Deck 19: Public Goods and the Tragedy of the Commons

Question 1

Street lights are an example of a good that is:

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

Answer 1

A

Question 2

A public good is:

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

Answer 2

A

Question 3

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of the following statements is TRUE?

A) If a consumer spends more money on Good 1, she gets more Good 1.
B) If a consumer spends more money on Good 2, she gets more Good 2.
C) If a consumer spends less money on Good 1, she gets less Good 2.
D) If a consumer spends less money on Good 2, she gets less Good 1.

Answer 3

A

Question 4

Which of the following is a list of public goods only?

A) a public beach, soup kitchen meals, public roads
B) online video games, a public beach, national defense, a lighthouse
C) a public beach, a lighthouse, toll highways, public roads
D) national defense, a lighthouse, smog reduction

Question 5

A good is excludable if:

A) people who do not pay cannot be easily prevented from using the good.
B) one person's use of the good does not reduce the ability of another person to use the same good.
C) people who do not pay can be easily prevented from using the good.
D) it is Wi-Fi or a similar service.

Question 6

Which of the following goods is nonexcludable?

A) a can of Coke
B) a concert at Radio City Music Hall
C) national defense
D) an apartment building

Question 7

If a consumer could pay $100 for a new pair of jeans or $100 toward asteroid deflection, what would that consumer likely choose?
I. purchase the jeans
II. purchase asteroid deflection
III. purchase both the jeans and asteroid deflection

A) I only
B) II only
C) III only
D) I and II only

Question 8

Which of the following goods best exemplifies a nonrival good?

A) a bottle of water
B) the Internet
C) an automobile
D) your apartment

Question 9

After Napster was introduced in 1999 as a peer-to-peer file-sharing Internet service, people could cheaply distribute music. Thanks to this and other innovations ("ripping" CDs, torrents, YouTube), music is becoming increasingly:

A) private.
B) nonexcludable.
C) nonrival.
D) taxable.

Question 10

Cellular phone service is an example of a good that is generally:

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

Question 11

Toilet paper is a rival good because:

A) there is a lot of competition in the toilet paper market.
B) it is a substitute good for a bidet.
C) one person's use of toilet paper reduces the ability of another person to use the same sheets.
D) it is made from natural resources.

Question 12

A person ________ be cheaply prevented from using national defense, a(n) ________ good.

A) can; excludable
B) cannot; nonexcludable
C) cannot; excludable
D) can; nonexcludable

Question 13

Use the following to answer questions: Table: Types of Goods $$\begin{array} { | l | l | l | } \hline & \text { Excludable } & \text { Nonexcludable } \\\hline \text { Rival } & 1 & 2 \\\hline \text { Nonrival } & 3 & 4 \\\hline & & \\\hline\end{array}$$

-(Table: Types of Goods) Refer to the table. Which of the following statements is TRUE?
I. Section 1 may contain fruit, chicken, and underwear.
II. Section 2 may contain fish in the ocean, public roads, and public hunting grounds.
III. Section 3 may contain Wi-Fi, cable TV, and digital music.
IV. Section 4 may contain asteroid deflection, national defense, and radio.

A) I, II, and IV
B) III and IV
C) II only
D) I, II, III, and IV

Question 14

If you give a firm $1,000 to protect the earth from asteroids:

A) your contribution will not have an effect on whether the firm will be successful in protecting the earth.
B) your contribution will be vital in determining whether the firm will have enough resources to combat asteroids.
C) your family will now have adequate protection.
D) you are considered a free-rider of public goods.

Question 15

An excludable good is:

A) one that is excluded from the common basket of goods consumed by households.
B) one that producers will exclude from production.
C) one where people can be prevented from using the good.
D) not necessary to consume, that is a luxury.

Question 16

Use the following to answer questions: Table: Types of Goods $$\begin{array} { | l | l | l | } \hline & \text { Excludable } & \text { Nonexcludable } \\\hline \text { Rival } & 1 & 2 \\\hline \text { Nonrival } & 3 & 4 \\\hline & & \\\hline\end{array}$$

-(Table: Types of Goods) Refer to the table. Which of the following statements is TRUE?

A) Section 1 includes national defense.
B) Section 2 includes a can of soda.
C) Section 3 includes cable TV.
D) Section 4 includes an MP3 song.

Question 17

Which of the following is a list of private goods only?

