Question 1

A good is nonrival in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

Accepted Answer

A good is nonrival in consumption if one person's use of the good does not diminish the ability of others to use the same good. The definition provided describes a non-excludable good, not a nonrival good.

Question 2

A charity that used to make an appeal to peoples' sense of civic or moral responsibility, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

When a charity stops appealing to people's sense of civic or moral responsibility, it may increase the free-rider problem because fewer individuals feel personally responsible for contributing. This can lead to a smaller level of contribution to the public good, as more people might choose to benefit from the good without contributing to its provision.

Question 3

The forces of supply and demand will provide a quantity that is

Accepted Answer

When a good generates external benefits, the social benefit exceeds the private benefit. Therefore, the supply curve (which represents the private cost) will understate the true cost. As a result, the equilibrium quantity will be less than the socially efficient quantity.

Question 4

If you can consume a good without having to pay for it, the good must be a public good.

Accepted Answer

The statement is not entirely true as there are some goods such as common resources or club goods that may be consumed without paying for them but they are not considered public goods. Public goods have specific characteristics such as non-excludability and non-rivalry which make them unique.

Question 5

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s).
-Recall the Application. When the U.S. acquires and then shares weather data with organizations in other countries

Accepted Answer

Sharing weather data with other countries allows for better planning and decision making in various sectors such as agriculture, transportation, and tourism. This can lead to increased productivity and economic growth both in the U.S. and other countries.

Question 6

Recall the Application about space debris in the atmosphere to answer the following question(s).
-Recall the Application. The clearing of space debris is a ________ good that ________ subject to the free-rider problem.

Accepted Answer

The clearing of space debris is a public good because it benefits society as a whole and it is non-excludable, meaning that once it is cleared, anyone can benefit from the reduced risk of collisions. However, it is subject to the free-rider problem because individuals or countries can benefit from it without contributing to the cost of clearing it. Therefore, B is the correct answer.

Question 7

To be an example of a public good, a good must be both rival in consumption and nonexcludable.

Accepted Answer

A public good is characterized by being non-rival in consumption and non-excludable, meaning one person's use doesn't reduce availability for others, and it's not feasible to exclude anyone from using the good.

Question 8

Public Broadcasting, in its fund drives, often arranges for a corporation to match donations made by its employees. This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

By arranging for a corporation to match donations made by its employees, the free-rider problem is likely to be reduced because individuals are incentivized to contribute knowing that their donation will be doubled. This is likely to lead to a larger level of contribution to the public good because people are more willing to donate when they know their donation will go further.

Question 9

A good is nonexcludable in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

Accepted Answer

Nonexcludability means that it is difficult or impossible to prevent someone from consuming a good or service even if they do not pay for it. Examples of nonexcludable goods include public parks and national defense.

Question 10

A charity that used to arrange matching charitable contributions, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

When a charity stops arranging matching contributions, individuals may feel less incentivized to contribute, believing their contribution is less impactful. This can increase the free-rider problem, where individuals rely on others to contribute to the public good, leading to a smaller overall level of contribution.

Question 11

Recall the Application about space debris in the atmosphere to answer the following question(s).
-Recall the Application. Which of the following is TRUE?

Accepted Answer

All of the options are true - there are over 20,000 pieces of junk as large as a softball in orbit around the Earth, modern global positioning satellites are at risk of colliding with orbital junk, and solving the space junk problem will require international cooperation.

Question 12

Externalities always consist of benefits that are not confined to the person or organization that decides how much of a good to produce or consume.

Accepted Answer

Externalities can be either positive (benefits) or negative (costs) and affect third parties not directly involved in the production or consumption of a good.

Question 13

If a private good generates external benefits

Accepted Answer

When a private good generates external benefits, it means that there are additional benefits that are enjoyed by individuals or society as a whole that are not reflected in the private benefit received by the person consuming the good. This means that the social benefit (private benefit plus external benefit) will be greater than the private benefit alone. Therefore, choice A is the correct answer.

Question 14

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s).
-Recall the Application. Weather monitoring is

Accepted Answer

Weather monitoring is a public good because it is non-excludable, meaning it is impossible to prevent people from benefiting from it once it is provided, and non-rival, meaning its consumption by one person does not diminish its availability to others. Therefore, it is not efficiently provided by private markets because individuals have little incentive to pay for it if they can benefit from it without paying.

Question 15

Public Broadcasting reads the names of local contributors on the air. This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

Reading the names of contributors on the air acts as a form of recognition for those who contribute, which can reduce the free-rider problem. This is because individuals may be more inclined to contribute if they receive public acknowledgment, leading to a larger level of contribution to the public good.

Question 16

A market in which there are neither external benefits nor external costs is inefficient.

Accepted Answer

A market in which there are no externalities (external benefits or external costs) is considered to be efficient. This is because buyers and sellers are able to fully account for all costs and benefits associated with the transaction, and therefore make mutually beneficial trades.

Question 17

When private goods have external benefits

Accepted Answer

When private goods have external benefits, the benefits of the good spill over to third parties who do not pay for the good. As a result, the marginal social benefit is greater than the marginal private benefit.

