Question 1

When something of value has no price attached to it,such as a public good,what will likely happen
A)Externalities will be present.
B)The good will be completely used up.
C)Only those who are better off have to pay.
D)Private companies will eventually produce the product and the good will no longer be free.

Accepted Answer

When something of value has no price attached to it, individuals are likely to consume it without considering the cost of their actions on others, resulting in externalities. These externalities occur because individuals do not have to pay for the negative consequences of their actions caused by the consumption of the public good. As a result, the consumption of the public good may not be efficient, and the government may have to intervene to ensure that resources are allocated effectively.

Question 2

What are common resource goods
A)excludable but not rival in consumption
B)rival in consumption but not excludable
C)both excludable and rival in consumption
D)neither excludable nor rival in consumption

Accepted Answer

Common resource goods are rival in consumption because one person's use diminishes others' ability to use them, but they are not excludable because it is difficult to prevent people from using them.

Question 3

Which good would satisfy attributes of a club good
A)a congested public freeway
B)an airline flight that has been overbooked
C)local Internet service
D)public parking

Accepted Answer

Club goods are non-rivalrous and excludable, like local Internet service, which can be restricted to paying customers and doesn't diminish with use until a certain point.

Question 4

What is an example of a club good
A)Internet service
B)tornado sirens
C)clothing
D)the environment

Accepted Answer

Club goods are non-rivalrous but excludable, meaning they can be used by multiple people without being depleted, but access can be restricted. Internet service fits this definition as it can be provided to multiple users simultaneously, but access can be controlled through subscriptions or passwords.

Question 5

What is a good that is rival in consumption but not excludable
A)a public good
B)a private good
C)a club good
D)a common resource

Accepted Answer

A common resource is rival in consumption, meaning that when one person uses it, it reduces the amount available for others to use. However, it is not excludable, meaning that it is difficult or impossible to prevent others from using it. Examples of common resources include fish in the ocean and the air we breathe.

Question 6

What characteristics do public goods and common resources have in common
A)Both goods are nonexcludable.
B)Both goods are excludable.
C)Both goods are rival in consumption.
D)Both goods are nonrival in consumption.

Accepted Answer

Both public goods and common resources are nonexcludable, meaning that once the good or resource is provided, it is difficult or impossible to prevent individuals from using it. This creates the issue of the free rider problem, where individuals can benefit from the good or resource without paying for it.

Question 7

What are the fish in the ocean an example of
A)a common resource
B)a public good
C)a private good
D)a club good

Accepted Answer

Fish in the ocean can be considered a common resource because they are not owned by any individual or organization and are available for all to use. However, their usage can lead to depletion and overfishing, which can result in their eventual extinction. Therefore, proper management and regulation of their usage is necessary to ensure sustainability.

Question 8

In an economy,when goods do not have a price,who or what primarily ensures that the good is produced
A)entrepreneurs
B)the government
C)charities
D)individual citizens

Accepted Answer

The government often ensures the production of goods that do not have a price, such as public goods, through taxation and public funding.

Question 9

For most goods in an economy,what is the signal that guides the decisions of buyers and sellers
A)greed
B)the self-interest of both buyers and sellers
C)prices
D)profits

Accepted Answer

Prices are signals that guide the decisions of both buyers and sellers in an economy. Prices determine the demand for goods and services by consumers and the supply by producers. When prices are high, it signals higher demand, and producers increase their supply to maximize profits. On the other hand, when prices are low, it signals lower demand, and producers reduce their supply to avoid losses. Therefore, prices act as an essential signal that guides the decisions of buyers and sellers in an economy.

Question 10

Which of the following would be considered a common resource good
A)Internet service
B)bottled natural mineral water
C)uncongested toll roads
D)fish in the ocean

Accepted Answer

Fish in the ocean are a classic example of a common resource good because they are non-excludable (people cannot be prevented from fishing in the ocean) and rivalrous (one person catching a fish reduces the number available for others). Internet service, bottled water, and uncongested toll roads are not common resource goods as they can be excluded (by paying for them) and are not inherently rivalrous.

Question 11

When one person uses a common resource,such as fish in the ocean,what would be the most likely outcome
A)Other people are not likely to be worse off.
B)Other people are likely to be compensated for their loss.
C)He or she neglects to account for external effects.
D)There will still be enough left since one person cannot make a major impact.

Accepted Answer

When one person uses a common resource, they are likely to neglect to account for external effects, such as the impact on other individuals who also rely on the resource. This can lead to the depletion or degradation of the resource over time, affecting both the individual and the community as a whole. Therefore, option C is the most likely outcome. Options A and D may not always be true, as other people may be worse off if the resource is overused, and one person can make a major impact on the resource. Option B is unlikely, as there is typically no system in place to compensate individuals for their loss of a common resource.

Question 12

When one person uses a common resource,which of the following outcomes will most likely occur
A)An externality will arise.
B)Other people will be neither better nor worse off.
C)It will be simple to charge him or her for usage of it.
D)No one else will be able to use the common resource.

