Deck 11: Public Goods and Common Resources

Question 1

A television signal is an example of a good that is

A)private.
B)nonrival in consumption.
C)social.
D)nonexcludable in production.

Answer 1

B

Question 2

Some goods can be either common resources or public goods depending on

A)whether the good is rival in consumption.
B)whether the good is excludable.
C)the marginal cost of the good.
D)None of the above is correct.

Answer 2

A

Question 3

Goods that are not excludable are usually

A)higher priced than excludable goods.
B)higher priced than rival goods.
C)in short supply.
D)free of charge.

Answer 3

D

Question 4

When a good is rival in consumption,

A)one person's use of the good diminishes another person's ability to use it.
B)people can be prevented from using the good.
C)no more than one person can use the good at the same time.
D)everyone will be excluded from obtaining the good.

Question 5

Bill owns 3 acres of beautiful wooded land.He has created a short walking trail through the woods.Because the terrain is hilly,the only safe entrance to the trail is at the front of Bill's property.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.Because the trail is short,only about 50 people can comfortably enjoy it.This state park is an example of a good that is

A)both rival in consumption and excludable.
B)neither rival in consumption nor excludable.
C)nonrival in consumption and excludable.
D)rival in consumption and nonexcludable.

Question 6

Goods that are not rival in consumption include both

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

Question 7

Goods that are excludable include both

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

Question 8

A good is excludable if

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

Question 9

If one person's use of a good diminishes another person's enjoyment of it,the good is

A)rival in consumption.
B)excludable.
C)normal.
D)exhaustible.

Question 10

If a road is congested,then use of that road by an additional person would lead to a

A)negative externality.
B)positive externality.
C)Pigovian externality.
D)free-rider problem with rush hour drivers stuck in traffic.

Question 11

When a good is excludable,

A)one person's use of the good diminishes another person's ability to use it.
B)people can be prevented from using the good.
C)no more than one person can use the good at the same time.
D)everyone will be excluded from using the good.

Question 12

A view of a spectacular sunset along a private beach is an example of a

A)private good.
B)public good.
C)nonrival but excludable good.
D)rival but nonexcludable good.

Question 13

Goods that are rival in consumption include both

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

Question 14

Both public goods and common resources are

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

Question 15

Excludability is the property of a good whereby

A)one person's use diminishes other people's use.
B)a person can be prevented from using it.
C)a good is private, not public.
D)a good is public, not private.

Question 16

When something of value has no price attached to it,

A)externalities will be present.
B)the product cannot be produced at any price.
C)a natural monopoly will eventually produce the product, and the good will no longer be free.
D)private companies will eventually produce the product, and the good will no longer be free.

Question 17

Goods that are rival in consumption but not excludable would be considered

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

Question 18

For most goods in an economy,the signal that guides the decisions of buyers and sellers is

A)greed.
B)consumer surplus.
C)prices.
D)profits.

Question 19

When goods do not have a price,which of the following primarily ensures that the good is produced?

A)entrepreneurs
B)the government
C)charities
D)the market

Question 20

Goods that are not excludable include both

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

Question 21

An example of a private good would be

A)cable TV service.
B)a tornado siren.
C)clothing.
D)a sunset.

Question 22

Which of the following statements is correct?

A)Private goods and public goods are both excludable and rival in consumption.
B)Private goods are rival in consumption but not excludable, whereas public goods are excludable but not rival in consumption.
C)Private goods are both excludable and rival in consumption, whereas public goods are neither excludable nor rival in consumption.
D)Private goods are neither excludable nor rival in consumption, whereas public goods are both excludable and rival in consumption.

Question 23

An example of a public good would be

A)cable TV service.
B)a tornado siren.
C)clothing.
D)the environment.

Question 24

A cheeseburger is

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

Question 25

Which of the following goods is rival and excludable?

A)an uncongested toll road
B)an uncongested nontoll road
C)a congested nontoll road
D)a congested toll road

Question 26

Uncongested,nontoll roads are a good example of a

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

Question 27

Private goods are both

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

Question 28

Which of the following would be considered a private good?

A)national defense
B)a public beach
C)local cable television service
D)a bottle of natural mineral water

Question 29

The value and cost of goods are easiest to determine when the goods are

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

Question 30

A lighthouse that primarily benefits a single port owner is more like a

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

Question 31

Which of the following would not be considered a private good?

A)tennis shoes
B)pizza
C)french fries
D)cable TV service

Question 32

Which of the following goods is rival in consumption and excludable?

A)a tornado siren
B)an uncongested toll road
C)a home
D)the environment

Question 33

Suppose that Martin owns a lighthouse,and Lewis owns a nearby port.Martin's lighthouse benefits only those ships that enter Lewis's port.Which of the following statements is not correct?

