Deck 11: Public Goods and Common Resources

Question 1

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

Answer 1

False

Question 2

Free goods are usually efficiently allocated without government intervention.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

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 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

National Public Radio would be considered a club good.

Question 19

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

Question 20

A pair of jeans is rival but non-excludable.

Question 21

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

Question 22

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

Question 23

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 24

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

Question 25

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

Question 26

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 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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 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

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 40

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 41

Property rights are well established for

A)private goods.
B)public goods.
C)common resources.
D)both (b) and (c).

Question 42

Markets do not ensure that the air we breathe is clean because

A)clean air has no value.
B)the government prevents markets from doing so.
C)property rights are not well established for clean air.
D)clean air is impossible to produce .

Question 43

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

Question 44

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

Question 45

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 46

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

Question 47

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

Question 48

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 49

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

Question 50

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

A)Private markets could easily solve them if governments left the markets alone.
B)They would all go away if the government sponsored an intensive public-information campaign.
C)They are all the result of a failure to establish clear property rights over something of value.
D)They are all the result of a failure of corrective taxes.

Question 51

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

Question 52

Table 11-6
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 11-6. 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 53

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

Question 54

Table 11-6
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 11-6. 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 55

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

Question 56

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

Question 57

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

Question 58

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 59

A traffic light would be considered a common resource.

Question 60

Table 11-6
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 11-6. 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.​

Question 61

Which of the following represents a potential solution to the problem of environmental pollution?

A)corrective taxes
B)well established property rights
C)government regulation
D)All of the above are correct.

Question 62

Which of the following statements is correct?

A)Environmental degradation is an example of a free rider problem..
B)The division between public goods and common resources is clear-cut.
C)Some goods, such as lighthouses, may be either private or public goods.
D)The free-rider problem prevents governments from supplying public goods.

Question 63

It would always be a mistake to view

A)many species of animals as common resources.
B)a road as a public good.
C)national defense as a common resource.
D)a fireworks display as a public good.

Question 64

Markets fail to allocate resources efficiently when

A)demanders and suppliers cannot agree on a price.
B)goods are rival in consumption and excludable.
C)property rights are not well established.
D)too many buyers and sellers exist in the same market.

Question 65

When the absence of property rights causes a market failure, the government can potentially solve the problem

A)by clearly defining property rights.
B)through regulation.
C)by supplying the good itself.
D)All of the above are correct.

Question 66

Which of the following is not a common resource?

A)clean air
B)clean water
C)open grazing land
D)national defense

Question 67

A textbook is a

A)private good and the knowledge that one gains from reading the book is a common resource.
B)private good and the knowledge that one gains from reading the book is a public good.
C)common resource and the knowledge that one gains from reading the book is a public good.
D)common resource and the knowledge that one gains from reading the book is a private good.

Question 68

It would always be a mistake to view

A)a streetlight as a common resource.
B)a nontoll road as a public good.
C)the environment as a common resource.
D)a lighthouse as a public good.

Question 69

If the use of a common resource is not regulated,

A)no one can enjoy it.
B)it will tend to be underused.
C)property rights will be clearly defined.
D)it will be overused.

Question 70

In which of the following examples are property rights not well established?

A)Carmen smokes a cigarette outside the door to her office building.
B)Carlita stocks shelves in a grocery store.
C)Cameron watches a movie in his home theater room.
D)Cathy docks her boat at her lake house.

Question 71

A common theme among examples of market failure is

A)the good being provided harms society in some systematic way.
B)some item of value does not have an owner with the legal authority to control it.
C)cost-benefit analysis will show that private markets should provide the goods and services.
D)government intervention decreases the social benefits.

Question 72

Which of the following statements is not correct?

A)Common resources are rival in consumption but are not excludable.
B)Uncongested toll roads are examples of club goods.
C)When African elephants were privatized, the survival of the species deteriorated.
D)National defense is not rival in consumption, nor is it excludable.

Question 73

When property rights are not well established,

A)private goods become public goods.
B)markets fail to allocate resources efficiently.
C)the distribution of private goods is unfair.
D)government resources are used inefficiently.

Question 74

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

A)to prevent overuse
B)to decrease taxes
C)to fight poverty
D)to increase consumption

Question 75

Which of the following is not a way for the government to solve the problem of excessive use of common resources?

A)regulation
B)taxes
C)turning the common resource into a public good
D)turning the common resource into a private good

Question 76

Each of the following would be considered a common resource except a

A)water reservoir.
B)streetlight.
C)a congested road.
D)book from a public library.

Question 77

Neither public goods nor common resources are

A)excludable, but only public goods are not rival in consumption.
B)excludable, but only common resources are not rival in consumption.
C)rival in consumption, but only public goods are not excludable.
D)rival in consumption, but only common resources are not excludable.

Question 78

Which of the following statements is correct?

A)The establishment of property rights sometimes gives rise to market failure.
B)The absence of property rights sometimes gives rise to market failure.
C)In the context of public goods, the Coase theorem implies that total surplus in some markets can be improved by the elimination of property rights.
D)Government regulation of private behavior, in response to market failure, can never improve social well-being.

Question 79

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents

A)a common resource problem.
B)a public good.
C)a club good.
D)All of the above are correct.

Question 80

Which of the following is not a common resource?

A)elephants in the wild
B)a narrow trail in a park
C)a neighborhood garden
D)Neither a nor b is a common resource.