Final Exam Study - Public Goods ECON

d) the product or service is a common property resource. Market failure occurs in competitive markets when the product or service is a public good, a common property resource, or if there are externalities.

A competitive market will NOT result in a price and output that maximizes social welfare when: a) the product or service is a pure private good. b) the production or consumption of a good or service creates no positive externalities. c) the production or consumption of a good or service creates no negative externalities. d) the product or service is a common property resource.

a) nonrival and nonexclusive Market equilibrium price for a public good, which is defined as being nonrival and nonexclusive, is where marginal cost equals the vertical summation of individual demands.

For a good that is _____, the market equilibrium price is where marginal cost equals the vertical summation of individual demands. a) nonrival and nonexclusive b) rival and nonexclusive c) nonrival and exclusive d) rival and exclusive

a) The inability to exclude drivers from using the freeway causes it to be overused. When a good is non-excludable but rival, congestion will result. This is an example of a tragedy of the commons.

Freeway 405 in Los Angeles is constantly congested, causing traffic to move very slowly. Why would this freeway be considered a Tragedy of the Commons? a) The inability to exclude drivers from using the freeway causes it to be overused. b) The inability to exclude drivers from using the freeway eliminates the rivalry problem. c) The fact that some drivers choose to drive below the speed limit is a tragedy for all other drivers. d) The car pool lane is constantly being used by cars with no passengers.

b) less than It is often viewed that public goods are available in a society lesser than what is actually desired.

Generally, the amount of public goods available in a society is _____ what is actually desired. a) greater than b) less than c) exactly d) either exactly or greater than

a) Someone who benefits from a good but does not pay for it. The free rider problem occurs when people usually will not pay for a good if they cannot be excluded from using it.

In which of the following situations does a free rider problem occur? a) Someone who benefits from a good but does not pay for it. b) Production of a good that generates pollution. c) Policymakers who ignore opportunity costs in making decisions. d) A firm does not have to advertise, because its customers recommend its product to their friends.

a) goods in which one person's consumption does not diminish the benefit to others from consuming the good, and once provided, no one person can be excluded from consuming. Public goods are nonexclusive and nonrival in consumption. Private Good - R(Y) E(Y) Common Resource - R(Y)E(N) Network - R(N)E(Y) Public Good - R(N)E(N)

Public goods are: a) goods in which one person's consumption does not diminish the benefit to others from consuming the good, and once provided, no one person can be excluded from consuming. b) goods in which one person's consumption diminishes the ability for others to consume it. c) goods in which people can be excluded from consuming. d) bought and sold in traditional markets.

b) tragedy of the commons. The depleting of resources owned by the community at large is known as the tragedy of the commons. Common property resources are nonexclusive, but they are rival.

Since people have little incentive to use resources owned by the community at large in a sustainable fashion, they tend to be overexploited and depleted. This is an example of: a) nonrivalry. b) tragedy of the commons. c) social welfare. d) public goods.

b) occurs when an individual can avoid paying for a public good because he or she cannot be excluded from enjoying the good once provided. When consumers cannot be prevented from using a good without paying, that good is subject to the free rider problem.

The free rider problem: a) occurs when an individual only partially pays for a public good. b) occurs when an individual can avoid paying for a public good because he or she cannot be excluded from enjoying the good once provided. c) exists when individuals can be excluded from using a good. d) is the ability of an individual to bear the full cost of a public good.

a) marginal cost equals the vertical summation of individual demands. The market equilibrium price for a public good is where marginal cost equals the vertical summation of individual demands.

The market equilibrium price for a public good is where: a) marginal cost equals the vertical summation of individual demands. b) marginal revenue equals the vertical summation of individual demands. c) marginal cost equals the horizontal summation of individual demands. d) marginal revenue equals the horizontal summation of individual demands.

b) Consumer surplus decreases. Marginal cost increases so consumer surplus decreases when a common good is overused.

What happens to consumer surplus when a common good is overused? a) Consumer surplus increases. b) Consumer surplus decreases. c) Consumer surplus stays the same. d) Consumer surplus can increase or decrease depending on what happens to producer surplus.

c) Public good with exclusion Goods that are nonrival and exclusive are public goods with exclusion. People can be excluded from enjoying the good and its consumption by one person does not reduce the utility of that good to others.

Which of the following best describes a freeway? a) Private good b) Common property resource c) Public good with exclusion d) Pure public good

a) Rival and exclusive Goods that are rival and exclusive are known as private goods. People can be excluded from enjoying the good and its consumption by one person reduces the utility of that good to others.

