Deck 19: Public Goods and Common Resources

Question 1

An example of an excludable good or service is:

A) national defense.
B) a public park.
C) ice cream.
D) air.

Answer 1

C

Question 2

Excludability matters because it:

A) allows owners to set an enforceable price on a good.
B) allows consumers to control the price of a good.
C) creates a perceived scarcity that allows the seller to keep the price artificially high.
D) creates a perceived scarcity that causes buyers to have an inelastic demand for the good.

Answer 2

A

Question 3

When faced with a market failure,the government:

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

Answer 3

D

Question 4

The type of good that is most likely to be subject to market failure is:

A) a public good.
B) a private good.
C) an uncommon resource.
D) a factor of production

Question 5

An example of an excludable good or service is a:

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

Question 6

When a good is rival in consumption:

A) one person's consumption prevents or decreases others' ability to consume it.
B) it is possible for sellers to prevent its use by those who have not paid for it.
C) consumers have a perception of scarcity of that good.
D) the government has specific import policies limiting its supply.

Question 7

The problem caused by goods that are considered common resources is that they are:

A) undersupplied.
B) oversupplied.
C) under consumed.
D) over consumed.

Question 8

Most goods are:

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

Question 9

Which of the following goods is most likely to be over consumed?

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

Question 10

Which of the following is likely to cause a market failure and be over consumed?

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

Question 11

When a good ends up over consumed and depleted,we can assume it is a:

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

Question 12

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

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

Question 13

Private goods are:

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

Question 14

When a good is excludable:

A) one person's consumption prevents or decreases others' ability to consume it.
B) it is possible for sellers to prevent its use by those who have not paid for it.
C) consumers have a perception of scarcity of that good.
D) the government has specific import policies limiting its supply.

Question 15

When a good ends up undersupplied,we can assume it is a:

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

Question 16

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

A) undersupplied.
B) over consumed.
C) under consumed.
D) oversupplied.

Question 17

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

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

Question 18

Which of the following goods is most likely to be over consumed? Fish in:

A) a pet store
B) the grocery store
C) the ocean
D) a fishery

Question 19

An example of a good that is not excludable is:

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

Question 20

Which of the following is most likely to be over consumed?

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

Question 21

The similarity between markets for common resources and markets with externalities is that:

A) the equilibrium quantity is too high in terms of society.
B) the price that competitive firms charge does not capture the true costs and benefits of consumption.
C) government involvement is needed to reach an efficient outcome.
D) generally we get an oversupply at market.

Question 22

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 23

An example of a good that is not rival in consumption is:

A) a sports car.
B) a paper clip.
C) bottled water.
D) electricity.

Question 24

A smart phone would be considered:

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

Question 25

Streaming Netflix movies would be considered:

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

Question 26

Traffic lights would be considered:

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

Question 27

An example of a good that is rival in consumption is:

A) a sweater.
B) bottled water.
C) tap water.
D) All of these goods are rival in consumption.

Question 28

A public good is:

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

Question 29

Fireworks would be considered:

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

Question 30

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 31

The free rider problem is caused by the:

A) nonexcludability of a good leading to the undersupply of it.
B) incentive to oversupply the good since it is nonrival in consumption.
C) "rivalness" in consumption of a good leading to the overconsumption of that good.
D) "rivalness" in consumption of a good leading to the undersupply of it.

Question 32

Goods that are neither rival in consumption nor excludable are:

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

Question 33

A common resource is:

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

Question 34

An artificially scarce good is:

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

Question 35

Cookies would be considered:

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

Question 36

Goods that are rival in consumption and excludable are:

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

Question 37

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 38

Goods that are not rival in consumption,but are excludable are:

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

Question 39

An example of a good that is rival in consumption is:

A) a hamburger.
B) radio signals broadcast over the air.
C) national defense.
D) public utilities.

Question 40

Goods that are rival in consumption,but not excludable are:

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

Question 41

When goods are subject to market failure,all of the following are possible solutions to the market failure except:

A) change social norms.
B) have government either regulate the market or provide the good.
C) privatize the good.
D) set a very specific consumer quota on consumption.

Question 42

Wikipedia is an example of a:

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

Question 43

An example of a public good is:

A) health.
B) cleanliness.
C) radio signals.
D) All of these are public goods.

Question 44

Because government bodies have the power to make up for inadequate supply of a good:

A) its presence as a producer is in virtually every market.
B) it can be efficiency enhancing in markets for public goods.
C) they have incentive to compete with local businesses.
D) None of these statements is true.

Question 45

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

A) free rider problem exists.
B) good will be oversupplied.
C) good is easily excludable.
D) good is nonrivalrous.

Question 46

Free riders enjoy:

A) negative externalities from others' choices to pay for a good.
B) positive externalities from others' choices to pay for a good.
C) positive externalities transferred from consumers who receive subsidies.
D) positive externalities from a good they choose to buy themselves.

