Deck 18: Public Economy

Question 1

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only excludable and nonrival goods fromthe table?

A)cable Internet service, toll highways, public roads, soup kitchen meals
B)online video games, a private beach, toll highways, cable Internet service
C)public beaches, soup kitchen meals, public roads, smog reduction
D)national defense, a lighthouse, smog reduction, cable Internet service

Answer 1

B

Question 2

Suppose that a firm plans to provide defense against asteroidsstriking the earth. Which of the following is TRUE?

A)Most people will find it in their self-interest to pay the firm to protect the earth.
B)Asteroid protection is a private good, so the firm will make a lot of profit.
C)In case of an earth bound asteroid, the firm will not protect people who refused to pay for asteroid defense.
D)Most people will not pay a firm for asteroid defense.(True Answer )Correct

Answer 2

D

Question 3

(Table: Types of Goods) Refer to the table. Which of thefollowing statements is true?

A)Section 1 includes national defense.
B)Section 2 includes a can of soda.
C)Section 3 includes wireless Internet.
D)Section 4 includes an MP₃ song.

Answer 3

C

Question 4

A good is excludable if:

A)the government can regulate the availability of the good.
B)it is a normal good.
C)several people can enjoy the good simultaneously.
D)people can be prevented from using it.(True Answer )Correct

Question 5

Goods that are excludable include both:

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

Question 6

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only private goods from the table?

A)a watermelon, toll highways, a private beach, a chair
B)a watermelon, cable Internet service, a private beach, a pencil, a chair
C)a watermelon, a chair, a pencil
D)online video games, a watermelon, a private beach, a pencil, a chair

Question 7

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only rival, excludable goods from the table?

A)a watermelon, toll highways, a private beach, a chair
B)a watermelon, cable Internet service, a private beach, a pencil, a chair
C)a watermelon, a chair, a pencil
D)online video games, a watermelon, a private beach, a pencil, a chair

Question 8

A public good is:

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

Question 9

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only public goods from the table?

A)a public beach, soup kitchen meals, public roads
B)online video games, a public beach, national defense, a lighthouse
C)a public beach, a lighthouse, toll highways, public roads
D)national defense, a lighthouse, smog reduction (True Answer )Correct

Question 10

A person ________ be cheaply prevented from using nationaldefense, a(n) ________ good.

A)can; excludable
B)cannot; nonexcludable
C)cannot; excludable
D)can; nonexcludable

Question 11

A rival good is one where:

A)one person's use does not impinge on another person's ability to enjoy the same good.
B)one person's use prevents another person's ability to use that good at the same time.
C)two people can use the same good at the same time.
D)the good is simultaneously nonexcludable and public.

Question 12

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only nonexcludable and rival goods fromthe table?

A)a public beach, soup kitchen meals, public roads (True Answer )Correct
B)online video games, a private beach, toll highways, cable Internet service
C)national defense, a lighthouse, smog reduction
D)online video games, a public beach, soup kitchen meals, public roads

Question 13

When a good is excludable:

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

Question 14

(Table: Types of Goods) Refer to the table. Which of thefollowing statements is true?
I) Section 1 may contain fruit, chicken, and underwear
II)Section 2 may contain fish in the ocean, public roads, andpublic hunting grounds
III) Section 3 may contain Wi-Fi, cable TV, and digital music.IV. Section 4 may contain asteroid deflection, national defense,and radio.

A)I, II, and IV
B)III and IV
C)II only
D)I, II, III, and IV

Question 15

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only common resources from the table?

A)online video games, a private beach, toll highways, cable Internet service
B)a public beach, soup kitchen meals, public roads (True Answer )Correct
C)national defense, a lighthouse, smog reduction
D)online video games, a public beach, soup kitchen meals, public roads

Question 16

If you give a firm $1,000 to protect the earth from asteroids:

A)your contribution will not have an effect on whether the firm will be successful in protecting the earth.(True Answer
)Correct
B)your contribution will be vital in determining whether the firm will have enough resources to combat
Asteroids.
C)your family will now have adequate protection.
D)you are considered a free-rider of public goods.

Question 17

Table: Example GoodsA WatermelonA LighthouseSmog ReductionOnline Video GamesCable Internet ServiceNational DefenseA Private BeachA Public BeachA PencilSoup Kitchen MealsA ChairToll HighwaysPublic RoadsReference: Ref 18-2(Table: Example Goods) Refer to the table. Which of thefollowing contains only nonexcludable, nonrival goods fromthe table?

