Deck 19: Public Goods and Common Resources

Question 1

When a good ends up undersupplied,we can assume it is:

A)a common resource.
B)a private good.
C)a public good.
D)None of these goods can be undersupplied.

Answer 1

a public good.

Question 2

When a good ends up overconsumed and depleted,we can assume it is:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Answer 2

a common resource.

Question 3

Which of the following goods is most likely to be overconsumed?

A)Fish in the ocean
B)Fish in a pet store
C)Fish in the grocery store
D)None of these is likely to be overconsumed.

Answer 3

Fish in the ocean

Question 4

When faced with a market failure,the government:

A)usually tries to redistribute the existing surplus more fairly.
B)always takes over the market.
C)often encourages the well-functioning firms to stay through protectionist policy.
D)None of these statements is true.

Question 5

Which of the following is likely to cause a market failure and be overconsumed?

A)Grazing pastureland
B)Cable TV
C)Public health
D)Education

Question 6

If you can't prevent people from consuming something,then:

A)they have little reason to pay for using it.
B)the good is not excludable.
C)individuals will likely use it for free.
D)All of these statements are true.

Question 7

An example of a good that is not excludable is:

A)fish in the ocean.
B)wireless connection to the Internet.
C)a movie in a theater.
D)None of these is excludable.

Question 8

Excludability matters because it:

A)allows owners to set an enforceable price on a good.
B)allows consumers to control the price of a good.
C)creates a perceived scarcity that allows the seller to keep the price artificially high.
D)creates a perceived scarcity that causes buyers to have an inelastic demand for the good.

Question 9

When a good is excludable:

A)it is possible for sellers to prevent its use by those who have not paid for it.
B)one person's consumption prevents or decreases others' ability to consume it.
C)consumers have a perception of scarcity of that good.
D)the government has specific import policies limiting its supply.

Question 10

A type of good that is subject to market failure is:

A)a public good.
B)a private good.
C)an uncommon resource.
D)None of these goods is subject to market failure.

Question 11

An example of an excludable good is:

A)ice cream.
B)a movie in a theater.
C)a digital camera.
D)All of these are excludable goods.

Question 12

The problem caused by goods that are considered common resources is that they:

A)are overconsumed.
B)are undersupplied.
C)are oversupplied.
D)are underconsumed.

Question 13

Private goods are:

A)not rival in consumption,but excludable.
B)rival in consumption and excludable.
C)rival in consumption,but not excludable.
D)not rival in consumption and not excludable.

Question 14

An example of an excludable good is:

A)a movie in a theater.
B)a city park.
C)a rainbow.
D)None of these is an excludable good.

Question 15

Which of the following goods is most likely to be overconsumed?

A)Fish in the ocean
B)Chickens on a farm
C)Horses on a ranch
D)None of these is likely to be overconsumed.

Question 16

Which of the following is likely to cause market failure and be undersupplied?

A)Research
B)Orange juice
C)River water
D)Grazing pasture

Question 17

When a good is rival in consumption:

A)one person's consumption prevents or decreases others' ability to consume it.
B)it is possible for sellers to prevent its use by those who have not paid for it.
C)consumers have a perception of scarcity of that good.
D)the government has specific import policies limiting its supply.

Question 18

Which of the following is most likely to be overconsumed?

A)Sparkling water
B)Tap water
C)Bottled water
D)None of these is likely to be overconsumed.

Question 19

Public goods,when left to the private market:

A)will be undersupplied.
B)will be overconsumed.
C)will be underconsumed.
D)will be oversupplied.

Question 20

Most goods are:

A)rival in consumption.
B)exclusive.
C)public goods.
D)None of these statements is true.

Question 21

Goods that are not rival in consumption,but are excludable are:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 22

Fish in the ocean would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 23

An example of a good that is rival in consumption is:

A)a sweater.
B)bottled water.
C)tap water.
D)All of these goods are rival in consumption.

Question 24

Cookies would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 25

A public good is:

A)rival in consumption and excludable.
B)not rival in consumption,but excludable.
C)rival in consumption,but not excludable.
D)not rival in consumption and not excludable.

Question 26

The free rider problem is caused by:

A)the nonexcludability of a good leading to the undersupply of it.
B)the incentive to oversupply the good since it is nonrival in consumption.
C)the rivalness in consumption of a good leading to the overconsumption of that good.
D)the rivalness in consumption of a good leading to the undersupply of it.

Question 27

A smart phone would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 28

An example of a good that is rival in consumption is:

A)a hamburger.
B)radio signals broadcast over the air.
C)national defense.
D)None of these goods is rival in consumption.

Question 29

Goods that are neither rival in consumption nor excludable are:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 30

Fireworks would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 31

When a good is not easily excludable,what people pay for it will:

A)not necessarily reflect the real value they place on it.
B)reflect the real value they place on it.
C)exactly equal the social benefit of the good.
D)All of these statements are true.

