Deck 11: Public Goods and Common Resources.

Question 1

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.

Answer 1

A

Question 2

Goods that are not excludable include both

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

Answer 2

C

Question 3

The provision of public goods gives rise to

A) positive externalities, as does the use of common resources.
B) positive externalities, whereas the use of common resources gives rise to negative externalities.
C) negative externalities, whereas the use of common resources gives rise to positive externalities.
D) negative externalities, as does the use of common resources.

Answer 3

B

Question 4

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 5

The provision of public goods gives rise to

A) no externalities.
B) positive externalities.
C) negative externalities.
D) rivalries in consumption.

Question 6

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 7

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 8

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 9

If people can be prevented from using a certain good,then that good is called

A) rival in consumption.
B) excludable.
C) a common resource.
D) a public good.

Question 10

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 11

Both public goods and common resources are

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

Question 12

The idea that "externalities arise because something of value has no price attached to it" is associated with

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

Question 13

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 14

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 15

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 16

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 17

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 18

Both private goods and club goods are

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

Question 19

Goods that are excludable include both

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

Question 20

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 21

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 22

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 23

Goods that are rival in consumption include both

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

Question 24

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 25

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

A) a can of Coca-Cola
B) cable TV service
C) a fireworks display
D) the environment

Question 26

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

A) private goods.
B) public goods.
C) common resources.
D) club goods.

Question 27

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

A) a sweater
B) a slice of pizza
C) a Toyota Prius
D) cable TV service

Question 28

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

A) club goods.
B) common resources.
C) public goods.
D) private goods.

Question 29

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 30

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 31

Goods that are not rival in consumption include both

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

Question 32

Goods that are rival in consumption and excludable would be considered

A) club goods.
B) common resources.
C) public goods.
D) private goods.

Question 33

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 34

An example of a private good would be

A) a local fire department.
B) a pair of pants.
C) a streetlight.
D) a national park.

Question 35

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 36

Reggie owns 3 acres of beautiful wooded land.When Reggie 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 37

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 38

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 39

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) an unlimited number of people can use the good at the same time.
D) everyone will be excluded from obtaining the good.

Question 40

Most goods in the economy are

A) club goods.
B) common resources.
C) public goods.
D) private goods.

Question 41

Under which of the following scenarios would a park be considered a club good?

A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Question 42

A local park filled with picnickers is

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

Question 43

A congested side street in your neighborhood is

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

Question 44

Which of the following goods is excludable but not rival in consumption?

A) a congested toll road
B) fire protection in a small town
C) a tornado siren
D) whales in the ocean

Question 45

A cable television broadcast of a movie is

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

Question 46

A vacation home in Malibu is

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

Question 47

At the local park there is a playground for children to use.While anyone is allowed to use the playground,it is often very busy,reducing the enjoyment of many of the children who use it.The playground is a

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

Question 48

Under which of the following scenarios would a park be considered a common resource?

A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Question 49

A pizza is

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

Question 50

A streetlight is a

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

Question 51

Labor is a

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

Question 52

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

Question 53

At the local park there is a playground that anyone may use.There is rarely anyone using the playground,so children who use the playground receive full enjoyment from its use.The playground is

A) rival in consumption and is excludable.
B) not rival in consumption, but is excludable.
C) rival in consumption, but is not excludable.
D) not rival in consumption nor is it excludable.

Question 54

The Mansfield Public Library has a large number of books that anyone with a library card may borrow.Anyone can obtain a card for free.Because the number of copies of each book is limited,not everyone can have the same book at the same time.What type of good would the library books be classified as in this case?

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

Question 55

Under which of the following scenarios would a park be considered a public good?

A) Visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables.
B) Vistors to the park must pay an admittance fee and frequently all of the picnic tables are in use.
C) Visitors can enter the park free of charge and there are always plenty of empty picnic tables.
D) Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Question 56

The Great Lakes are

A) private goods.
B) club goods.
C) common resources.
D) public goods.

Question 57

Pay-per-view broadcasts are

A) private goods.
B) club goods.
C) common resources.
D) public goods.

Question 58

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

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

Question 59

An AM radio transmission of a baseball game is

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

Question 60

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

A) a wristwatch
B) fire protection in a small town
C) fish in the ocean
D) efforts to fight poverty

Question 61

Who among the following is a free rider?

A) Mickey buys groceries from the store where he works.
B) Donald rides to work with Betsey, but he pays Betsey for gasoline and other travel-related expenses.
C) Fred drives 20,000 miles a year on public streets, but he pays no more in property taxes than Barney, who only drives 1,000 miles.
D) Wilma watches many public television programs, but she has never sent in a contribution to the station.