A)national defense, a lighthouse, smog reduction (True Answer )Correct
B)a public beaches, soup kitchen meals, public roads
C)online video games, a public beach, national defense, a lighthouse
D)a public beach, a lighthouse, toll highways, public roads

Question 18

Suppose that a private-sector firm produces two goods: Good 1 is a private good and Good 2 is a public good. Which of thefollowing statements is true?

A)If a consumer spends more money on Good 1, she gets more Good 1.
B)If a consumer spends more money on Good 2, she gets more Good 2.
C)If a consumer spends less money on Good 1, she gets less Good 2.
D)If a consumer spends less money on Good 2, she gets less Good 1.

Question 19

An excludable good is:

A)one that is excluded from the common basket of goods consumed by households.
B)one that producers will exclude from production.
C)one where people can be prevented from using the good.
D)not necessary to consume, a luxury.

Question 20

Toilet paper is a rival good because:

A)there is a lot of competition in the toilet paper market.
B)it is a substitute good for a bidet.
C)one person's use of toilet paper reduces the ability of another person to use the same sheets.
D)it is made from natural resources.

Question 21

The city government taxes its residents to pay for mosquitocontrol. Betty is not happy about paying the tax, formosquitoes never bite her. Betty is a:

A)free rider.
B)forced rider.
C)taxed rider.
D)lonesome rider.

Question 22

An example of a private good would be:

A)a tornado siren.
B)a fireworks display.
C)a piece of fruit.
D)cable TV.

Question 23

Uncongested, non-toll roads are a good example of a:

A)public good.
B)common resource.
C)private good.
D)natural monopoly.

Question 24

Goods that are rival in consumption include both:

A)public goods and common resources.
B)common resources and natural monopolies.
C)common resources and private goods.(True Answer )Correct
D)public goods and private goods.

Question 25

A tornado warning siren is an example of a:

A)private good.
B)public good.
C)common resource.
D)rival public good.

Question 26

Compared to private goods, the free market would ________public goods.

A)overproduce
B)efficiently produce
C)underproduce
D)sometimes overproduce but most often underproduce

Question 27

Which of the following is rival and not excludable?

A)cable TV
B)lobsters in the ocean
C)national defense
D)clothing

Question 28

The problem of free riders is most apparent for:

A)private goods.
B)nonrival private goods.
C)public goods.
D)textbooks.

Question 29

Which of the following goods is not rival and not excludable?

A)a boat
B)a public road
C)an ice cream cone
D)a street light

Question 30

Both public goods and common resources are:

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

Question 31

People have little incentive to produce a public good because:

A)fixed costs are usually too high.
B)production is impossible.
C)of the free rider problem.
D)social benefits are typically less than total costs.

Question 32

A free rider is a person who:

A)avoids paying taxes by using tax code loopholes.
B)produces goods at no cost.
C)receives the benefits of a good but avoids paying for it.
D)will purchase products only when on sale.

Question 33

Which of the following is a public good?

A)city parking spots
B)protection of the ozone layer
C)computers
D)the Internet

Question 34

A good is nonexcludable if it is:

A)easy to prevent people from using the good at low cost.
B)easy to make people use the good at low cost.
C)difficult to prevent people from using the good at low cost.
D)difficult to make people use the good at low cost.

Question 35

When a good is rival in consumption:

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

Question 36

Private goods are both:

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

Question 37

If one person's use of a good prevents another person's abilityto use it, then the good is:

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

Question 38

Which of the following is NOT considered a private good?

A)pizza
B)tennis rackets
C)cable TV
D)French fries

Question 39

Which of the following is a private good?

A)national defense
B)cable TV
C)soft drinks
D)the environment

Question 40

A good is nonrival if:

A)the good does not cause rivalry between the people using the good.
B)the good potentially creates rivalry between the people using the good.
C)one person's use of the good reduces the ability of another person to use the same good.
D)one person's use of the good does not reduce the ability of another person to use the same good.

Question 41

Private goods:
I) are excludable
II)can be priced
III) are rival in consumption.

A)I only
B)II only
C)I and III only
D)I, II, and III

Question 42

It is difficult to get people to pay for public goods voluntarilybecause these goods are:

A)excludable, and therefore markets tend to overprovide them.
B)excludable, and therefore markets tend to underprovide them.
C)nonexcludable, and therefore markets tend to overprovide them.
D)nonexcludable, and therefore, markets tend to underprovide them.

Question 43

Which of the following would NOT be considered as anexample of public good?

A)asteroid deflection
B)national defense
C)mosquito control
D)public roads

Question 44

Which of the following statements is FALSE?