A) a watermelon, toll highways, a private beach, a chair
B) a watermelon, cable Internet service, a private beach, a pencil, a chair
C) a watermelon, a chair, a pencil
D) online video games, a watermelon, a private beach, a pencil, a chair

Question 18

A rival good is one where:

A) one person's use does not impinge on another person's ability to enjoy the same good.
B) one person's use prevents another person's ability to use that good at the same time.
C) two people can use the same good at the same time.
D) the good is simultaneously nonexcludable and public.

Question 19

Which of the following is a list of rival, excludable goods only?

A) a watermelon, toll highways, a private beach, a chair
B) a watermelon, cable Internet service, a private beach, a pencil, a chair
C) a watermelon, a chair, a pencil
D) online video games, a watermelon, a private beach, a pencil, a chair

Question 20

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

A) Most people will find it in their self-interest to pay the firm to protect the earth.
B) Asteroid protection is a private good, so the firm will make a lot of profit.
C) In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense.
D) Most people will not pay a firm for asteroid defense.

Question 21

The environment is an example of a:

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

Question 22

A jump rope is a:

A) rival good.
B) public good.
C) common good.
D) nonrival good.

Question 23

When a good is excludable:

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

Question 24

Which of the following is a list of common resources only?

A) online video games, a private beach, toll highways, cable Internet service
B) a public beach, soup kitchen meals, public roads
C) national defense, a lighthouse, smog reduction
D) online video games, a public beach, soup kitchen meals, public roads

Question 25

Goods that are excludable include both:

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

Question 26

A good is nonexcludable if it is:

A) easy to prevent people from using the good at low cost.
B) easy to make people use the good at low cost.
C) difficult to prevent people from using the good at low cost.
D) difficult to make people use the good at low cost.

Question 27

Common resources are:

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

Question 28

The difference between private goods and common resources is that common resources are:

A) more valuable than private goods.
B) excludable, and private goods are nonexcludable.
C) nonexcludable, and private goods are excludable.
D) nonrival.

Question 29

Which of the following is a list of nonexcludable and rival goods only?

A) a public beach, soup kitchen meals, public roads
B) online video games, a private beach, toll highways, cable Internet service
C) national defense, a lighthouse, smog reduction
D) online video games, a public beach, soup kitchen meals, public roads

Question 30

Which of the following is a list of nonrival private goods only?

A) cable Internet service, toll highways, public roads, soup kitchen meals
B) a public beach, soup kitchen meals, public roads, smog reduction
C) online video games, a private beach, toll highways, cable Internet service
D) national defense, a lighthouse, smog reduction, cable Internet service

Question 31

Which of the following is a list of excludable and nonrival goods only?

A) cable Internet service, toll highways, public roads, soup kitchen meals
B) online video games, a private beach, toll highways, cable Internet service
C) a public beach, soup kitchen meals, public roads, smog reduction
D) national defense, a lighthouse, smog reduction, cable Internet service

Question 32

State highways are an example of a:

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

Question 33

A good is excludable if:

A) the government can regulate the availability of the good.
B) it is a normal good.
C) several people can enjoy the good simultaneously.
D) people can be prevented from using it.

Question 34

Mosquito control is an example of a good that:

A) people still get to enjoy even without paying for it, that is a nonrival good.
B) if used by one person cannot be used by another, that is a nonrival good.
C) people still get to enjoy even without paying for it, that is a nonexcludable good.
D) people must pay for to enjoy, that is an excludable good.

Question 35

Wealthy industrialist Henry Hawk fears an asteroid hitting Earth and is willing and able to pay $15 billion to develop an asteroid deflection system. Suppose asteroid deflection only costs $10 billion and Hawk makes asteroid deflection a reality. What type of good has Henry Hawk provided?

A) public good
B) private good
C) nonrival private good
D) commons resource

Question 36

Private goods are:

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

Question 37

Public goods are:

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

Question 38

Which of the following is a list of nonexcludable, nonrival only?

A) national defense, a lighthouse, smog reduction
B) a public beach, soup kitchen meals, public roads
C) online video games, a public beach, national defense, a lighthouse
D) a public beach, a lighthouse, toll highways, public roads

Question 39

Ocean tuna is an example of a:

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

Question 40

Public roads sometimes get congested, suggesting that public roads are:

A) public goods.
B) rival.
C) private goods.
D) experiencing a free rider problem.

Question 41

People have little incentive to produce a public good because:

A) fixed costs are usually too high.
B) production is impossible.
C) of the free rider problem.
D) social benefits are typically less than total costs.

