Question 1

A good is _____ when it is difficult to prevent someone from using or having access to it.

Accepted Answer

A good is nonexcludable when it is difficult to prevent someone from using or having access to it. This means that individuals cannot be easily excluded from using the good or service, regardless of whether or not they have paid for it.

Question 2

A nonrival good is a good:

Accepted Answer

A nonrival good is a good where one person's use of the good does not reduce another person's ability to use the same unit of the good. Therefore, option C is the correct answer. Option A describes a nonexcludable good, option B describes a monopoly, and option D describes a product with lack of competition.

Question 3

A good has a free-rider problem when:

Accepted Answer

A free-rider problem occurs when someone can enjoy the benefits of a good or service without paying for it. This creates a disincentive for individuals to pay for the good because they know they can still benefit from it without incurring any costs. Therefore, choice B is the correct answer. Choices A, C, and D do not accurately describe a free-rider problem.

Question 4

Which of the following would be both nonrival and nonexcludable?

Accepted Answer

A siren tornado warning system is both nonrival and nonexcludable because its use by one individual does not reduce its availability to others (nonrival), and no one can be effectively prevented from benefiting from it (nonexcludable).

Question 5

Which of the following goods would be nonrival?

Accepted Answer

An online course would be nonrival because multiple people can consume the course at the same time without diminishing its availability or quality for others.

Question 6

When a good is nonrival and nonexcludable, it suffers from the _____ problem.

Accepted Answer

Nonrival and nonexcludable goods, sometimes referred to as public goods, are difficult to provide through the market because people have an incentive to free ride, or enjoy the benefits without paying their fair share. This problem is known as the free-rider problem. Cap and trade refers to a system to limit pollution, the Coase Theorem is a theory about private bargaining, and partial good is not a commonly used term in economics.

Question 7

A government uses taxes to build and maintain a museum, and citizens can visit the museum without paying an admission fee. Which of the following considerations implies that visiting a museum is NOT a public good?

Accepted Answer

Although enjoying the exhibits might be nonrival, the experience is excludable because admittance could easily be limited to those who pay. Therefore, visiting a museum is not a public good.

Question 8

When a good is a rival good:

Accepted Answer

A rival good is a good that can only be used by one person at a time, meaning if one person is using it, it is not available for others to use. Therefore, one person's use of it prevents others from using it.

Question 9

In a market system, public goods would:

Accepted Answer

In a market system, public goods tend to be underproduced because they are non-excludable, meaning that it is difficult to exclude non-payers from consuming the good. As a result, individuals may have an incentive to free-ride and not contribute to the provision of public goods, leading to an underproduction of these goods.

Question 10

Which of the following is FALSE regarding public goods?

Accepted Answer

A public good is defined as a good that is nonexcludable and nonrival. Nonrival means that the consumption of the good by one individual does not affect the availability of the good for consumption by others.

Question 11

The difference between a club good and a public good is that a club good is _____ and a public good is _____.

Accepted Answer

Club goods are excludable but nonrival, meaning they can prevent people from using them but one person's use doesn't reduce availability for others. Public goods are nonexcludable and nonrival, meaning they are available to everyone and one person's use doesn't affect another's.

Question 12

A good that is excludable but nonrival in consumption is known as a _____ good.

Accepted Answer

A good that is excludable but nonrival in consumption is known as a club good. This means that the good can be restricted to certain individuals (excludable), but when one person consumes the good, it does not decrease the amount available for others to consume (nonrival). Club goods typically have a limited capacity and are provided by a club or organization, such as a private golf course or a satellite TV subscription.

Question 13

Common resources have:

Accepted Answer

Common resources typically involve private gains for the individuals who exploit them, but the costs of their overuse or depletion are shared by the broader community.

Question 14

The tragedy of the commons is the:

Accepted Answer

The tragedy of the commons refers to the tendency of individuals to overconsume common resources, leading to their depletion. This occurs because individuals do not bear the full costs of their consumption, but rather share them with the rest of society, leading to a situation where each person has an incentive to use as much of the resource as possible before others do the same. This leads to a situation where the resource is overexploited and eventually depleted, to the detriment of everyone.

Question 15

How can the tragedy of the commons be averted?

Accepted Answer

The answer of How can the tragedy of the commons...

Question 16

What type of good is rival and nonexcludable?

Accepted Answer

Common resources are rival in consumption since one person's use reduces the availability for others and they are non-excludable meaning that it is difficult or impossible to exclude someone from using the resource. Examples include clean air and fish in the ocean.

Question 17

What type of good is rival and excludable?

Accepted Answer

Rival goods are those whose consumption by one person reduces the availability of the same good for others, and excludable goods are those which can be restricted to certain individuals or groups. Private goods are both rival and excludable, as they can be owned by individuals and their consumption by one person reduces the availability of the same good for others. Examples include clothing, food, and electronics.

Question 18

What type of good is nonrival and excludable?

Accepted Answer

Nonrival goods are ones that can be consumed by multiple people without diminishing its quantity or quality. Excludable goods are ones that can be restricted to certain individuals or groups. Club goods fit this definition, as they are goods that can be enjoyed by multiple people but can also be restricted to a certain group who pay for access to it, such as a gym membership or a streaming service like Netflix.

Question 19

What type of good is nonrival and nonexcludable?

Accepted Answer

Public goods are nonrival and nonexcludable, meaning that consumption by one individual does not reduce the amount available to others and it is difficult to exclude non-payers from consuming the good.

Question 20

Ollie considers the benefits and costs of buying a large motorcycle versus a bicycle or a car. He buys the motorcycle. What externalities might be associated with Ollie's use of his motorcycle that he might not have considered when he assessed the benefits and costs of buying a large motorcycle?

Accepted Answer

The answer of Ollie considers the benefits and costs of...

Quiz 10: Externalities and Public Goods