Accepted Answer

When one person uses a common resource, it can lead to an externality, as their usage can affect the availability or quality of the resource for others.

Question 13

When a good is excludable but not rival in consumption,what is it an example of
A)a club good
B)a private good
C)a public good
D)a common resource

Accepted Answer

A club good is characterized by the fact that it is excludable, meaning that people can be prevented from using it if they do not pay, but it is not rival in consumption, meaning that one person's use of the good does not decrease the availability of the good for others. Examples of club goods include cable TV, private golf courses, and movie theaters where people pay for admission, but their use does not directly interfere with others using the same good.

Question 14

What are common resources
A)Both rival in consumption and nonexcludable.
B)Both rival in consumption and excludable.
C)Both nonrival in consumption and excludable.
D)Both nonrival in consumption and nonexcludable.

Accepted Answer

Common resources are rival in consumption because one person's use diminishes others' ability to use them, and they are nonexcludable because it is difficult to prevent people from using them.

Question 15

What happens when goods are available in an economy free of charge
A)Market forces cannot be used to allocate resources.
B)Too many of these goods will be produced since there is no cost of production.
C)The product will have no value for the majority of the population.
D)Goods are not available in market economies free of charge.

Accepted Answer

Market forces, such as supply and demand, are based on the availability of goods and their prices. If goods are available free of charge, then market forces cannot be used to allocate resources because there is no market price to regulate supply and demand.

Answer: B
 When goods are available free of charge, there would be no incentive for producers to limit production as there are no costs of production to be covered. This could lead to overproduction, waste of resources, and inefficiencies.

Answer: C
 In an economy where goods are available free of charge, some goods may lose their value for the majority of the population because they are no longer a scarce resource. If anyone can have them for free, then they will not be seen as valuable compared to goods that are scarce and difficult to obtain.

Answer: D
 This statement is not accurate as some goods are indeed available free of charge in market economies, such as samples, giveaways, or public goods that are provided by the government. However, the availability of goods free of charge does not mean that market forces do not apply or that the goods have no value.

Question 16

Why does the market not provide national defence
A)It is impossible to prevent any single person from enjoying the benefit of national defence.
B)The fixed cost of national defence is too high.
C)The necessary resources for national defence are not available in the private sector.
D)Private sectors are not willing to pay for it.

Accepted Answer

National defence is a public good, meaning it is non-excludable and non-rivalrous. This means that once it is provided, it is impossible to prevent any single person from enjoying its benefits, leading to the free-rider problem where individuals have no incentive to pay for it themselves.

Question 17

For both public goods and common resources,why does an externality arise
A)Something of value has no price attached to it.
B)The goods are undervalued by society.
C)The social optimum level of output is lower than the market equilibrium's.
D)There are no defined property rights.

Accepted Answer

An externality arises because something of value, such as clean air or fish in the ocean, has no price attached to it, leading to overuse or under-provision.

Question 18

How are club goods classified
A)excludable but not rival in consumption
B)rival in consumption but not excludable
C)both excludable and rival in consumption
D)neither excludable nor rival in consumption

Accepted Answer

Club goods are excludable because people can be prevented from using them, but they are not rival in consumption because one person's use does not reduce availability for others.

Question 19

What are both public goods and common resources
A)nonrival in consumption
B)both nonexcludable and nonrival in consumption
C)excludable
D)nonexcludable

Accepted Answer

Public goods and common resources are both nonexcludable, meaning that it is difficult or impossible to prevent people from using them. However, public goods are nonrival in consumption, while common resources are rival in consumption.

Question 20

Goods that are not excludable are usually which of the following
A)higher priced than excludable goods
B)higher priced than rival in consumption goods
C)in short supply
D)free of charge

Accepted Answer

Goods that are not excludable cannot be effectively restricted to only those who have paid for them, meaning that they cannot be easily sold or priced. Therefore, these goods are often provided as a public good, meaning they are free of charge to all individuals.

Quiz 11: Public Goods and Common Resources

When something of value has no price attached to it,such as a public good,what will likely happen

What are common resource goods

Which good would satisfy attributes of a club good

What is an example of a club good

What is a good that is rival in consumption but not excludable

What characteristics do public goods and common resources have in common

What are the fish in the ocean an example of

In an economy,when goods do not have a price,who or what primarily ensures that the good is produced

For most goods in an economy,what is the signal that guides the decisions of buyers and sellers

Which of the following would be considered a common resource good

When one person uses a common resource,such as fish in the ocean,what would be the most likely outcome

When one person uses a common resource,which of the following outcomes will most likely occur

When a good is excludable but not rival in consumption,what is it an example of

What are common resources

What happens when goods are available in an economy free of charge

Why does the market not provide national defence

For both public goods and common resources,why does an externality arise

How are club goods classified

What are both public goods and common resources

Goods that are not excludable are usually which of the following