Question 62

You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.Because the cost to build the library is only $500,000,you arrange to have the library built.Everyone in town enjoys the library,but when you asked for donations to pay for the library,you only collected $100,000.You are convinced that

A) the survey must have overstated how much the library was worth to each resident; otherwise, you would have collected $500,000 in donations.
B) the cost of the library exceeded the social benefits.
C) the library was an example of the Tragedy of the Commons.
D) most residents of the town are probably free-riders at the library.

Question 63

Which of the following is not a public good?

A) national defense
B) patented technological knowledge
C) general knowledge
D) the elimination of poverty

Question 64

The free-rider problem exists with

A) apples.
B) knowledge.
C) cable TV service.
D) congested toll roads.

Question 65

The Pennsylvania Turnpike is a tolled freeway running through the state of Pennsylvania.Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway.Suppose that despite the tolls,many motorists in the urban areas use the Turnpike causing traffic to slow during peak times.What type of good would the Turnpike be classified as in this case?

A) private good
B) club good
C) common resource
D) public good

Question 66

When a free-rider problem exists,

A) the market will devote too few resources to the production of the good.
B) the cost of the good will always be more than the benefit of the good.
C) the good will not be produced.
D) entrepreneurs will eventually find a way to make free-riders pay their share.

Question 67

Pete is a non-union employee at The Electric Co.The majority of the employees at The Electric Co.are unionized.The union at The Electric Co.has negotiated very good benefits.Even though he is not a union member and he does not have to pay union dues,Pete receives all the benefits that the union has negotiated.Pete's behavior is an example of

A) rivalry.
B) a barrier to entry.
C) free riding.
D) Taft-Hartley opposition.

Question 68

Without government intervention,public goods tend to be

A) overproduced and common resources tend to be overconsumed.
B) overproduced and common resources tend to be underconsumed.
C) underproduced and common resources tend to be overconsumed.
D) underproduced and common resources tend to be underconsumed.

Question 69

Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible.In this case,the market for this good will likely

A) be provided by a private firm rather than the government.
B) have a free-rider problem.
C) not exist.
D) be limited to a small number of units of production.

Question 70

A free rider is a person who

A) will only purchase a product on sale.
B) receives the benefit of a good but avoids paying for it.
C) can produce a good at no cost.
D) rides public transit regularly.

Question 71

Suppose that everyone prefers to live in a society without poverty.Further suppose that some private charities are successful in reducing poverty.People who do not contribute to the charities

A) receive no external benefit from private antipoverty programs.
B) decrease the reliance of individuals on antipoverty programs.
C) can free ride on the generosity of others.
D) are most likely to be in favor of government-sponsored programs.

Question 72

The free-rider problem

A) forces the supply of a public good to exceed its demand.
B) results in common resources becoming club goods.
C) explains why many local governments supply public goods.
D) results in public goods becoming private goods.

Question 73

A sidewalk runs across Milton's front yard near the street.By law,anyone has the right to use the sidewalk.When Milton shovels the sidewalk after a heavy snow,he is providing a

A) good that is rival in consumption.
B) private good.
C) public good.
D) common resource.

Question 74

A free-rider problem exists for any good that is not

A) rival in consumption.
B) a private good.
C) free.
D) excludable.

Question 75

Because public goods are

A) excludable, people have an incentive to be free riders.
B) excludable, people do not have an incentive to be free riders.
C) not excludable, people have an incentive to be free riders.
D) not excludable, people do not have an incentive to be free riders.

Question 76

You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.The cost to build the library is $500,000.Which of the following is the most efficient option?

A) The library should be built and paid for with donations collected from residents, as these donations should more than cover the cost of the library.
B) The library should be built and paid for by the town government and paid for with a tax on the residents because all residents would benefit from it but some residents would not donate if they were asked.
C) The library should be built and paid for by the wealthiest ten percent of the residents.
D) The library should not be built.

Question 77

Market failure associated with the free-rider problem is a result of

A) a problem associated with pollution.
B) benefits that accrue to those who don't pay.
C) losses that accrue to providers of the product.
D) market power.

Question 78

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

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

Question 79

The U.S.military defends Jacob from foreign attackers.The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it.For this reason,we say that national defense is

A) excludable.
B) not excludable.
C) rival in consumption.
D) not rival in consumption.

Question 80

Because of the free-rider problem,

A) private markets tend to undersupply public goods.
B) the federal government spends too many resources on national defense and not enough resources on medical research.
C) fireworks displays have become increasingly dangerous.
D) poverty has increased.