Ch. 11 Public Goods and Common Resources

D) people can be prevented from using it.

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) a corrective tax.

A toll on a congested road is in essence A) an interstate highway subsidy. B) a hidden tax. C) a gasoline tax. D) a corrective tax.

D) not rival and not excludable in consumption.

A traffic light at an intersection is A) rival and excludable in consumption. B) not rival but excludable in consumption. C) rival but not excludable in consumption. D) not rival and not excludable in consumption.

C) not excludable, people have an incentive to be free riders.

Because public goods are 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.

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

Tragedy of the Commons

1. Clean Air and Water 2. Congested Roads 3. Fish, Whales, and Other Wildlife

What are three important Common Resources?

A) one person's use of the good diminishes another person's ability to use it.

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) an unlimited number of people can use the good at the same time. D) everyone will be excluded from obtaining the good.

C) An ice cream cone

Which of the following is not a common resource? A) Lions in the wild B) A small pond in a public park C) An ice cream cone D) Trees in a forest

a person who receives the benefit of a good but avoids paying for it

free rider

the property of a good whereby one person's use diminishes other peoples use

rivalry in consumption

A) reduce the use of a common resource.

The goal of requiring licenses for hunting and fishing is to A) reduce the use of a common resource. B) ensure that the people hunting and fishing are qualified. C) promote hunting and fishing. D) monitor compliance with federal gun laws.

goods that are excludable but not rival in consumption

club goods

1. National defense 2. Basic Research 3. Fighting Poverty

what are the three important examples of Public Goods?

regulations and corrective taxes, to limit the use of common resources.

Common resources are not excludable but are rival in consumption. Examples include common grazing land, clean air, and congested roads. Because people are not charged for their use of common resources, they tend to use them excessively. Governments can remedy this problem using various methods, such as ...

B) receives the benefit of a good but avoids paying for it.

A free rider is a person who A) will only purchase a product on sale. B) receives the benefit of a good but avoids paying for it. C) can produce a good at no cost. D) rides public transit regularly.

C) People do not have to pay an explicit fee to enjoy these goods.

Which of the following is usually true about government-provided goods? A) These goods have a zero opportunity cost. B) These goods are not scarce. C) People do not have to pay an explicit fee to enjoy these goods. D) The invisible hand is at work to ensure these goods are provided in the market

D) will have difficulty estimating the value of the highway.

A cost-benefit analysis of a highway is difficult to conduct because analysts A) cannot estimate the explicit cost of a project that has not been completed. B) are unlikely to have access to costs on similar projects. C) are not able to consider the opportunity cost of resources. D) will have difficulty estimating the value of the highway.

C) conduct a cost-benefit analysis and compare the total cost and total benefits of the project.

Before considering any public project, the government should A) only measure the total benefits of the project. B) only measure the cost of the project. C) conduct a cost-benefit analysis and compare the total cost and total benefits of the project. D) infer that citizens who vote for a project are willing to pay equally for it.

D) price.

For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is A) advertising. B) quality. C) reputation. D) price.

A) prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.

For private goods allocated in markets, A) prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. B) prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources. C) the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. D) the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation of resources.

private goods, which are both excludable and rival in consumption. Markets do not work as well for other types of goods.

Goods differ in whether they are excludable and whether they are rival in consumption. A good is excludable if it is possible to prevent someone from using it. A good is rival in consumption if one person's use of the good reduces others' ability to use the same unit of the good. Markets work best for ...

C) both public goods and common resources.

Governments can improve market outcomes for A) public goods but not common resources. B) common resources but not public goods. C) both public goods and common resources. D) neither public goods nor common resources.

D) cost-benefit analysis.

If the government decides to build a new community center, the first step would be to conduct a study to determine the value of the project. The study is called a A) budget analysis. B) project analysis. C) reimbursement analysis. D) cost-benefit analysis.

C) if too many people use it, one person's use diminishes other peoples' use.

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because A) people can be prevented from using it. B) access is limited due to driving distances. C) if too many people use it, one person's use diminishes other peoples' use. D) anyone can use it without affecting anyone else.

C) excludable and rival in consumption.

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.

providing public goods and deciding the quantity of each good using cost-benefit analysis.

Public goods are neither excludable nor rival in consumption. Examples of public goods include fireworks displays, national defense, and the discovery of fundamental knowledge. Because people are not charged for their use of the public good, they have an incentive to free ride, making private provision of the good infeasible. Governments can improve the allocation of resources by ...

D) not rival in consumption.

The U.S. military defends Ngoc from foreign conflict. The fact that Ngoc enjoys this protection does not detract from other Americans' enjoyment of it. For this reason, we say that national defense is A) excludable. B) not excludable. C) rival in consumption. D) not rival in consumption.

a study that compares the costs and benefit to society of providing a public good

cost-benefit analysis

goods that are rival in consumption but not excludable

common resources

think why!

examples of different goods being rival or not and excludable or not

the property of a good whereby a person can be prevented from using it

excludability

goods that are both excludable and rival in consumption

private goods

goods that are neither excludable nor rival in consuption

public goods