Question 42

Why is national defense a public good?
I. It is expensive to produce.
II. People who don't pay for national defense still benefit from having it.
III. One person's benefit from national defense doesn't reduce anyone else's benefit from it.
IV. It is provided by the government.

A) I and IV only
B) II and III only
C) II, III, and IV only
D) I, II, and III only

Question 43

The city government taxes its residents to pay for mosquito control. Betty is not happy about paying the tax, for mosquitoes never bite her. Betty is a:

A) free rider.
B) forced rider.
C) taxed rider.
D) lonesome rider.

Question 44

Which of the following statements is FALSE?

A) The total benefit of a public good equals the sum of the benefits to each person.
B) It is harder for society to produce optimal amounts of public goods than it is for private goods.
C) The United States Postal Service is not a public good.
D) People value public goods differently.

Question 45

Public goods are:
I. excludable.
II. nonrival.
III. free to those who do not pay.

A) I only
B) II only
C) I and II only
D) II and III only

Question 46

A free rider is a person who:

A) avoids paying taxes by using tax code loopholes.
B) produces goods at no cost.
C) receives the benefits of a good but avoids paying for it.
D) will purchase products only when on sale.

Question 47

Public goods are those goods that are:

A) nonrival and nonexcludable.
B) rival and nonexcludable.
C) produced by the government.
D) highly valued for the purpose of national security.

Question 48

A major difference between a private good and a public good is that private goods:

A) are excludable, public goods are not.
B) can be produced in efficient quantities while public goods generally are not.
C) are rival in consumption, public goods are not.
D) All of the answers are correct.

Question 49

In which of the case below is there the potential for a free-rider problem?

A) half-off sales at department stores
B) voluntary payments for a smog reduction program
C) group projects where all members have clearly assigned tasks and are responsible for presenting their work
D) cable Internet service

Question 50

A tornado warning siren is an example of a:

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

Question 51

Private goods:
I. are excludable.
II. can be priced.
III. are rival in consumption.

A) I only
B) II only
C) I and III only
D) I, II, and III

Question 52

Private goods are both:

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

Question 53

Compared to private goods, the free market would ________ public goods.

A) overproduce
B) efficiently produce
C) underproduce
D) sometimes overproduce but most often underproduce

Question 54

The sun has features of a:

A) public good -it shines on everyone
B) common resource-everyone in society can use it for warmth and light.
C) rival good that can easily be made excludable.
D) private good since solar energy can be marketed.

Question 55

Free riders are people who:

A) enjoy public goods without paying for them.
B) pay for public goods but do not end up enjoying them.
C) pay for both private and public goods.
D) ride public transportation without paying.

Question 56

Which of the following statements is TRUE?
I. In order for society to have a sufficient level of national defense, the government must tax the public to raise funds for a standing army.
II. For every 100 people that use a public good, approximately 500 people are prevented from using it.
III. People do not have an incentive to voluntarily pay for nonexcludable goods.

A) I and II only
B) III only
C) I and III only
D) I, II, and III

Question 57

Uncongested, nontoll roads are a good example of a:

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

Question 58

An example of a private good would be:

A) a tornado siren.
B) a fireworks display.
C) a piece of fruit.
D) cable TV.

Question 59

Suppose your city has had an increase in crime and the city government decides that more police are needed to patrol at night. Which of the following funding solutions avoids the free-rider problem involved with additional police officers?

A) taxation of the city's top 50% of income earners
B) donation-based police service
C) voluntary police officers
D) an increase in the city's sales tax

Question 60

The problem of free riders is most apparent for:

A) private goods.
B) nonrival private goods.
C) public goods.
D) textbooks.

Question 61

Which of the following is an example of a forced rider?

A) a Canadian-American who pays taxes that help maintain the U.S. army in case of a Canadian invasion
B) someone without children who recently had to start paying a community fee for the maintenance of a new playground
C) a city resident who pays a city tax for a weekly trash removal service
D) someone who dislikes the noise coming from a privately owned park and pays taxes to maintain public parks

Question 62

A forced rider is someone who:

A) pays a share of the costs of a public good but who does not enjoy the benefits.
B) pays a share of the costs of a public good and enjoys the benefits.
C) does not pay a share of the costs of a public good but who enjoys the benefits.
D) does not pay a share of the costs of a public good and does not enjoy the benefits.

Question 63

What quantity of public goods should the government produce?