A)Martin's lighthouse may be considered a private good.
B)Martin can reduce the free-rider problem by charging Lewis a usage fee.
C)Martin can exclude Lewis's port from benefiting from the lighthouse by simply turning the power off.
D)Martin's lighthouse would be considered a common resource.

Question 34

Which of the following goods is rival in consumption and excludable?

A)a slice of pizza
B)cable TV service
C)a sunset
D)national defense

Question 35

Which of the following statements is correct?

A)Private goods are rival in consumption and excludable.
B)Public goods are rival in consumption but nonexcludable.
C)Collecting tolls on all roads is a practical solution to traffic congestion.
D)Governments serve their citizens best when they refrain from addressing market failures.

Question 36

Most goods in the economy are

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

Question 37

Which of the following is not considered a public good?

A)national defense
B)basic research
C)fire protection
D)fighting poverty

Question 38

A vacation house in Colorado is

A)not rival in consumption and excludable.
B)rival in consumption and excludable.
C)not rival in consumption and not excludable.
D)rival in consumption and not excludable.

Question 39

If the local government in Richmond,Missouri,decides to put on a public fireworks display,the display would be

A)excludable.
B)rival in consumption.
C)a public good.
D)All of the above are correct.

Question 40

Which of the following statements is not correct?

A)Some goods that are often thought of as public goods may be private goods in certain circumstances.For example, a lighthouse that protects a privately owned port may be a private good.
B)Some goods that are often though of a private goods may be public goods in certain circumstances.For example, a candy bar could be a public good.
C)Antipoverty programs can be an example of a public good because everyone benefits from living in a society with less poverty.
D)The government must provide national defense because it is impossible to exclude people from its benefit, and the consumption of national defense is nonrival in consumption.

Question 41

An example of a natural monopoly would be

A)a congested public freeway.
B)an airline flight that has been overbooked.
C)local cable television service.
D)public parking.

Question 42

An example of a natural monopoly would be

A)cable TV service.
B)a tornado siren.
C)clothing.
D)the environment.

Question 43

Which of the following goods is rival and not excludable?

A)national defense
B)cable TV service
C)lobsters in the ocean
D)a boat

Question 44

When one person uses a common resource,such as fish in the ocean,which of the following would not be correct?

A)Other people are likely to be worse off.
B)Other people will not be compensated for their loss.
C)The person does not account for external effects.
D)There will still be enough left for other people, since one person cannot make a major impact.

Question 45

Fire protection is a good example of a natural monopoly because

A)it is nonexcludable
B)it is rival in consumption.
C)protecting one house is unlikely to reduce the protection available to others.
D)All of the above are correct.

Question 46

Goods that are both nonexcludable and rival in consumption would be considered

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

Question 47

Which of the following goods is rival and not excludable?

A)an uncongested toll road
B)an uncongested nontoll road
C)a congested nontoll road
D)a congested toll road

Question 48

When one person uses a common resource,which of the following does not occur?

A)An externality will occur.
B)Other people are worse off.
C)It is difficult to charge the person for the use of the resource.
D)No one else will be able to use the resource.

Question 49

The fish in the ocean are an example of a

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

Question 50

Which of the following goods is not rival and not excludable?

A)an uncongested toll road
B)an uncongested nontoll road
C)a congested nontoll road
D)a congested toll road

Question 51

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

A)something of value has no price attached to it.
B)supply exceeds demand.
C)cost-benefit analysis can only measure the cost of the free-rider problem.
D)Both a and b are correct.

Question 52

When goods are available in an economy free of charge,

A)market forces cannot be used to allocate resources.
B)too many of these goods will be produced since there is no cost of production.
C)the product will have no value for the majority of the population.
D)the goods can only be luxury goods.

Question 53

Which of the following statements is correct?

A)A private good is not rival in consumption but is excludable.
B)A public good is both rival in consumption and excludable.
C)A common resource is rival in consumption but not excludable.
D)A natural monopoly is neither rival in consumption nor excludable.

Question 54

Public goods are both

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

Question 55

Which of the following goods is not rival in consumption and not excludable?

A)a hiking trail
B)a street light
C)a bicycle
D)a boat

Question 56

Which of the following would be considered a common resource?

A)cable television
B)bottled natural mineral water
C)uncongested toll roads
D)fish in the ocean

Question 57

Common resources are both

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

Question 58

An example of a common resource would be

A)cable TV service.
B)a tornado siren.
C)clothing.
D)the environment.

Question 59

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 well-being.
C)private markets will correct for the gain or loss to consumer surplus.
D)the free-rider problem is eliminated.

Question 60

Goods that are neither excludable nor rival in consumption would be considered

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

Question 61

Natural monopolies are both

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

Question 62

Because of the free-rider problem,

A)private markets tend to undersupply public goods.
B)the federal government spends too many resources on national defense and not enough resources on medical research.
C)fireworks displays have become increasingly dangerous.
D)poverty has increased.