Question 47

One way to solve the free-rider problem is:

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 48

An example of a public good is:

A) national defense.
B) libraries.
C) timber.
D) natural gas.

Question 49

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

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

Question 50

Nonexcludable goods tend to be undersupplied because:

A) the free rider problem persists.
B) people do not pay the true value of the good.
C) people rarely willingly pay for something they could get for free, regardless of how much they value it.
D) All of these statements are true.

Question 51

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 it.

Question 52

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

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 statements are true.

Question 53

All solutions to market failures in markets for public goods or common resources:

A) try to force the internalization 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 54

Social disapproval carries a higher cost in all of the following cases except when you:

A) know the people around you.
B) care about the opinions of people around you.
C) expect to interact with the people around you again in the future.
D) have very loose interactions with community members.

Question 55

Which of the following is not a consideration when attempting to eliminate a free rider problem or tragedy of the commons 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 56

If the government runs an ad campaign to shame litterers,they are:

A) wasting a lot of money.
B) trying to get individuals to internalize the negative externality created by their decision to litter.
C) using protectionist policy to help the trash-collecting industry.
D) All of these statements are true.

Question 57

To combat the undersupply of public goods,a solution is:

A) for the government to step in and provide it directly.
B) to place a quota on the consumption of the good.
C) to change social norms around consumption of the good.
D) put a quota on the amount that people can consume.

Question 58

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

A) free rider problem does not exist.
B) good will be undersupplied.
C) good is easily excludable.
D) not a socially desirable good.

Question 59

When government tries to change social norms,they:

A) might run an extensive ad campaign.
B) are trying to change people's opinions about their actions.
C) try to get consumers to internalize the cost or benefit they cause by their market decision.
D) All of these statements are true.

Question 60

When the free rider problem is present in a market:

A) what people pay often does not reflect the real value they put on a good.
B) the good will likely be over consumed.
C) the good is rival in consumption.
D) the good is easily excludable.

Question 61

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

A) 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 individual's marginal benefits of the good.
D) polling the public about the most appropriate funding measures.

Question 62

If the cost were greater than the marginal benefit of a good:

A) consumers could increase their utility by buying more.
B) consumers could increase their utility by buying less.
C) producers should increase production.
D) social net benefit would be maximized.

Question 63

When a good is both rivalrous and nonexcludable the:

A) free rider problem may arise.
B) tragedy of the commons may arise.
C) good is likely a private good.
D) good is likely an artificially scarce good.

Question 64

An example of a public good that is difficult to make excludable is:

A) sewer systems.
B) fire protection.
C) national defense.
D) All of these are nonexcludable public goods.

Question 65

The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________

A) nonexcludable; both rivalrous and nonexcludable.
B) rivalrous; both rivalrous and nonexcludable.
C) both rivalrous and nonexcludable; rivalrous.
D) both rivalrous and nonexcludable; excludable.

Question 66

The free-rider problem is triggered by being:

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

Question 67

Nonexcludability,in the case of rival goods,causes:

A) inefficiently high demand.
B) inefficiently low demand.
C) efficient, high demand.
D) efficient, low demand.

Question 68

An example of a public good that the government has made excludable is:

A) city buses.
B) sewer systems.
C) police protection.
D) national defense.

Question 69

Which of the following is not an example of a public good that the government has made excludable?

A) Toll roads.
B) City buses.
C) State colleges.
D) Fire Protection.

Question 70

An example of a public good that is difficult to make excludable is:

A) toll roads.
B) city buses.
C) state universities.
D) police protection.

Question 71

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) rival in consumption.
D) excludability.

Question 72

The tragedy of the commons is the:

A) undersupply of a public good due to people not wanting to pay for a publicly common good.
B) disappearance of certain markets due to the lack of willingness to pay by individuals, leading to collective misfortune.
C) depletion of a common resource due to individually rational but collectively inefficient overconsumption.
D) notion that common resources are generally under consumed and therefore not produced by suppliers due to artificially low demand.

Question 73

If the marginal benefit were greater than the cost of a good:

A) consumers could increase their utility by buying more.
B) consumers could increase their utility by buying less.
C) producers should decrease production.
D) social net benefit would be maximized.

Question 74

The marginal social benefit is the:

A) benefit gained by the last user.
B) sum of the marginal benefit gained by each individual user.
C) total benefit gained by the last user.
D) sum of the benefit gained by each individual user.

Question 75

When a good is not excludable but is rival in consumption the:

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

Question 76

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

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

Question 77

The tragedy of the commons arises from the:

A) good being rival.
B) good being excludable.
C) combination of rivalry and nonexcludability.
D) combination of rivalry and excludability.

Question 78

One way the government decides how to pay for a public good is:

A) the ease of collecting payout.
B) if they can make the good excludable and charge its users.
C) the transfer of surplus.
D) All of these are ways the government allocates payment of public goods.

Question 79

Nonexcludability causes:

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

Question 80

If the government is supplying a public good,the efficient quantity is 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.