Deck 4: Public Goods

Question 1

Most goods that are nonexcludable are pure public goods.

A) True
B) False
C) Uncertain

Answer 1

Uncertain

Question 2

Which of the following is a public good?

A) public defense
B) public television
C) a library
D) schools
E) all of these answer options are correct.

Answer 2

schools

Question 3

Public goods can be

A) provided privately.
B) provided publicly.
C) subject to free rider problems.
D) all of these answer options are correct.

Answer 3

all of these answer options are correct.

Question 4

Pure private goods are nonrival in consumption.

A) True
B) False
C) Uncertain

Question 5

Market mechanisms are unlikely to provide

A) prices.
B) nonrival goods efficiently.
C) supply and demand.
D) none of these answer options are correct.

Question 6

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.

Question 7

Equilibrium in the market is where supply is equal to demand.

A) True
B) False
C) Uncertain

Question 8

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

A) True
B) False
C) Uncertain

Question 9

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 10

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 11

Public goods are characterized by

A) nonrivalness.
B) excludability.
C) the sum of the MRSs equaling MRT.
D) all of these answer options are correct.

Question 12

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 these answer options are correct.

Question 13

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 14

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 15

A private good is

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

Question 16

From the figures below,the market price of rockets is

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

Question 17

Equilibrium for public goods is characterized by

A) MSB = MSB.
B) SMRS = MRT.
C) MRS₁ = MRS₂ = MRS₃ = … = MRS_n = MRT.
D) MC = MB.
E) MRS - MRT = MSB.

Question 18

The MRT is

A) the marginal ring tone.
B) the minimal rate of time.
C) the maximum rate of transformation.
D) none of these answer options are correct.

Question 19

Impure 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 20

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 21

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.

Question 22

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

A) True
B) False
C) Uncertain

Question 23

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

Question 24

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

A) True
B) False
C) Uncertain

Question 25

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

Question 26

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 27

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 28

Suppose that there are only two fishermen,Zach and Jacob,who fish along a certain coast.They would each benefit if a lighthouse were built along the coast where they fish.The marginal cost of building each additional lighthouse is $150.The marginal benefit to Zach of each additional lighthouse is 90 - Q,and the marginal benefit to Jacob is 40 - Q,where Q equals the number of lighthouses.
What is the efficient number of lighthouses?

Question 29

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 30

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

A) True
B) False
C) Uncertain

Question 31

Choosing between public or private provision of a good always lead to market efficiencies.

A) True
B) False
C) Uncertain

Question 32

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 33

Airport security is best provided by public entities over private.

A) True
B) False
C) Uncertain

Question 34

Private goods are always provided by the private sector.

A) True
B) False
C) Uncertain

Question 35

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

A) True
B) False
C) Uncertain