Question 1

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

Accepted Answer

A)  Most people will find it in their self-interest to pay the firm to protect the earth. 
B)  Asteroid protection is a private good, so the firm will make a lot of profit. 
C)  In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense. 
D)  Most people will not pay a firm for asteroid defense. 
A)  Most people will find it in their self-interest to pay the firm to protect the earth. 
B)  Asteroid protection is a private good, so the firm will make a lot of profit. 
C)  In case of an earth-bound asteroid, the firm will not protect people who refused to pay for asteroid defense. 
D)  Most people will not pay a firm for asteroid defense.

Question 2

The problem of free riders is most apparent for:

Accepted Answer

A)  private goods. 
B)  nonrival private goods. 
C)  public goods. 
D)  textbooks. 
A)  private goods. 
B)  nonrival private goods. 
C)  public goods. 
D)  textbooks.

Question 3

When it comes to national defense, antiwar protesters are:

Accepted Answer

A)  latent payers. 
B)  reserved funders. 
C)  forced riders. 
D)  free riders. 
A)  latent payers. 
B)  reserved funders. 
C)  forced riders. 
D)  free riders.

Question 4

An excludable good is:

Accepted Answer

A)  one that is excluded from the common basket of goods consumed by households. 
B)  one that producers will exclude from production. 
C)  one where people can be prevented from using the good. 
D)  not necessary to consume, that is a luxury. 
A)  one that is excluded from the common basket of goods consumed by households. 
B)  one that producers will exclude from production. 
C)  one where people can be prevented from using the good. 
D)  not necessary to consume, that is a luxury.

Question 5

National defense is an example of a:

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good. 
A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good.

Question 6

Many people who own dogs do not pick up after them in public places. This is an example of:

Accepted Answer

A)  free riders. 
B)  the tragedy of the commons. 
C)  a public good. 
D)  forced riders. 
A)  free riders. 
B)  the tragedy of the commons. 
C)  a public good. 
D)  forced riders.

Question 7

Though markets can provide goods that are excludable but nonrival, they do so at the price of:

Accepted Answer

A)  efficiency. 
B)  inefficiency. 
C)  equity. 
D)  inequity. 
A)  efficiency. 
B)  inefficiency. 
C)  equity. 
D)  inequity.

Question 8

Which of the following is a list of rival, excludable goods only?

Accepted Answer

A)  a watermelon, toll highways, a private beach, a chair 
B)  a watermelon, cable Internet service, a private beach, a pencil, a chair 
C)  a watermelon, a chair, a pencil 
D)  online video games, a watermelon, a private beach, a pencil, a chair 
A)  a watermelon, toll highways, a private beach, a chair 
B)  a watermelon, cable Internet service, a private beach, a pencil, a chair 
C)  a watermelon, a chair, a pencil 
D)  online video games, a watermelon, a private beach, a pencil, a chair

Question 9

Jeans are an example of a:

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good. 
A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good.

Question 10

To provide the necessary funding for an asteroid defense shield, the

Accepted Answer

A)  government will have to tax the public. 
B)  government can rely on voluntary contributions. 
C)  market can use debt financing. 
D)  market can create forced riders. 
A)  government will have to tax the public. 
B)  government can rely on voluntary contributions. 
C)  market can use debt financing. 
D)  market can create forced riders.

Question 11

Mosquito control is an example of a:

Accepted Answer

A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good. 
A)  private good. 
B)  public good. 
C)  common resource. 
D)  nonrival private good.

Question 12

Public goods are inefficiently provided in the free market because of the forced rider problem.

Accepted Answer

A) True 
 B)False

Question 13

Advertising is an efficient solution to the problem of nonexcludability and nonrivalry.

Accepted Answer

A) True 
 B)False

Question 14

Entrepreneurs are constantly looking for ways to turn nonexcludable, nonrival goods, such as television, into club goods.

Accepted Answer

A) True 
 B)False

Question 15

Mosquito control must be provided by the government because if:

Accepted Answer

A)  a lot of people free ride then mosquito control would be overprovided by the market. 
B)  a lot of people free ride then mosquito control would be underprovided by the market. 
C)  only few people are benefited then mosquito control would be overprovided by the market. 
D)  only few people are benefited then mosquito control would be underprovided by the market. 
A)  a lot of people free ride then mosquito control would be overprovided by the market. 
B)  a lot of people free ride then mosquito control would be underprovided by the market. 
C)  only few people are benefited then mosquito control would be overprovided by the market. 
D)  only few people are benefited then mosquito control would be underprovided by the market.