A) the quantity that maximizes the sum of producer and consumer surplus
B) the quantity where consumer surplus is maximized
C) the quantity where consumer surplus is maximized and producer surplus is minimized
D) the quantity where the total benefits equal the total costs

Question 64

Which of the following explains why it is difficult to determine the optimal quantity of public goods that the government should produce?

A) It is difficult to determine how much budget the government should have each year.
B) It is difficult to assess exactly how much each individual values a public good.
C) It is difficult to identify how public goods really benefit the society.
D) It is difficult to find out how demographics change over time.

Question 65

Hamburgers are example of goods that are:

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

Question 66

Which of the following statements is TRUE?
I. Excludability leads to efficiency.
II. The benefits of public goods provide an argument for government provision of these goods.
III. Taxation turns some people into free riders.

A) I and II only
B) II only
C) II and III only
D) I, II, and III

Question 67

Asteroid deflection would be considered a:

A) public good since it is rival and nonexcludable.
B) public good since it is nonrival and nonexcludable.
C) private good since it is rival and excludable.
D) private good since it is nonrival and excludable.

Question 68

Which of the following would NOT be considered an example of a public good?

A) asteroid deflection
B) national defense
C) mosquito control
D) public roads

Question 69

It is difficult to get people to pay for public goods voluntarily because these goods are:

A) excludable, and therefore markets tend to overprovide them.
B) excludable, and therefore markets tend to underprovide them.
C) nonexcludable, and therefore markets tend to overprovide them.
D) nonexcludable, and therefore markets tend to underprovide them.

Question 70

Private goods can be provided by competitive markets because they are:

A) excludable, providing an incentive to pay for and thus to produce these goods.
B) excludable, since the market for buying and selling these goods is distinguishable.
C) nonexcludable, providing an incentive to pay for and thus to produce these goods.
D) nonexcludable, since the market for buying and selling these goods cannot be distinguished.

Question 71

Sarah pays county taxes, part of which are used to subsidize public schools, even though she has no children. Sarah is an example of:

A) a free rider.
B) statistical discrimination.
C) tragedy of the commons.
D) a forced rider.

Question 72

Which of the following statements is correct?

A) It is paradoxical that people can be made better off by requiring them to do something that they would choose to do voluntarily.
B) It is paradoxical that people cannot be made better off by requiring them to do something that they would choose to do voluntarily.
C) Even though none contribute voluntarily, all would agree to be taxed as long as everyone else is also taxed.
D) Even though everyone contributes voluntarily, no one would agree to be taxed if everyone else is not taxed.

Question 73

Many individuals refer to education as a public good. How is education NOT a public good?

A) Its acquisition is rival.
B) Its acquisition is excludable.
C) Its acquisition is both rival and excludable.
D) Its acquisition is usually rival and rarely excludable.

Question 74

Voting and other democratic procedures:
I. provide information about an individual's preferences for public goods.
II. result in an efficient allocation of resources.
III. result in the government underproducing public goods, just like the market would.

A) I and II only
B) I and III only
C) III only
D) I only

Question 75

Which of the following methods would help to produce optimal amounts of public goods?

A) antitrust law
B) regulation
C) privatization
D) taxation

Question 76

If markets underproduce public goods because of the free rider problem,:

A) the price of the public good will increase.
B) total value in society will be minimized.
C) it may be more efficient for the government to tax individuals to pay for the production of the public good.
D) entrepreneurs will not be able to find a way to profit from the production of these goods.

Question 77

Markets tend to be inefficient when it comes to public goods because:

A) the government tends to overproduce the good.
B) free riders lead to an underproduction of the good.
C) the rival nature of the good makes it hard to collect payment from consumers.
D) consumers tend to value these goods less than private goods.

Question 78

Which of the following conditions would turn some people into forced riders?

A) People must contribute to the public good because their benefit from the public good is high.
B) People must contribute to the public good even though they will not benefit from the public good.
C) People are not required to contribute to the public good if they will not receive any benefit from it.
D) None of the answers is correct.

Question 79

Mosquito control must be provided by the government because if:

A) a lot of people free ride then mosquito control would be overprovided by the market.
B) a lot of people free ride then mosquito control would be underprovided by the market.
C) only few people are benefited then mosquito control would be overprovided by the market.
D) only few people are benefited then mosquito control would be underprovided by the market.

Question 80

The need to produce public goods provides a strong argument for:

A) regulation and subsidy.
B) regulation and government provision.
C) taxation and subsidy.
D) taxation and government provision.