Deck 10: Public Goods and the Role of Government

Question 1

Classifying a good as nonrival means

A) that there is a surplus of the good.
B) that the good is produced in a competitive market.
C) that the producer can prevent people from consuming it.
D) that many people can consume the good simultaneously.

Answer 1

that many people can consume the good simultaneously.

Question 2

A good is considered to be nonexcludable if

A) your consumption of the good reduces the quantity available for others to consume.
B) the producer can keep those who did not pay for the good from consuming the good.
C) the producer finds it difficult to keep those who did not pay for the good from consuming the good.
D) it is jointly owned by all members of a community.

Answer 2

the producer finds it difficult to keep those who did not pay for the good from consuming the good.

Question 3

Which of the following is an example of a product that is nonexcludable and rival?

A) a motorcycle
B) the court system
C) Western lowland gorillas
D) a NASCAR event

Answer 3

Western lowland gorillas

Question 4

Which of the following is an example of a product that is excludable and nonrival?

A) a motorcycle
B) the court system
C) Western lowland gorillas
D) a NASCAR event

Question 5

Which of the following is an example of a product that is excludable and rival?

A) a motorcycle
B) the court system
C) Western lowland gorillas
D) a NASCAR event

Question 6

Which of the following is an example of a product that is nonexcludable and nonrival?

A) a motorcycle
B) the court system
C) Western lowland gorillas
D) a NASCAR event

Question 7

Which of the following is an example of a common pool resource?

A) a lighthouse
B) burritos
C) a high school football game
D) redwood forests

Question 8

Which of the following is an example of a pure private good?

A) a lighthouse
B) burritos
C) a high school football game
D) redwood forests

Question 9

Which of the following is an example of a pure public good?

A) a lighthouse
B) burritos
C) a high school football game
D) redwood forests

Question 10

Which of the following is an example of a club good?

A) a lighthouse
B) burritos
C) a high school football game
D) redwood forests

Question 11

Club goods differ from pure private goods in that

A) club goods are nonexcludable while pure private goods are excludable
B) club goods are excludable while pure private goods are nonexcludable.
C) club goods are nonrival while pure private goods are rival.
D) club goods are nonexcludable while pure private goods are excludable.

Question 12

A rival good is defined as a good for which there are substitutes.

Question 13

An excludable good is a good that a producer can prevent people from consuming.

Question 14

A common pool resource is nonrival and nonexcludable.

Question 15

An amusement park is an example of a pure private good.

Question 16

The San Diego Zoo is an example of a club good.

Question 17

Determine if each of the goods below displays any of the following characteristics:
(i) rivalry
(ii) nonrivalry
(iii) excludability
(iv) nonexcludability
a. attending a Packers game at Lambeau Field
b. online encyclopedia Wikipedia
c. a shopping mall on Black Friday
d. an online defensive driving class
e. a Tesla Model S electric car

Question 18

State whether each of the following goods is nonrival, nonexcludable, or both:

-a botanical garden

A) Nonrival
B)nonexcludable
C) A & B

Question 19

State whether each of the following goods is nonrival, nonexcludable, or both:

-a public beach

A) Nonrival
B)nonexcludable
C) A & B

Question 20

State whether each of the following goods is nonrival, nonexcludable, or both:

-a congested interstate highway

A) Nonrival
B)nonexcludable
C) A & B

Question 21

State whether each of the following goods is nonrival, nonexcludable, or both:

-a toll bridge

A) Nonrival
B)nonexcludable
C) A & B

Question 22

State whether each of the following goods is nonrival, nonexcludable, or both:

-street lights

A) Nonrival
B)nonexcludable
C) A & B

Question 23

A good that is rival but nonexcludable is a ________.

Question 24

Which of the following best illustrates the free rider problem?

A) For every purchase of a $100 season pass, you are entitled to free entry to an amusement park for the entire summer.
B) If your neighbors redo the landscapes in their yards, it is likely that the value of your house will increase.
C) Since no one owns rhinos and rhinos are valued for their horns, rhinos can be hunted to extinction.
D) Homeowners in a small neighborhood decide that security lighting is good for the neighborhood. One homeowner installs the lighting and asks you to contribute toward the cost, but you choose not to contribute.

Question 25

Free riding is primarily a characteristic of which type of good?

A) a pure private good
B) a pure public good
C) a club good
D) a common pool resource

Question 26

People who live in apartment buildings across from a football stadium are able to watch football games from the balconies of their apartments instead of paying for tickets to sit inside the stadium. For these free riders, the football games are

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

Question 27

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If only one light is installed, the person who is responsible for the light being installed receives a payoff of

A) 2.
B) 4.
C) 6.
D) 8.

Question 28

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If only one light is installed, the people who were not responsible for the light being installed each receive a payoff of

A) 2.
B) 4.
C) 6.
D) 8.

Question 29

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If two lights are installed, the people who were responsible for the light being installed each receive a payoff of

A) 2.
B) 4.
C) 6.
D) 8.

Question 30

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If two lights are installed, the person who was not responsible for the light being installed receives a payoff of

A) 4.
B) 6.
C) 8.
D) 12.

Question 31

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If three lights are installed, the people who were responsible for the light being installed each receive a payoff of

A) 4.
B) 6.
C) 8.
D) 10.

Question 32

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If Daisy contributes to the lighting, Luke should

A) contribute if Bo contributes.
B) not contribute only if Bo does not contribute.
C) contribute if Bo does not contribute.
D) not contribute regardless of what Bo decides to do.

