Deck 11: Public Goods and Common Resources

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

When one person enjoys the benefit of national defence, he reduces the benefit to others.

Answer 3

False

Question 4

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

Question 5

An ice-cream cone is an example of a public good.

Question 6

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

Question 7

A free rider is someone who receives the benefit of a good but avoids paying for it.

Question 8

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 9

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

Question 10

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

Question 11

In our economy, government agencies determine the prices of most goods traded between buyers and sellers.

Question 12

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

Question 13

The government developed the patent system so that private inventors could make a reasonable profit from their own inventions.

Question 14

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

Question 15

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

Question 16

Advocates of anti-poverty programs argue that private charity is not enough to fight poverty because of the free-rider problem.

Question 17

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

Question 18

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

Question 19

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

Question 20

A fireworks display is excludable because it is possible to prevent someone from seeing the show.

Question 21

Clean air and clean water are both public goods.

Question 22

If the owners of a lighthouse receive payments from a nearby port for the lighthouse service, then the lighthouse is now closer to a public good.

Question 23

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 24

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 25

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

Question 26

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 27

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

Question 28

Allowing people to farm American alligators will not maintain the species' population.

Question 29

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

Question 30

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

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

If people choose to buy small cars with less safety features than larger cars, then this shows that these people believe that human life can not be priced.

Question 37

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 38

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 39

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

Question 40

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 41

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

Question 42

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

Question 43

Fishing rights are an infrequent source of international tension among normally friendly countries.

Question 44

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

Question 45

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

Question 46

Which of the following would be considered a private good?

A) a visit to an uncongested amusement park
B) a public beach
C) local cable television service
D) a bottle of natural mineral water

Question 47

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

Question 48

If roads become so crowded that people have to drive more slowly, the road has become a public good.

Question 49

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

Question 50

Private goods are:

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

Question 51

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

Question 52

A good is excludable 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 53

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

Question 54

In the market for a good like 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 55

International disputes over fish, led to three 'cod-wars' between Great Britain and Iceland in the 1970s.

Question 56

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

A) clean air
B) clean restaurants
C) clean movie theatres
D) all of the above

Question 57

Oceanic fish species like cod, are less prone to over-fishing because less people want to harvest them.

Question 58

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

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

Question 59

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

Question 60

An ineffective way to reduce congestion on roads is to charge higher tolls when the roads are heavily travelled.

Question 61

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

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

Question 62

A foot-long cheeseburger, due to its immense size is:

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

Question 63

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 64

The market does not provide national defence because:

A) national defense is a common resource
B) national defence is too expensive
C) human life has no price
D) none of the above are true

Question 65

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 66

Profit-seeking firms will devote little effort to develop general knowledge as:

A) they prefer to develop specific technological knowledge
B) patents are too expensive to obtain
C) government agencies won't subsidise the research
D) all of the above

Question 67

If a poacher starts hunting tigers in a reserve then:

A) other poachers will try to preserve the tiger population by hunting less
B) landowners have more incentive to protect tigers on their land
C) the poacher will try to kill as many tigers as possible
D) governments should reduce the hunting season on tigers

Question 68

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 69

National defence is a classic example of a public good because:

A) it is provided by the government
B) private security forces would make too much money
C) everyone agrees that some level of national defence is important
D) too many people would be free-riders if private security forces tried to provide it

Question 70

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 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

The fish in the ocean are an example of:

A) a public good
B) a common resource
C) a private good
D) none of the above

Question 73

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 74

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 75

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 76

Goods that are non-excludable and rival are:

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

Question 77

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 78

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 79

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 80

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