Question 32

Markets work well for allocating ____________ efficiently,but not always so well for allocating ______________________.

A)private goods;public goods
B)public goods;private goods
C)common resources;public goods
D)public goods;common resources

Question 33

Traffic lights would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 34

Goods that are rival in consumption and excludable are:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 35

A common resource is:

A)rival in consumption and excludable.
B)not rival in consumption,but excludable.
C)rival in consumption,but not excludable.
D)not rival in consumption and not excludable.

Question 36

An artificially scarce good is:

A)rival in consumption and excludable.
B)not rival in consumption,but excludable.
C)rival in consumption,but not excludable.
D)not rival in consumption and not excludable.

Question 37

Streaming Netflix movies would be considered:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 38

An example of a good that is rival in consumption is:

A)a sports car.
B)a paper clip.
C)bottled water.
D)All of these goods are rival in consumption.

Question 39

The similarity between markets for common resources and markets with externalities is that:

A)the price that competitive firms charge does not capture the true costs and benefits of consumption.
B)the equilibrium quantity is too high in terms of society.
C)government involvement is needed to reach an efficient outcome.
D)All of these statements are true.

Question 40

Goods that are rival in consumption,but not excludable are:

A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.

Question 41

An example of a public good is:

A)national defense.
B)libraries.
C)timber.
D)All of these are public goods.

Question 42

When a good is both rivalrous and nonexcludable:

A)the free rider problem may arise.
B)the tragedy of the commons may arise.
C)the good is likely a private good.
D)the good is likely an artificially scarce good.

Question 43

One way to solve the free-rider problem is:

A)have the government provides the good at a certain cost.
B)make the good or service more excludable.
C)tax those who truly value the good.
D)tax everyone an equal amount for the good.

Question 44

An example of a public good is:

A)health.
B)cleanliness.
C)radio signals.
D)All of these are public goods.

Question 45

Free riders enjoy:

A)positive externalities from others' choices to pay for a good.
B)negative externalities from others' choices to pay for a good.
C)positive externalities transferred from consumers who receive subsidies.
D)positive externalities from a good they choose to buy themselves.

Question 46

The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________

A)nonexcludable;both rivalrous and nonexcludable.
B)rivalrous;both rivalrous and nonexcludable.
C)both rivalrous and nonexcludable;rivalrous.
D)both rivalrous and nonexcludable;excludable.

Question 47

The combination of inefficiently high demand and dwindling quantity leads to what is called:

A)the free rider problem.
B)nonexcludable consumption.
C)rival in consumption.
D)the tragedy of the commons.

Question 48

The tragedy of the commons arises from:

A)the combination of rivalry and nonexcludability.
B)the good being rival.
C)the good being excludable.
D)the combination of rivalry and excludability.

Question 49

Nonexcludable goods tend to be undersupplied because:

A)the free rider problem persists.
B)people do not pay the true value of the good.
C)people rarely willingly pay for something they could get for free,regardless of how much they value it.
D)All of these statements are true.

Question 50

Wikipedia is an example of:

A)a public good.
B)a private good.
C)a common resource.
D)an artificially scarce resource.

Question 51

When the free rider problem is present in a market:

A)what people pay often does not reflect the real value they put on a good.
B)the good will likely be overconsumed.
C)the good is rival in consumption.
D)All of these statements are true.

Question 52

Nonexcludability,in the case of rival goods,causes:

A)inefficiently high demand.
B)inefficiently low demand.
C)efficient,high demand.
D)efficient,low demand.

Question 53

When what people pay does not necessarily reflect the real value they put on a good,it is likely that:

A)the free rider problem exists.
B)the good will be undersupplied.
C)the good is not easily excludable.
D)All of these statements are true.

Question 54

When a good is not excludable and rival in consumption:

A)the free rider problem may arise.
B)the tragedy of the commons may arise.
C)the good is likely a private good.
D)the good is likely a common resource.

Question 55

The tragedy of the commons is:

A)the undersupply of a public good due to people not wanting to pay for a publicly common good.
B)the disappearance of certain markets due to the lack of willingness to pay by individuals,leading to collective misfortune.
C)the depletion of a common resource due to individually rational but collectively inefficient overconsumption.
D)None of these statements is correct.

Question 56

The depletion of a common resource due to individually rational but collectively inefficient overconsumption is called:

A)the tragedy of the commons.
B)the free rider problem.
C)rival in consumption.
D)excludability.

Question 57

In a market where the tragedy of the commons arises,the equilibrium quantity is both individually ____________ and collectively __________.

A)rational;inefficient
B)inefficient;rational
C)irrational;efficient
D)efficient;irrational

Question 58

The free-rider problem is triggered by being:

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

Question 59

Nonexcludability causes:

A)people to demand a higher quantity than they would if they had to pay for what they consumed.
B)people to demand a lower quantity than they would if they paid for what they consumed.
C)firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good.
D)firms to supply a higher quantity than they would if they had to pay for what they supplied.

