Deck 4: Public Goods

Question 1

Commodity egalitarianism refers to commodities that

A)are good ideas but never produced.
B)are important for most consumers.
C)should be made available to all consumers.
D)are too dangerous for most consumers.

Answer 1

should be made available to all consumers.

Question 2

A pure public good is

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

Answer 2

nonrival and nonexcludable in consumption.

Question 3

Summing demand curves horizontally sends market to individuals, while summing vertically sends market to individuals.

A)quantity; price
B)price; price
C)price; quantity
D)quantity; quantity

Answer 3

price; quantity

Question 4

Market mechanisms are unlikely to provide

A)public goods efficiently.
B)prices.
C)supply and demand.
D)none of these answers is correct.

Question 5

The free rider problem causes less than optimal production of a public good.

A)True
B)False
C)Uncertain

Question 6

Vertical summation of demand curves yields results equivalent to those of horizontal summation.

A)True
B)False
C)Uncertain

Question 7

Charging individual prices that are based on consumers' willingness to pay is

A)will pricing.
B)price discrimination.
C)government price supports.
D)second tier pricing.

Question 8

When asked to reveal their true preferences people

A)always tell the truth.
B)sometimes tell the truth.
C)never tell the truth.
D)generally don't know what preferences are.

Question 9

Increasing distortionary taxes to finance an additional unit of the public good further distorts the allocation of resources in the economy but increases economic efficiency.

A)True
B)False
C)Uncertain

Question 10

Equilibrium in the market is where supply is equal to demand.

A)True
B)False
C)Uncertain

Question 11

Public goods are always provided by the public sector.

A)True
B)False
C)Uncertain

Question 12

Recent evidence supports the view that privately-owned firms exhibit lower productivity than government-owned firms.

A)True
B)False
C)Uncertain

Question 13

The MRT is

A)the minimal rate of time.
B)the maximum rate of transformation.
C)the marginal rate of taxation.
D)none of these answer options is correct.

Question 14

Public goods can be

A)subject to free rider problems.
B)provided privately.
C)provided publicly.
D)all of these answer options are correct.

Question 15

A pure public good can become an impure public good.

A)True
B)False
C)Uncertain

Question 16

National defence is an example of a good that is both nonrival and nonexcludable.

A)True
B)False
C)Uncertain

Question 17

Choosing between public or private provision of a good always leads to market efficiencies.

A)True
B)False
C)Uncertain

Question 18

An example of a private good is

A)a lighthouse.
B)an ice cream cone.
C)an express toll route.
D)national defence.

Question 19

Private goods are always provided by the private sector.

A)True
B)False
C)Uncertain

Question 20

A private good is

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

Question 21

Suppose that there are only two fishermen, Zach and Jacob, who fish along a certain coast. They would each benefit if a lighthouse were built along the coast where they fish. The marginal cost of building each additional lighthouse is $150. The marginal benefit to Zach of each additional lighthouse is 90 - Q, and the marginal benefit to Jacob is 40 - Q, where Q equals the number of lighthouses.
What is the efficient number of lighthouses?

Question 22

Equilibrium for public goods is characterized by

A)MC = MB.
B)SMB = SMB.
C)MRS1 + MRS2 + MRS3 + … + MRSn = MRT.
D)SMC = MRT.

Question 23

Impure public goods

A)are the same as pure public goods.
B)are to some extent rival or excludable in consumption.
C)are nonrival in consumption.
D)are nonexcludable in consumption.

Question 24

A is a person who wants to enjoy the benefits of a public good without contributing his or her marginal benefit to the cost of financing the amount made.

A)free rider
B)price optimizer
C)politician
D)price maker

Question 25

Suppose you are given the following demand curves: Q = 32 - P and Q = 16 - (P/2). Add these two demand curves vertically and find the market demand curve.

Question 26

Suppose there are two individuals with identical demand curves characterized by the equation P = 2
- Q. What is market demand if these demand curves are added horizontally? Vertically?

Question 27

From the figures below, the market price of rockets is

A)6.
B)4.
C)10.
D)20.

Question 28

Some people do not engage in free riding, even when there is no cost or chance or reprisal. Discuss why?

Question 29

There are not many examples of pure public goods. Why?

Question 30

Which of the following is a public good?

A)Toll highways
B)Thrift stores
C)Cable television
D)Schools

Question 31

Suppose there is a public good that has market supply characterized by the equation X = (P/3)- (32/3). Suppose further that market demand for this good can be characterized by the equation X = 25 - P. Find the equilibrium quantity of the public good that will be supplied.

Question 32

Discuss and contrast the advantages and disadvantages of public highways versus toll roads.

Question 33

Most goods that are nonexcludable are pure public goods.

A)True
B)False
C)Uncertain