Question 16

A good cannot be private at the same time that it is nonexcludable.

Accepted Answer

A) True 
 B)False

Question 17

When entrepreneurs use advertising to pay for the provision of a public good, the outcome is typically:

Accepted Answer

A)  efficient because the market price is zero and hence equal to the marginal cost of providing the public good. 
B)  efficient because the market price is equal to the benefits received from the public good. 
C)  inefficient because people are not paying for the benefits that they receive from the public good. 
D)  inefficient because while advertising generates some revenue for the producers, it typically does not generate enough to equal the social benefits received from the public good. 
A)  efficient because the market price is zero and hence equal to the marginal cost of providing the public good. 
B)  efficient because the market price is equal to the benefits received from the public good. 
C)  inefficient because people are not paying for the benefits that they receive from the public good. 
D)  inefficient because while advertising generates some revenue for the producers, it typically does not generate enough to equal the social benefits received from the public good.

Question 18

The O'Reilly Factor is a popular cable television news show. To watch the show requires a paid subscription. Therefore, which of the following is TRUE?

Accepted Answer

A)  This show is a nonrival private good because 1) nonpayers can be excluded and 2) when one person watches it does not diminish another person's ability to watch. 
B)  This show is a public good because payers and nonpayers alike are watching a rival show. 
C)  This show is a public good because 1) no one can be excluded and 2) when one person watches it does not diminish another person's ability to watch. 
D)  This show is a common good because 1) nonpayers can be excluded and 2) when one person watches it does not diminish another person's ability to watch. 
A)  This show is a nonrival private good because 1) nonpayers can be excluded and 2) when one person watches it does not diminish another person's ability to watch. 
B)  This show is a public good because payers and nonpayers alike are watching a rival show. 
C)  This show is a public good because 1) no one can be excluded and 2) when one person watches it does not diminish another person's ability to watch. 
D)  This show is a common good because 1) nonpayers can be excluded and 2) when one person watches it does not diminish another person's ability to watch.

Question 19

Overutilization and lack of conservation are more likely a problem for:

Accepted Answer

A)  private goods. 
B)  material goods. 
C)  goods that are not owned. 
D)  cows and chickens. 
A)  private goods. 
B)  material goods. 
C)  goods that are not owned. 
D)  cows and chickens.

Question 20

People have little incentive to produce a public good because:

Accepted Answer

A)  fixed costs are usually too high. 
B)  production is impossible. 
C)  of the free rider problem. 
D)  social benefits are typically less than total costs. 
A)  fixed costs are usually too high. 
B)  production is impossible. 
C)  of the free rider problem. 
D)  social benefits are typically less than total costs.

Exam 19: Public Goods and the Tragedy of the Commons

Suppose that a firm plans to provide defense against asteroids striking the earth. Which of the following is TRUE?

The problem of free riders is most apparent for:

When it comes to national defense, antiwar protesters are:

An excludable good is:

National defense is an example of a:

Many people who own dogs do not pick up after them in public places. This is an example of:

Though markets can provide goods that are excludable but nonrival, they do so at the price of:

Which of the following is a list of rival, excludable goods only?

Jeans are an example of a:

To provide the necessary funding for an asteroid defense shield, the

Mosquito control is an example of a:

Public goods are inefficiently provided in the free market because of the forced rider problem.

Advertising is an efficient solution to the problem of nonexcludability and nonrivalry.

Entrepreneurs are constantly looking for ways to turn nonexcludable, nonrival goods, such as television, into club goods.

Mosquito control must be provided by the government because if:

A good cannot be private at the same time that it is nonexcludable.

When entrepreneurs use advertising to pay for the provision of a public good, the outcome is typically:

The O'Reilly Factor is a popular cable television news show. To watch the show requires a paid subscription. Therefore, which of the following is TRUE?

Overutilization and lack of conservation are more likely a problem for:

People have little incentive to produce a public good because:

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

International Trade

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

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