Question 60

When the free rider problem is present in a market:

A)the good will be oversupplied.
B)the good will be underconsumed.
C)the good is rival in consumption.
D)the good is not excludable.

Question 61

One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is:

A)clear distinctions between who is and is not allowed to access the resource.
B)the participation of resource users in setting the rules for use.
C)the ability of users to monitor one another.
D)All of these are important to the effectiveness of community-based solutions.

Question 62

Because government bodies have the power to impose limits on how much of a resource is consumed:

A)it can be efficiency enhancing in markets for common resources.
B)it will always cause deadweight loss.
C)they decide what is the "right" amount for the public to consume.
D)they will often correct a market before testing the effectiveness of social norms to correct the problem.

Question 63

Elinor Ostrom won the 2009 Nobel Prize in economics for her research showing:

A)social norms can sometimes be powerful enough for commonly held property to be managed extremely well.
B)social norms are not an effective solution for the management of commonly held property.
C)that privatization of public goods is the most effective solution to market failure associated with commonly held property.
D)government provision of public goods is the most efficient solution to the tragedy of the commons problem.

Question 64

Social disapproval carries a higher cost in places where you:

A)know the people around you.
B)care about the opinions of people around you.
C)expect to interact with the people around you again in the future.
D)All of these statements are true.

Question 65

Because government bodies have the power to make up for inadequate supply of a good:

A)its presence as a producer is in virtually every market.
B)it can be efficiency enhancing in markets for public goods.
C)they have incentive to compete with local businesses.
D)None of these statements is true.

Question 66

In 2009,the Nobel Prize in economics was awarded for work on the effectiveness of social norms in the management of commonly held property to:

A)Arthur Pigou.
B)Gary Becker.
C)Elinor Ostrom.
D)Ronald Coase.

Question 67

Using a common resource:

A)creates a positive externality for others.
B)maximizes total surplus.
C)is an irrational decision.
D)imposes a negative externality on others.

Question 68

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created,their demand curve:

A)would shift straight down and they would consume less.
B)would shift straight up and they would consume more.
C)would shift straight down and they would consume more.
D)would shift straight up and they would consume less.

Question 69

Government intervention can be productive and efficiency enhancing:

A)whenever it regulates a market.
B)in markets for public goods and common resources.
C)because the government always acts with altruistic motives.
D)except in markets for public goods.

Question 70

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created:

A)an efficient level would be reached.
B)total surplus would be maximized for the whole society.
C)individuals would consume less.
D)All of these statements are true.

Question 71

When we consider solving a free rider problem through changing social norms,it is helpful to remember:

A)all costs aren't financial.
B)social disapproval can be considered a cost.
C)conflict with those in your community can be considered a cost.
D)All of these statements are true.

Question 72

Social disapproval is likely to be more effective:

A)in a small town than a large city.
B)in solving a free rider problem than a tragedy of the commons problem.
C)than taxation.
D)All of these statements are true.

Question 73

When someone does not have to pay for a good:

A)it is rational to overconsume.
B)it is irrational to overconsume.
C)it is rational to underconsume.
D)it means there is zero demand for the good.

Question 74

One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is:

A)the government setting clear rules for use.
B)individual pledges to self-monitor their actions.
C)clear distinctions between who is and is not allowed to access the resource.
D)All of these are important to the effectiveness of community-based solutions.

Question 75

When goods are subject to market failure,one possible solution is to:

A)change social norms.
B)have government either regulate the market or provide the good.
C)privatize the good.
D)All of these are possible solutions.

Question 76

If the government runs an ad campaign to shame litterers,they are:

A)wasting a lot of money.
B)trying to get individuals to internalize the negative externality created by their decision to litter.
C)using protectionist policy to help the trash-collecting industry.
D)All of these statements are true.

Question 77

In order to eliminate a free rider problem or tragedy of the commons problem:

A)the social costs must be realized by the individual.
B)something must be done to alter individuals' trade-offs.
C)market participants must internalize the value of the externality.
D)All of these statements are true.

Question 78

When government tries to change social norms,they:

A)might run an extensive ad campaign.
B)are trying to change people's opinions about their actions.
C)try to get consumers to internalize the cost or benefit they cause by their market decision.
D)All of these statements are true.

Question 79

Not having to pay for a good leads to:

A)overconsumption.
B)underconsumption.
C)oversupply.
D)None of these statements is true.

Question 80

All solutions to market failures in markets for public goods or common resources:

A)try to force the internalization of externalities.
B)must be provided by the government.
C)are not perfect,and total surplus cannot be maximized in these markets.
D)need to be accepted by the affected parties to be effective.