Deck 11: Public Goods and Common Resources

Question 1

National Public Radio would be considered a club good.

Answer 1

False

Question 2

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Answer 2

False

Question 3

A good that is excludable but not rival is known as a club good.

Answer 3

True

Question 4

Some goods can be classified as either public goods or private goods depending on the circumstances.

Question 5

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

Question 6

Private goods and club goods have in common that they are excludable, but are different in that private goods are rival while club goods are not rival in consumption.

Question 7

You and your friends watch a movie in your bedroom. For you and your friends, the enjoyment that you get from watching the movie is not rival in consumption.

Question 8

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Question 9

Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

Question 10

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

Question 11

All goods that are excludable are also rival in consumption, but not all goods that are rival in consumption are excludable.

Question 12

You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

Question 13

When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.

Question 14

A good that is excludable is one that someone can be prevented from using if she did not pay for it.

Question 15

A free rider is a person who pays for a good but does not receive the benefit of it.

Question 16

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

Question 17

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

Question 18

A pair of jeans is rival but non-excludable.

Question 19

Free goods are usually efficiently allocated without government intervention.

Question 20

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

Question 21

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Question 22

Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Question 23

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Question 24

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

Question 25

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Question 26

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Question 27

Aristotle writes, "What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others." In this statement, Aristotle is referring to the free-rider problem that occurs when a person receives the benefit of a good without paying for it.

Question 28

When free riders are present in a market, the market generally fails to provide the efficient outcome.

Question 29

An example of the "Tragedy of the Commons" is litter in the picnic area of a local park.

Question 30

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Question 31

Advocates of antipoverty programs claim that fighting poverty is a public good.

Question 32

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

Question 33

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Question 34

Government agencies, such as the National Science Foundation, subsidize basic research because in the absence of a subsidy too little research would be conducted.

Question 35

The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.

Question 36

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

Question 37

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

Question 38

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Question 39

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Question 40

One benefit of the patent system is that it encourages the production of technical knowledge.

Question 41

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

Question 42

Markets may fail to allocate resources efficiently when property rights are not well established.

Question 43

Table 11-2
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.
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Refer to Table 11-2. Suppose the cost to clean the lake is $32 per hour and that the residents have agreed to split the cost of cleaning the lake equally. It would maximize Mary's surplus if 3 hours of cleaning is done.
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Question 44

Pollution is a negative externality, but it is not appropriate to view the problem of pollution as a common-resource problem.

Question 45

Nontoll roads can be either public goods or common resources, depending upon the degree of congestion.

Question 46

Table 11-2
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.
​
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Refer to Table 11-2. Suppose the cost to clean the lake is $12 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Question 47

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Question 48

Table 11-2
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.
​
​
Refer to Table 11-2. Suppose the cost to clean the lake is $8 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Question 49

When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts.

Question 50

Tolls are not effective in altering people's incentives to drive during rush hour.

Question 51

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

Question 52

When a highway is congested, giving rise to negative externalities, it is appropriate to view the highway as a common resource.

Question 53

Depending on congestion, national parks can be either a common resource or a public good.

Question 54

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Question 55

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

Question 56

Table 11-2
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.
​
​
Refer to Table 11-2. Suppose the cost to clean the lake is $32 per hour and that the residents have agreed to split the cost of cleaning the lake equally. It would maximize Lydia's surplus if 6 hours of cleaning is done.
​

Question 57

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Question 58

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

Question 59

A traffic light would be considered a common resource.

Question 60

The pollution market failure is an example of the free rider problem.

Question 61

What particular characteristic do public goods and common resources have in common?

Question 62

What do we mean when we say that a good is rival in consumption?

Question 63

A rather large city has only one fire station, two fire trucks, and four firefighters. Is fire protection in this city characterized by rivalry in consumption?

Question 64

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

Question 65

Which two types of goods are excludable?

Question 66

Which two types of goods are rival in consumption?

Question 67

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Do any of these goods cause an externality? If so, which one(s)? Positive or negative? Briefly explain.

Question 68

Are common resources excludable? Are they rival in consumption?

Question 69

What particular characteristic do private goods and common resources have in common?

Question 70

What particular characteristic do public goods and club goods have in common?

Question 71

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Question 72

What particular characteristic do private goods and club goods have in common?

Question 73

If no one can be prevented from using good x, then good x is one of two types of goods. What are those two types?

Question 74

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a club good? Briefly explain.

Question 75

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly explain.

Question 76

Are public goods excludable? Are they rival in consumption?

Question 77

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Question 78

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a private good? Briefly explain.

Question 79

What do we mean when we say that a good is excludable?

Question 80

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a club good? Briefly explain.