A)The total benefit of a public good equals the sum of the benefits to each person.
B)It is harder for society to produce optimal amounts of public goods than it is for private goods.
C)The United States Postal Service is not a public good.
D)People value public goods differently.

Question 45

The sun has features of a:

A)public good.
B)common resource-everyone in society can use it for warmth and light.
C)rival good that can easily be made excludable.
D)private good since solar energy can be marketed.

Question 46

Free riders are people who:

A)enjoy public goods without paying for them.(True Answer )Correct
B)pay for public goods but do not end up enjoying them.
C)pay for both private and public goods.
D)ride public transportation without paying.

Question 47

Public goods are:
I) excludable
II)nonrival
III) free to those who do not pay.

A)I only
B)II only
C)I and II only
D)II and III only

Question 48

Mosquito control must be provided by government because if:

A)a lot of people free ride then mosquito control would be overprovided by the market.
B)a lot of people free ride then mosquito control would be underprovided by the market.
C)only few people are benefited then mosquito control would be overprovided by the market.
D)only few people are benefited then mosquito control would be underprovided by the market.

Question 49

A forced rider is someone who:

A)pays a share of the costs of public good but who does not enjoy the benefits.
B)pays a share of the costs of public good and enjoys the benefits.
C)does not pay a share of the costs of public good but who enjoys the benefits.
D)does not pay a share of the costs of public good and does not enjoy the benefits.

Question 50

In which of the cases can you identify the potential for a free-rider problem?

A)half-off sales at department stores
B)voluntary payments for a smog reduction program (True Answer )Correct
C)group projects where all members have clearly assigned tasks and are responsible for presenting their work
D)cable Internet service

Question 51

Which of the following statements is correct?

A)It is paradoxical that people can be made better off by requiring them to do something that they would choose to do
Voluntarily.
B)It is paradoxical that people cannot be made better off by requiring them to do something that they would choose to do
Voluntarily.
C)Even though none contribute voluntarily, all would agree to be taxed as long as everyone else is also taxed.(True Answer
)Correct
D)Even though everyone contributes voluntarily, none would agree to be taxed if everyone else is not taxed.

Question 52

Why is national defense a public good?
I) because it is expensive to produceII. because people who don't pay for national defense stillbenefit from having itIII. because one person's benefit from national defense doesn'treduce anyone else's benefit from itIV. because it is provided by the government

A)I and IV only
B)II and III only
C)II, III, and IV only
D)I, II, and III only

Question 53

Which of the following statements is TRUE?
I) In order for society to have a sufficient level of nationaldefense, the government must tax the public to raise funds fora standing army
II)For every 100 people that use a public good, approximately 500 people are prevented from using it
III) People do not have an incentive to voluntarily pay fornonexcludable goods.

A)I and II only
B)III only
C)I and III only
D)I, II, and III

Question 54

Suppose your city has had an increase in crime and the citygovernment decides that more police are needed to patrol atnight. Which of the following funding solutions avoids thefree-rider problem involved with additional police officers?

A)taxation of the city's top 50 percent of income earners
B)donation-based police service
C)voluntary police officers
D)an increase in the city's sales tax

Question 55

Hamburgers are example of goods that are:

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

Question 56

Asteroid deflection would be considered a:

A)public good since it is rival and nonexcludable.
B)public good since it is nonrival and nonexcludable.(True Answer )Correct
C)private good since it is rival and excludable.
D)private good since it is nonrival and excludable.

Question 57

Private goods can be provided by competitive markets becausethey are:

A)excludable, providing an incentive to pay for and thus to produce these goods.
B)excludable, since the market for buying and selling these goods is distinguishable.
C)nonexcludable, providing an incentive to pay for and thus to produce these goods.
D)nonexcludable, since the market for buying and selling these goods cannot be distinguished.

Question 58

The need to produce public goods provides a strong argumentfor:

A)regulation and subsidy.
B)regulation and government provision.
C)taxation and subsidy.
D)taxation and government provision.

Question 59

Which of the following conditions would turn some people intoforced riders?

A)People who must contribute to the public good because their benefit from the public good is high.
B)People who must contribute to the public good even though they will not benefit from the public good.(True Answer
)Correct
C)People who are not required to contribute to the public good if they will not receive any benefit from it.
D)None of the answers is correct.

Question 60

A major difference between a private good and a public goodis that:

A)private goods are excludable, public goods are not.
B)private goods can be produced in efficient quantities while public goods generally are not.
C)private goods are rival in consumption, public goods are not.
D)All of the answers are correct.

Question 61

Although the provision of nonrival private goods is ________,we typically consider it ________.

