Deck 11: Public Goods and Common Resources

Question 1

Free goods are usually efficiently allocated without government intervention.

Answer 1

False

Question 2

National Public Radio would be considered a natural monopoly.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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 7

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

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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

Question 13

A pair of jeans is rival but non-excludable.

Question 14

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

Question 15

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

Question 16

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

Question 17

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 18

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

Question 19

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

Question 20

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 21

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

Question 22

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 23

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

Question 24

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

Question 25

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

Question 26

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 27

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

Question 28

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

Question 29

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 30

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

Question 31

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

Question 32

If Toby and Pete 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 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

London charges drivers driving in "congestion zones" a tax in order to reduce traffic congestion.

Question 38

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 39

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

Question 40

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Question 41

When goods do not have a price,which of the following primarily ensures that the good is produced?

A) buyers
B) sellers
C) government
D) the market

Question 42

Goods that are not excludable are usually

A) higher priced than excludable goods.
B) higher priced than rival goods.
C) in short supply.
D) free of charge.

Question 43

The old lyric "the best things in life are free"

A) is not true for any goods.
B) is even true for some goods that have a price.
C) refers to goods provided by nature or the government.
D) refers to goods provided by the market.

Question 44

Excludability is the property of a good whereby

A) one person's use diminishes other peoples' use.
B) a person can be prevented from using it.
C) a good is private,not public.
D) a good is public,not private.

Question 45

For most goods in an economy,the signal that guides the decisions of buyers and sellers is

A) preference.
B) government intervention.
C) quantity.
D) price.

Question 46

A good is excludable if

A) one person's use of the good diminishes another person's enjoyment of it.
B) the government can regulate its availability.
C) it is not a normal good.
D) people can be prevented from using it.

Question 47

Private decisions about consumption of common resources and production of public goods usually lead to an

A) efficient allocation of resources and external effects.
B) efficient allocation of resources and no external effects.
C) inefficient allocation of resources and external effects.
D) inefficient allocation of resources and no external effects.

Question 48

Goods that are excludable include both

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

Question 49

Some advocates of antipoverty programs claim that fighting poverty is a public good.Describe why government intervention may be necessary to reduce poverty.

Question 50

When a good is excludable,

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

Question 51

Goods that are not excludable include both

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

Question 52

The government often intervenes when private markets fail to provide an optimal level of certain goods and services.For example,the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another.Why might the private market not reach the socially optimal level of traffic without the help of government?

Question 53

Government policy can potentially raise economic well-being

A) in all markets for goods and services.
B) in economic models,but not in reality.
C) when a good does not have a price attached to it.
D) never.

Question 54

The provision of a public good generates a

A) positive externality,as does the use of a common resource.
B) positive externality and the use of a common resource generates a negative externality.
C) negative externality,as does the use of a common resource.
D) negative externality and the use of a common resource generates a positive externality.

Question 55

Both public goods and common resources are

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

Question 56

When something of value has no price attached to it,

A) externalities will be present.
B) production of the product has no cost.
C) government should not intervene to produce the product.
D) private companies will eventually produce the product,and the good will no longer be free.

Question 57

Both private goods and natural monopolies are

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

Question 58

For private goods allocated in markets,

A) prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
B) prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.
C) the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
D) the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

Question 59

Governments can improve market outcomes for

A) public goods but not common resources.
B) common resources but not public goods.
C) both public goods and common resources.
D) neither public goods nor common resources.

Question 60

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

Question 61

Goods that are not rival in consumption include both

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

Question 62

Bill owns 3 acres of beautiful wooded land.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

A) both rival in consumption and excludable.
B) neither rival in consumption nor excludable.
C) nonrival in consumption and excludable.
D) rival in consumption and nonexcludable.

Question 63

Which of the following goods is rival and excludable?

A) an uncongested toll road
B) an uncongested nontoll road
C) a congested nontoll road
D) a congested toll road

Question 64

A view of a spectacular sunset along a private beach is an example of a

A) private good.
B) public good.
C) nonrival but excludable good.
D) rival but nonexcludable good.

Question 65

Private goods are both

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

Question 66

When a good is rival in consumption,

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

Question 67

Goods that are rival in consumption and excludable would be considered

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

Question 68

Most goods in the economy are

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

Question 69

An FM radio signal is an example of a good that is

A) private.
B) nonrival in consumption.
C) social.
D) nonexcludable in production.

Question 70

If a road is congested,then use of that road by an additional person would lead to a

A) negative externality.
B) positive externality.
C) Pigovian externality.
D) free-rider problem with rush hour drivers stuck in traffic.

Question 71

Which of the following goods is rival in consumption and excludable?

A) a slice of pizza
B) cable TV service
C) a sunset
D) national defense

Question 72

An example of a private good would be

A) national defense.
B) a t-shirt.
C) a streetlight.
D) a river.

Question 73

Which of the following would be considered a private good?

A) national defense
B) a public beach
C) local cable television service
D) a bottle of natural mineral water

Question 74

Some goods can be either common resources or public goods depending on

A) whether the good is rival in consumption.
B) whether the good is excludable.
C) the marginal cost of the good.
D) None of the above is correct.

Question 75

If one person's use of a good diminishes another person's enjoyment of it,the good is

A) rival in consumption.
B) excludable.
C) normal.
D) exhaustible.

Question 76

Which of the following would not be considered a private good?

A) a pair of jeans
B) an apple
C) a Honda Civic
D) cable TV service

Question 77

Goods that are rival in consumption but not excludable would be considered

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

Question 78

The value and cost of goods are easiest to determine when the goods are

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

Question 79

Goods that are rival in consumption include both

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

Question 80

Which of the following goods is rival in consumption and excludable?

A) a tornado siren
B) an uncongested toll road
C) a home
D) the environment