ABE Ch 11

If one person's use of a good diminishes another person's enjoyment of it, the good is a. rival in consumption. b. excludable. c. normal. d. exhaustible.

A

The Tragedy of the Commons occurs because a. a common resource is rival in consumption. b. a common resource is underutilized. c. crimes are committed in public places. d. common resources are subject to exclusionary rules

A

When a good is rival in consumption, a. one person's use of the good diminishes another person's ability to use it. b. people can be prevented from using the good. c. no more than one person can use the good at the same time. d. everyone will be excluded from obtaining the good.

A

Because public good a. excludable, people have an incentive to be free riders. b. excludable, people do not have an incentive to be free riders. c. not excludable, people have an incentive to be free riders. d. not excludable, people do not have an incentive to be free riders

C

Private decisions about consumption of common resources and production of public goods usually lead to an a. efficient allocation of resources and external effects. b. efficient allocation of resources and no external effects. c. inefficient allocation of resources and external effects. d. inefficient allocation of resources and no external effects.

C

Private goods are both a. excludable and nonrival in consumption. b. nonexcludable and rival in consumption. c. excludable and rival in consumption. d. nonexcludable and nonrival consumption.

C

Which of the following is not a way for the government to solve the problem of excessive use of common resources? a. regulation b. taxes c. turning the common resource into a public good d. a public good turning the common resource into a private good

C

A free-rider problem exists for any good that is not a. rival in consumption. b. a private good. c. free. d. excludable.

D

A good is excludable if a. one person's use of the good diminishes another person's enjoyment of it. b. the government can regulate its availability. c. it is not a normal good. d. people can be prevented from using it.

D

Both public goods and common resources are a. rival in consumption. b. nonrival in consumption. c. excludable. d. nonexcludable.

D

Most goods in the economy are a. natural monopolies. b. common resources. c. public goods. d. private goods.

D

T/F: A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

False

T/F: Free goods are usually efficiently allocated without government intervention.

False

T/F: One person's use of common resources does not reduce the enjoyment other people receive from the resource.

False

T/F: When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.

False

T/F: A free-rider is someone who receives the benefit of a good but avoids paying for it.

True

T/F: A good that is excludable but not rival is known as a natural monopoly.

True

T/F: In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

True

T/F: In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

True

T/F: Markets may fail to allocate resources efficiently when property rights are not well established.

True

T/F: Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

True

T/F: One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

True

T/F: Some goods can be classified as either public goods or private goods depending on the circumstances.

True

When a good is excludable, a. one person's use of the good diminishes another person's ability to use it. b. people can be prevented from using the good. c. no more than one person can use the good at the same time. d. everyone will be excluded from using the good.

b