A)efficient; an inefficient allocation due to its nonrival nature
B)inefficient; not that big a deal because we value diversity and creativity
C)inefficient; a big deal because it leads to many forced riders
D)efficient; a big deal because it leads to other types of market inefficiencies

Question 62

During the Middle Ages, many villages had areas reserved forfamilies to take their cows or sheep to graze. All families werewelcome to use this land without charge. The land for grazingcan be characterized as a:

A)public good.
B)private good.
C)natural resource.
D)common resource.

Question 63

An example of a common resource would be:

A)a street light.
B)the environment.
C)clothing.
D)cable TV.

Question 64

Google provides a(n) ________ good, but uses advertising tomake its good ________.

A)excludable; nonexcludable
B)common; more scarce
C)nonexcludable; excludable
D)public; private

Question 65

Which of the following solutions allows for an efficientallocation of a public good?

A)widespread taxation
B)government command and control policies
C)donation-based funding
D)advertising

Question 66

Which of the following methods would help to produceoptimal amounts of public goods?

A)antitrust law
B)regulation
C)privatization
D)taxation

Question 67

Overutilization and lack of conservation are more likely aproblem for:

A)private goods.
B)material goods.
C)goods that are not owned.
D)cows and chickens.

Question 68

A common resource is:

A)likely to be overutilized.
B)a good that, when used by one person, leaves less for everyone else.
C)rival but nonexcludable.
D)All of the answers are correct.

Question 69

During the Middle Ages, many villages had areas reserved forfamilies to take their cows or sheep to graze. All families werewelcome to use this land without charge. This situation likelyled to a(n):

A)tragedy of the commons.
B)finite of proportions.
C)marketable public good.
D)exhaustive equilibrium.

Question 70

Which of the following scenarios best describes a tragedy ofthe commons problem?

A)Neighborhood residents discover strawberry plants in the flower beds at the city park.
B)Illegal immigrants who do not pay taxes benefit from tax- funded police patrols.
C)Pacifists become forced riders in tax hikes to fund national defense plans.
D)There is overcrowding on public beaches.

Question 71

Which of the following solutions for public goods fundingavoids both the problems of "forced riders" and "free riders"?

A)widespread taxation
B)advertising
C)donation based funding
D)None of the answers is correct.

Question 72

Though markets can provide goods which are excludable butnonrival, they do so at the price of:

A)efficiency.
B)inefficiency.
C)equity.
D)inequity.

Question 73

Which of the following explains why it is difficult to determinethe optimal quantity of public goods that the governmentshould produce?

A)It is difficult to determine how much budget the government should have each year.
B)It is difficult to assess exactly how much each individual values a public good.
C)It is difficult to identify how public goods really benefit the society.
D)It is difficult to find out how demographics change over time.

Question 74

Nonrival private goods are likely to be:

A)overprovided by the market.
B)underprovided by the market.
C)nonrival and nonexclusive.
D)rival and nonexclusive.

Question 75

Nonrival private goods are likely to have ________ fixed costsand ________ marginal costs.

A)small; large
B)no; small
C)large; small
D)large; no

Question 76

A television show like The Sopranos, for example, is:

A)rival and excludable.
B)nonrival but excludable.
C)rival but nonexcludable.
D)nonrival and nonexcludable.

Question 77

Tuna in the ocean is a common resource because:

A)it is difficult to prevent people from fishing in the ocean and every time someone catches tuna there is less tuna for someone
Else.
B)all tuna are identical (i.e., a homogenous good) and sold in competitive markets.
C)there is an abundance of tuna and no one fisherman can affect the market equilibrium output.
D)None of the answers is correct.

Question 78

Which of the following statements is TRUE?
I) Excludability leads to efficiency
II)The benefits of public goods provide an argument forgovernment provision of these goods
III) Taxation turns some people into free riders.

A)I and II only
B)II only
C)II and III only
D)I, II, and III

Question 79

Which of the following scenarios describes how a tragedy ofthe commons problem occurs?

A)A radio station goes out of service because it cannot raise enough money from advertising.
B)Illegal immigrants who do not pay taxes benefit from tax- funded school systems.
C)Farmers harvest deer out of season rather than pay the high price of beef.
D)The establishment of tradable pollution allowances helps reduce pollution.

Question 80

For some public goods, such as Internet search engines, whichare nonrival but potentially excludable, it is more profitablefor the providers to:

A)exclude people who don't pay for its service.
B)sell advertising and provide its services for free.(True Answer )Correct
C)sell advertising and also charge people for using the services.
D)offer the service to anyone for free.