Ch. 18 - Public Goods & Tragedy of Commons
________ allows producers to give goods like radio broadcasts away for free (which is the efficient solution) while still being profitable.
Advertising
A good that is rival and nonexcludable is: → a public good. → a common resource. → a private good. → a nonrival private good.
a common resource. → An example of a common resource is a public road.
Sarah pays county taxes, part of which are used to subsidize public schools, even though she has no children. Sarah is an example of → statistical discrimination. → a free rider. → tragedy of the commons. → a forced rider.
a forced rider.
Which of the following is an example of an excludable and rival good or service? → a cable television package → a kung fu movie on DVD → Netflix instant-viewing movie service → National Public Radio
a kung fu movie on DVD → A private good, such as a DVD, is rival and excludable.
A good that is nonrival and excludable is: → a public good. → a private good. → a nonrival private good. → a common resource.
a nonrival private good. → Utilities like electricity and water are generally nonrival private goods.
A tuna swimming around in international waters is a ________ resource because it is a good that is nonexcludable and rival.
common
Wireless Internet service in a public place like an airport or coffee shop is a good that is ________ and nonrival.
excludable
Private goods are → nonexcludable and rival. → excludable and rival. → nonexcludable and nonrival. → excludable and nonrival.
excludable and rival
In practice, the inefficiency from the underprovision of most nonrival private goods, such as television, music, and software: → is not a big deal. → is sufficient to argue for government provision of these goods. → can be solved through a system of tradable allowances. → does not exist.
is not a big deal. → The diversity, creativity, and responsiveness of the markets for these goods make up for the inefficiency of underprovision.
Which of the following goods is nonexcludable? → an apartment building → a can of Coke → national defense → a concert at Radio City Music Hall
national defense
The difference between private goods and common resources is that common resources are → nonexcludable and private goods are excludable. → nonrival. → more valuable than private goods. → excludable and private goods are nonexcludable.
nonexcludable and private goods are excludable
James manages to transfer his roommate's iTunes music collection to his computer, but when James tries to listen to the music, iTunes requests his roommate's password. In this way, iTunes keeps music downloads: → rival and excludable. → nonrival and nonexcludable. → rival and nonexcludable. → nonrival and excludable.
nonrival and excludable. → Music downloaded from iTunes is a nonrival private good, or a good that is nonrival and excludable
The tragedy of the commons refers to the → underproduction of public goods in economic markets. → overuse of a nonrival and nonexcludable good. → overuse of a rival but nonexcludable good. → underproduction of a common good.
overuse of a rival but nonexcludable good
If a good is non-excludable: → people who didn't purchase it can still use it. → a person of any age can purchase it. → it must be a government service. → it must be a common resource.
people who didn't purchase it can still use it. → While a nonexcludable good can be government provided or a common resource, the defining element of a nonexcludable good is that people who do not pay for it cannot be easily prevented from using it.
A salt bagel is a(n) ________ good, because it is excludable and rival.
private
Wireless Internet service in a public place like an airport or coffee shop is called a nonrival _______ good, because it is nonrival and excludable.
private
National defense is a(n) ________ good because it is nonrival and nonexcludable.
public
Common resources are: → nonrival and excludable. → nonrival and nonexcludable. → rival and nonexcludable. → rival and excludable.
rival and nonexcludable. → This is the definition of a common resource.
Which of the following goods best exemplifies a nonrival good? → the Internet → an automobile → a bottle of water → your apartment
the Internet
If you're camping with a few friends, which of the following is a public good? → the food → the toilet paper → the campfire → the tents
the campfire
New Zealand's ITQ system: → was unsuccessful because it granted property rights over the catch. → was successful because it created property rights over the catch. → was unsuccessful because it led to capital stuffing. → was successful because it led to capital stuffing.
was successful because it created property rights over the catch. → Property rights would allow for the management of resources that are, without property rights, subject to the tragedy of the commons.
Advertising works so well that some nonrival goods are provided without exclusion even when exclusion would be easy. A good example of this is: → HBO programming. → a radio broadcast. → a Google Web search. → a southern bluefin tuna.
a Google Web search. → Google has discovered that selling advertising and providing searches for free is more profitable.
In group projects for class there is often one member who does noticeably less work than others. Which of the following is the most accurate description of that person? → a forced rider → a free rider → tragedy of the commons → lazy
a free rider
While captain of a salmon fishing boat in British Columbia, Jacob saved enough money to start a salmon farm. By leaving the fishing industry to farm salmon, Jacob: → All of these answers are correct. → will earn more money in the short run. → contributes to the tragedy of the commons among the salmon fishermen who remained. → enables himself to exercise control over his stock of salmon.
enables himself to exercise control over his stock of salmon. → Private ownership allows Jacob to control how much salmon he has, rather than competing for salmon with other fishermen, which can result in overfishing and endangering wild salmon.
If people who do not pay for a good can easily be prevented from using that good, the good is: → nonexcludable. → nonrival. → rival. → excludable.
excludable. → A good is excludable if people who don't pay for the good can easily be prevented from using it.
Layla password-protected her wireless Internet so that her neighbors would stop using it. Wireless Internet is: → a public good. → non-excludable. → excludable. → a common resource.
excludable. → Wireless Internet is a nonrival private good, which means it is nonrival but excludable.
Markets tend to be inefficient when it comes to public goods because → consumers tend to value these goods less than private goods. → the rival nature of the good makes it hard to collect payment from consumers. → free riders lead to an underproduction of the good. → the government tends to overproduce the good.
free riders lead to an underproduction of the good.
Nonrival private goods are: → rival and nonexcludable. → nonrival and nonexcludable. → nonrival and excludable. → rival and excludable.
nonrival and excludable. → This is the definition of a nonrival private good.
Television and radio broadcasts are examples of unique public goods because they are: → provided by markets. → a network good. → nonrival and nonexcludable. → also available as nonrival private goods, as in the case of cable television and XM radio.
provided by markets. → The unique element of television and radio broadcasts is that they are public goods supplied by markets.
Wealthy industrialist Henry Hawk fears an asteroid hitting Earth and is willing and able to pay $15 billion to develop an asteroid deflection system. Suppose asteroid deflection only costs $10 billion and Hawk makes asteroid deflection a reality. What type of good has Henry Hawk provided? → private good → public good → nonrival private good → commons resource
public good
A tuna swimming around in international waters is a good that is ________ and nonexcludable.
rival