can be considered either public goods or common resources, depending on how congested they are.

Question 55

Private goods are:

A)excludable and rival
B)non-excludable and rival
C)excludable and non-rival
D)non-excludable and non-rival

Question 56

The profit motive that stems from private ownership has proven to be detrimental to elephant populations.

Question 57

A good is rival if:

A)one person's use of the good diminishes another person's enjoyment of it
B)the government regulates its availability
C)it is not a normal good
D)people can be prevented from using it

Question 58

Property rights are important to solving some of the problems of goods that the market does not provide adequately.

Question 59

Cost-benefit analysis can account for risk by adjusting benefits and costs by their probability of occurrence.

Question 60

Which of the following would be considered a private good?

A)a telecommunications service
B)a mobile phone advertisement
C)a mobile phone case
D)a telecommunications tower

Question 61

The Australian patent system:

A)makes both general and technical knowledge excludable
B)makes only technical knowledge excludable
C)creates a disincentive to invent
D)does all of the above

Question 62

The government provides public goods because:

A)private markets are incapable of producing public goods
B)markets are always better off with some government oversight
C)free-riders make it difficult for private markets to supply the socially optimal quantity
D)external benefits will occur to private producers

Question 63

Which of the following statements is true of public goods?

A)one person's enjoyment of a public good reduces another person's enjoyment of the same good
B)people cannot be prevented from using a public good
C)all of the above are true
D)none of the above is true

Question 64

Because the benefit each citizen receives from having an educated community is a public good:

A)the free-rider problem causes the private market to undersupply education to the community
B)the government can potentially help the market reach a socially optimal level of education
C)a tax increase to pay for education could potentially make the community better off
D)all of the above are true

Question 65

Goods that are non-excludable and non-rival are:

A)public goods
B)private goods
C)natural monopolies
D)common resources

Question 66

When a good is not excludable but it is rival, it is an example of a:

A)natural monopoly
B)private good
C)public good
D)common resource

Question 67

A private beach is an example of:

A)a public good
B)a common resource
C)a private good
D)a club good

Question 68

A natural monopoly is:

A)provided by the government
B)excludable but not rival
C)rival but not excludable
D)often targeted by free riders

Question 69

If the government allows landowners to kill a number of tigers that roam on their property and sell their remains then:

A)poachers will try to kill as many tigers as possible
B)landowners have more incentive to protect tigers on their land
C)landowners have more incentive to try to kill as many tigers as possible
D)poachers will buy land to protect the tigers

Question 70

What characteristics do public goods and common resources have in common?

A)both types of good are non-rival
B)both types of good are excludable
C)both types of good are rival
D)both types of good are non-excludable

Question 71

Common resource goods are:

A)rival and non-excludable
B)rival and excludable
C)non-rival and excludable
D)non-rival and non-excludable

Question 72

Basic research is a public good because it:

A)is difficult to exclude those who might benefit from it
B)is used to develop public goods
C)always benefits developed countries at the expense of developing countries
D)is a rival good

Question 73

Due to the externalities associated with public goods and common resources:

A)private markets will lead to an efficient allocation of resources
B)government intervention can potentially raise economic wellbeing
C)private markets will correct for the gain or loss to consumer surplus
D)all of the above are true

Question 74

The efficient provision of public goods is difficult because:

A)governments can't directly observe users' willingness to pay for the good
B)some users may exaggerate the benefits in a questionnaire
C)information on costs is poor because prices aren't directly observed
D)all of the above

Question 75

The market does not provide national defence because:

A)national defence is a public good
B)national defence is subject to free-riders
C)national defence is a common resource
D)the value of national defence is difficult to measure

Question 76

A huge, very busy museum in Europe is:

A)non-excludable and rival
B)non-excludable and non-rival
C)excludable and rival
D)excludable and non-rival

Question 77

If tuna fish are an oceanic common resource then:

A)preventing over-harvest won't need international cooperation
B)fishers will try to limit their catches without government regulations
C)enforcing agreements to limit fishing will be difficult
D)all of the above

Question 78

Which of the following would be considered a common resource good?

A)cable television
B)bottled natural mineral water
C)a congested public park
D)electricity consumption by a household

Question 79

For both public goods and common resources, an externality arises because:

A)something of value has no price attached to it
B)the goods are undervalued by society
C)the social optimum level of output is greater than market equilibrium
D)all of the above are true

Question 80

An example of a market failure associated with the provision of public good in the private market is:

A)free-riders pay too much for the good, so it is undersupplied
B)free-riders don't pay for the good, so it is undersupplied
C)free-riders pay too much for the good, so it is oversupplied
D)free-riders don't pay for the good, so it is oversupplied