Question 63

Which of the following goods is excludable and not rival in consumption?

A)a can of soda
B)New England lobsters in the ocean
C)street lights
D)fire protection

Question 64

Police protection in a small town with a large police force is

A)not rival in consumption and excludable.
B)rival in consumption and excludable.
C)not rival in consumption and not excludable.
D)rival in consumption and not excludable.

Question 65

Tom is a non-union employee at General Power.Eight-five percent of the employees at General Power are unionized.The union at General Power has negotiated very good benefits.Even though he is not a union member and he does not have to pay union dues,Tom receives all the benefits that the union has negotiated.Tom's behavior is an example of

A)rivalry.
B)a barrier to entry.
C)free riding.
D)Taft-Hartley opposition.

Question 66

A lighthouse is typically considered to be a public good because

A)the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.
B)there is rarely another lighthouse nearby to provide competition.
C)a nearby port authority cannot avoid paying fees to the lighthouse owner.
D)all passing ships are able to enjoy the benefits of the lighthouse without paying.

Question 67

Market failure associated with the free-rider problem is a result of

A)a problem associated with pollution.
B)benefits that accrue to those who don't pay.
C)losses that accrue to providers of the product.
D)a project in which costs exceed benefits.

Question 68

Most lighthouses are operated by the government because

A)of the free-rider problem.
B)lighthouses are no longer valued by society.
C)most lighthouses are only tourist attractions in state and national parks.
D)shipping companies would not be able to afford maintenance fees for lighthouses.

Question 69

Which of the following goods is excludable and not rival in consumption?

A)a congested toll road
B)an uncongested toll road
C)an uncongested nontoll road
D)a congested nontoll road

Question 70

A free rider is a person who

A)will only purchase a product on sale.
B)receives the benefit of a good but avoids paying for it.
C)can produce a good at no cost.
D)takes advantage of tax loop-holes to lower his taxes.

Question 71

The free-rider problem

A)forces the supply of a public good to exceed its demand.
B)allows more people to pay for the public good than if it were a private good.
C)explains why many local governments supply public goods.
D)is reflected in the above-market price of a public good in comparison to a private good.

Question 72

The free-rider problem exists with

A)fire protection.
B)knowledge.
C)cable TV service.
D)congested toll roads.

Question 73

Private markets usually fail to provide lighthouses because

A)lighthouses cost too much to build relative to their benefits.
B)government intervention makes it hard for private lighthouse owners to compete in the market.
C)ship captains have incentives to use lighthouses without paying.
D)lighthouses are valued very little by ship captains these days.

Question 74

Who among the following is a free rider?

A)Barry steals candy from the store where he works.
B)Betty rides to work with Sally, but she pays Sally for gasoline and other travel-related expenses.
C)Joe drives 20,000 miles a year on public streets, but he pays no more in property taxes than Sam, who only drives 1,000 miles.
D)Fred watches many public television programs, but he has never sent in a contribution to the station.

Question 75

When goods are not excludable

A)the goods will be produced as private goods but not as public goods.
B)the goods will not be produced since no one values them.
C)the free-rider problem prevents the private market from supplying them.
D)the private market will produce the goods but will charge less for them than if they are produced as public goods.

Question 76

A free-rider problem exists for any good that is not

A)rival in consumption.
B)a private good.
C)free.
D)excludable.

Question 77

Suppose that everyone prefers to live in a society without poverty.Further suppose that some private charities are successful in reducing poverty.People who do not contribute to the charities

A)receive no external benefit from private antipoverty programs.
B)decrease the reliance of individuals on antipoverty programs.
C)can free ride on the generosity of others.
D)are most likely to be in favor of government-sponsored programs.

Question 78

Goods that are excludable but not rival in consumption would be considered

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

Question 79

When a free-rider problem exists,

A)the market will devote too few resources to the production of the good.
B)the cost of the good will always be more than the benefit of the good.
C)the good will not be produced.
D)entrepreneurs will eventually find a way to make free-riders pay their share.

Question 80

You are the mayor of a small town with 2,000 residents.The head of your economic development agency recently conducted a survey in which the 2,000 residents said that a public concert in the center of town would be worth $20 to each of them.Since the concert cost only $5,000 to hold,you organized and held the concert,which everyone in town enjoyed.But when you asked for donations to pay for the concert,you only collected $300.You are convinced that

A)the survey must have overstated how much the concert was worth to each resident; otherwise, you would have collected $40,000 in donations.
B)the cost of the concert exceeded the social benefits.
C)the concert was an example of the Tragedy of the Commons.
D)residents of the town were probably free-riders at the concert.