Question 18

A charity that used to offer contributors private goods such as coffee mugs, books, or magazine subscriptions, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

By not offering private goods, the charity might increase the free-rider problem because individuals may be less inclined to contribute if they don't receive something in return, leading to a smaller level of contribution to the public good.

Question 19

Arranging matching charitable contributions will ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

Arranging matching charitable contributions reduces the free-rider problem because individuals are more likely to contribute if they know their contributions will be matched, effectively doubling the impact of their donation. This incentive leads to a larger level of contribution to the public good.

Question 20

Public Broadcasting, in its fund drives, often appeals to viewers by saying, "without you, there will be no Big Bird." This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Accepted Answer

This statement aims to reduce the free-rider problem by making individuals feel personally responsible for the continuation of the service (in this case, programming like "Big Bird"). By doing so, it encourages a larger level of contribution to the public good, as people are more likely to donate if they believe their contributions are crucial.

Quiz 9: Imperfect Information, External Benefits, and External Costs

A good is nonrival in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

A charity that used to make an appeal to peoples' sense of civic or moral responsibility, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

The forces of supply and demand will provide a quantity that is

If you can consume a good without having to pay for it, the good must be a public good.

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s) . -Recall the Application. When the U.S. acquires and then shares weather data with organizations in other countries

Recall the Application about space debris in the atmosphere to answer the following question(s) . -Recall the Application. The clearing of space debris is a good that subject to the free-rider problem.

To be an example of a public good, a good must be both rival in consumption and nonexcludable.

Public Broadcasting, in its fund drives, often arranges for a corporation to match donations made by its employees. This is likely to the free-rider problem and lead to a level of contribution to the public good.

A good is nonexcludable in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

A charity that used to arrange matching charitable contributions, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

Recall the Application about space debris in the atmosphere to answer the following question(s) . -Recall the Application. Which of the following is TRUE?

Externalities always consist of benefits that are not confined to the person or organization that decides how much of a good to produce or consume.

If a private good generates external benefits

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s) . -Recall the Application. Weather monitoring is

Public Broadcasting reads the names of local contributors on the air. This is likely to the free-rider problem and lead to a level of contribution to the public good.

A market in which there are neither external benefits nor external costs is inefficient.

When private goods have external benefits

A charity that used to offer contributors private goods such as coffee mugs, books, or magazine subscriptions, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

Arranging matching charitable contributions will the free-rider problem and lead to a level of contribution to the public good.

Public Broadcasting, in its fund drives, often appeals to viewers by saying, "without you, there will be no Big Bird." This is likely to the free-rider problem and lead to a level of contribution to the public good.

Quiz 9: Imperfect Information, External Benefits, and External Costs

A good is nonrival in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

A charity that used to make an appeal to peoples' sense of civic or moral responsibility, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

The forces of supply and demand will provide a quantity that is

If you can consume a good without having to pay for it, the good must be a public good.

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s) . -Recall the Application. When the U.S. acquires and then shares weather data with organizations in other countries

Recall the Application about space debris in the atmosphere to answer the following question(s) . -Recall the Application. The clearing of space debris is a ________ good that ________ subject to the free-rider problem.

To be an example of a public good, a good must be both rival in consumption and nonexcludable.

Public Broadcasting, in its fund drives, often arranges for a corporation to match donations made by its employees. This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

A good is nonexcludable in consumption if it is not practical to exclude people who don't pay for it from enjoying its benefits.

A charity that used to arrange matching charitable contributions, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Recall the Application about space debris in the atmosphere to answer the following question(s) . -Recall the Application. Which of the following is TRUE?

Externalities always consist of benefits that are not confined to the person or organization that decides how much of a good to produce or consume.

If a private good generates external benefits

Recall the Application about the benefits generated when one country gathers information on global weather to answer the following question(s) . -Recall the Application. Weather monitoring is

Public Broadcasting reads the names of local contributors on the air. This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

A market in which there are neither external benefits nor external costs is inefficient.

When private goods have external benefits

A charity that used to offer contributors private goods such as coffee mugs, books, or magazine subscriptions, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Arranging matching charitable contributions will ________ the free-rider problem and lead to a ________ level of contribution to the public good.

Public Broadcasting, in its fund drives, often appeals to viewers by saying, "without you, there will be no Big Bird." This is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.

A charity that used to make an appeal to peoples' sense of civic or moral responsibility, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

Recall the Application about space debris in the atmosphere to answer the following question(s) . -Recall the Application. The clearing of space debris is a good that subject to the free-rider problem.

Public Broadcasting, in its fund drives, often arranges for a corporation to match donations made by its employees. This is likely to the free-rider problem and lead to a level of contribution to the public good.

A charity that used to arrange matching charitable contributions, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

Public Broadcasting reads the names of local contributors on the air. This is likely to the free-rider problem and lead to a level of contribution to the public good.

A charity that used to offer contributors private goods such as coffee mugs, books, or magazine subscriptions, but no longer does, is likely to the free-rider problem and lead to a level of contribution to the public good.

Arranging matching charitable contributions will the free-rider problem and lead to a level of contribution to the public good.

Public Broadcasting, in its fund drives, often appeals to viewers by saying, "without you, there will be no Big Bird." This is likely to the free-rider problem and lead to a level of contribution to the public good.