Deck 4: Public Goods

Question 1

Pure private goods are nonrival in consumption.

Answer 1

True

Question 2

When asked to reveal their true preferences people

A)always tell the truth.
B)never tell the truth.
C)sometimes tell the truth.
D)generally don't know what preferences are.

Answer 2

sometimes tell the truth.

Question 3

The MRT is

A)the marginal ring tone.
B)the minimal rate of time.
C)the maximum rate of transformation.
D)none of the above.

Answer 3

none of the above.

Question 4

Summing demand curves horizontally sends market ______________ to individuals,while summing vertically sends market ______________ to individuals.

A)price;price
B)quantity;quantity
C)quantity;price
D)price;quantity

Question 5

Charging individual prices that are based on consumers' willingness to pay is

A)government price supports.
B)will pricing.
C)second tier pricing.
D)price discrimination.

Question 6

Which of the following is a public good?

A)public defense
B)public television
C)a library
D)schools
E)all of the above

Question 7

The free rider problem causes less than optimal production of a public good.

Question 8

A ________ is a person who wants to enjoy the benefits of a public good without contributing his or her marginal benefit to the cost of financing the amount made.

A)free rider
B)politician
C)price maker
D)price optimizer

Question 9

Equilibrium for public goods is characterized by

A)MSB = MSB.
B)( $\Sigma$ MRS = MRT).
C)MRS₁ = MRS₂ = MRS₃=…= MRS_n = MRT.
D)MC = MB.
E)MRS - MRT = MSB.

Question 10

When those that do not contribute to the costs of a public good are denied use,this is a case of

A)exclusion.
B)being nonrival.
C)price discrimination.
D)infeasibility.

Question 11

Public goods can be

A)provided privately.
B)provided publicly.
C)subject to free rider problems.
D)all of the above.

Question 12

Figure 4.3
From Figure 4.3 ,the market price of rockets is

A)10.
B)4.
C)6.
D)20.

Question 13

Market mechanisms are unlikely to provide

A)prices.
B)nonrival goods efficiently.
C)supply and demand.
D)none of the above.

Question 14

A private good is

A)nonrival in consumption.
B)subject to free rider problems.
C)not subject to exclusion.
D)subject to exclusion.

Question 15

Commodity egalitarianism refers to commodities that

A)are important for most consumers.
B)are too dangerous for most consumers.
C)should be made available to all consumers.
D)are good ideas but never produced.

Question 16

Congestible public goods

A)are nonrival in consumption.
B)cannot be priced in the market.
C)are rival in consumption.
D)are never provided by the private sector.

Question 17

A pure private good is

A)nonrival in consumption and subject to exclusion.
B)rival in consumption and subject to exclusion.
C)rival in consumption and not subject to exclusion.
D)all of the above.

Question 18

School vouchers are

A)provided by the government.
B)provided by private organizations.
C)public funds to be used for private tuition.
D)all of the above.

Question 19

Vertical summation of demand curves yield results equivalent to those of horizontal summation.

Question 20

Public goods are characterized by

A)nonrivalness.
B)excludability.
C)the sum of the MRSs equaling MRT.
D)all of the above.

Question 21

Increasing the quantity of a pure public good can be done at zero cost.

Question 22

Private goods are always provided by the private sector.

Question 23

Suppose there is a public good that has market supply characterized by the equation X = (P/3)- (32/3).Suppose further that market demand for this good can be characterized by the equation X = 25 -P.Find the equilibrium quantity of the public good that will be supplied.

Question 24

Demand curves for pure public goods satisfy the law of demand.

Question 25

Discuss and contrast the advantages and disadvantages of public highways versus toll roads.

Question 26

Refer to "Discussion Questions" number 11 in your text.How does your answer change if the marginal cost of building each additional lighthouse increases to $150?

Question 27

Pure public goods involve positive externalities.

Question 28

Some economists believe that public schools would improve if they were subjected to competition.Discuss the pros and cons of this idea.

Question 29

Use the answer you found when adding market demand curves vertically in Question 18 above to find the market equilibrium quantity if the market supply is constant at 4 units.

Question 30

Suppose you are given the following demand curves: Q = 32 - P and Q = 16 - (P/2).Add these two demand curves vertically and find the market demand curve.

Question 31

Suppose there are two individuals with identical demand curves characterized by the equation P = 2 - Q.What is market demand if these demand curves are added horizontally? Vertically?

Question 32

The Global Positioning System (GPS)is an example of a good that is both non-rival and excludable good.

Question 33

Some people do not engage in free riding,even when there is no cost or chance or reprisal.Discuss why?

Question 34

You have read that the free rider problem affects equilibrium in a public good context.Explain how this situation can be modeled as a prisoner's dilemma game.