Question 33

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If Daisy contributes to the lighting, Bo should

A) contribute if Luke contributes.
B) not contribute only if Luke does not contribute.
C) not contribute regardless of what Luke decides to do.
D) contribute if Luke does not contribute.

Question 34

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If Daisy does not contribute to the lighting, Luke should

A) contribute if Bo contributes.
B) not contribute only if Bo does not contribute.
C) not contribute regardless of what Bo decides to do.
D) contribute if Bo does not contribute.

Question 35

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. If Daisy does not contribute to the lighting, Bo should

A) contribute if Luke contributes.
B) not contribute only if Luke does not contribute.
C) not contribute regardless of what Luke decides to do.
D) contribute if Luke does not contribute.

Question 36

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. The dominant strategy for ________ is to not contribute.

A) Daisy
B) Bo
C) Luke
D) all of the above

Question 37

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. The dominant strategy for ________ is to contribute.

A) Daisy
B) Bo
C) Luke
D) none of the above

Question 38

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. The Nash equilibrium occurs on the ________ page, in the ________ cell.

A) Contribute; upper-left
B) Contribute; lower-right
C) Don't Contribute; lower-right
D) Don't Contribute; upper-left

Question 39

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. When each player plays his or her dominant strategy, society is poorer and the payoffs are smaller by ________ units than if each player had played the strategy with the ideal outcome for both the individual players and for the group as a whole.

A) 6
B) 12
C) 18
D) 30

Question 40

Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.

-Refer to Figure 10.1. This scenario is representative of a(n)

A) prisoner's dilemma game.
B) battle of the sexes game.
C) pure coordination game.
D) assurance game.

Question 41

In economics, a free rider is someone who relies on others to pay his bills.

Question 42

The free-rider problem arises because pure public goods are nonexcludable.

Question 43

Free riding is primarily a characteristic of pure private goods.

Question 44

Free riding often results than less than the optimal quantity of a good being produced.

Question 45

The public goods problem refers to the tendency for private individuals to provide pure public goods in less-than-socially-ideal amounts because of free riding.

Question 46

A student makes the following statement: "The real problem with pure public goods is that they are nonrival and nonexcludable."Explain whether you agree or disagree with the student's statement.

Question 47

Timmy and Tommy are considering contributing to a project. If both contribute, each receives a payoff of 20. If neither contribute, each receives a payoff of 10. If only one person contributes, the person who contributes receives a payoff of 14 and the person who does not contribute receives a payoff of 18. Will the public goods problem prevent this project from being completed? Explain why or why not.

Question 48

Five people want to have a lighted garden built at the entrance to their neighborhood. The difficulties they experience in getting one another to commit to paying for the garden are best described as

A) property rights.
B) transactions costs.
C) negative externalities.
D) rivalry.

Question 49

Property rights motivate people to work harder and produce more economic pie than they would if property rights were not well defined.

Question 50

People have little incentive to contribute to a project if they will be able to enjoy the benefits of the finished project for free.

Question 51

If the government implements a tax on the general public to pay for street lighting in one neighborhood,

A) the tax redistributes well-being and the benevolent social planner is not pleased.
B) the tax redistributes well-being, but the benevolent social planner is pleased.
C) the tax reduces well being and the benevolent social planner is not pleased.
D) the tax has no bearing on well-being and the benevolent social planner is indifferent.

Question 52

Suppose the government of a town of 2,000 people implements a tax on each of 5 people in a small neighborhood to raise $1,000 for a sculpture that will be placed in the common area of that 5-person neighborhood. Each of the 5 people in the small neighborhood will receive $120 in benefits from the sculpture. This tax is likely to

A) generate a great deal of opposition from taxpayers.
B) generate a great deal of opposition from the 5 people in the affected neighborhood.
C) generate little opposition from the 5 people in the affected neighborhood.
D) generate the desirable social outcome.

Question 53

Suppose the government of a town of 2,000 people implements a tax on each of its 2,000 citizens to raise $1,000 for a sculpture that will be placed in the common area of a 5-person neighborhood. Each of the 5 people in the small neighborhood will receive $120 in benefits from the sculpture. This tax is likely to

A) generate a great deal of opposition from taxpayers.
B) generate a great deal of opposition from the 5 people in the affected neighborhood.
C) generate little opposition from a majority of its taxpayers.
D) generate the desirable social outcome.

Question 54

Markets are generally more effective at providing ________ and governments are most effective at providing ________.

A) pure public goods; common pool resources
B) pure private goods; pure public goods
C) common pool resources; club goods
D) club goods; pure private goods

Question 55

A pure public good will never be provided by individuals acting on their own initiative.

Question 56

Governments are most effective at providing pure private goods.

Question 57

Governments should provide nonrival, nonexcludable goods only if the social benefits of the goods outweigh the cost of producing those goods.

Question 58

The $14.3 billion U.S. craft beer market is being subsidized at local, state, and even federal government levels, and the taxpayers pay for these subsidies. Economists know that these subsidies make Americans poorer on the whole. Why is it so difficult for U.S.taxpayers to end these subsidies for the craft beer market, a market which has been described as "booming"and "highly successful"?

Question 59

Stadiums and arenas built for use by professional sports teams are often paid for by local governments using tax dollars. What kind of goods are these stadiums and arenas, and why would government use tax dollars to pay for them when the professional sports franchises that use them are generally quite successful, financially?