Which of the following best describes a slice of pizza? a) Rival and exclusive b) Rival and nonexclusive c) Nonrival and exclusive d) Nonrival and nonexclusive

d) Pure public good Goods that are nonrival and nonexclusive are known as pure public goods. People cannot be excluded from enjoying the good and its consumption by one person does not reduce the utility of that good to others.

Which of the following best describes public radio? a) Private good b) Common property resource c) Public good with exclusion d) Pure public good

c) Nonrival and exclusive Goods that are nonrival and exclusive are public goods with exclusion. People can be excluded from enjoying the good and its consumption by one person does not reduce the utility of that good to others.

Which of the following best describes satellite television? a) Rival and exclusive b) Rival and nonexclusive c) Nonrival and exclusive d) Nonrival and nonexclusive

d) Both are nonrival but satellite radio is exclusive. Both AM radio and satellite radio are nonrival since one person's use does not diminish the ability of another person from using it; however, satellite radio is rival because one must pay to listen to it.

Which of the following best describes the difference between AM radio and satellite radio? a) Both are rival but AM radio is exclusive. b) Both are exclusive but AM radio is rival. c) Both are nonrival but AM radio is exclusive. d) Both are nonrival but satellite radio is exclusive.

d) Both are nonrival but public television is nonexclusive. Public television is a pure public good, which means that it is nonrival and nonexclusive. On-demand cable television is nonrival (one person's viewing does not reduce the ability of anyone else to watch it) but it is exclusive (you have to pay for the movie or other broadcast).

Which of the following best describes the difference between public television and on-demand cable television? a) Both are rival but public television is exclusive. b) Both are exclusive but public television is rival. c) Both are nonrival but public television is exclusive. d) Both are nonrival but public television is nonexclusive.

d) Nonrival and nonexclusive Goods that are nonrival and nonexclusive are known as pure public goods. People cannot be excluded from enjoying the good and its consumption by one person does not reduce the utility of that good to others.

Which of the following best describes the federal court system? a) Rival and exclusive b) Rival and nonexclusive c) Nonrival and exclusive d) Nonrival and nonexclusive

b) A severe traffic jam on the freeway. The tragedy of the commons refers to an issue that occurs when people exploits a shared resource to the extent that demand overwhelms supply and the resource becomes unavailable to the few or all.

Which of the following best represents a tragedy of the commons? a) A shopping mall with no shoppers inside. b) A severe traffic jam on the freeway. c) A fire that burns an entire apartment complex. d) A ski resort that has closed due to lack of snow.

a) River A river is a common property resource. A common property resource is a resource that is owned by the community and therefore tends to be overexploited because individuals have little incentive to use it in a sustainable fashion.

Which of the following is an example of a common property resource? a) River b) Bubble gum c) Cable television d) Laptop computer

d) Public parking Public parking is rival but non-exclusive, and is considered to be a common property resource.

Which of the following is least likely to be a public good with exclusion? a) Satellite radio b) Premium subscription to a news website c) Pay-per-view television d) Public parking

c) Some students choose not to recycle their soda bottles after class, instead leaving them in the classroom. Recycling and maintaining a clean classroom benefits everyone, but yet not everyone contributes to this goal.

Which of the following is the best example of a free rider problem common among public goods? a) A student sneaks onto the city bus without paying the fare. b) A friend asks to ride on the handle bars of your bike to school. c) Some students choose not to recycle their soda bottles after class, instead leaving them in the classroom. d) Your roommate studies all night and earns an A on an exam.

c) Satellite radio service. The public goods are non-excludable and non-rivalrous, however there are certain public goods such as satellite radio service that exclude users.

Which of the following is the best example of a public good with exclusion? a) A fireworks display that can be seen miles away. b) Fire protection services offered by the city. c) Satellite radio service. d) A public lake.

c) A person without health insurance visiting an emergency room since they cannot be turned away. The free rider problem occurs when individuals who gains from resources, goods, or services but do not pay for them. This creates an under provision of those goods or services.

Which of the following represents the best example of a free-rider? a) Your roommate asking you for a ride to school but will not help out with gas. b) A panhandler who sneaks onto the subway without paying. c) A person without health insurance visiting an emergency room since they cannot be turned away. d) A neighbor who plants vegetables in her garden and allows others to help themselves to her harvest.

c) Snowplowing the streets. Snow plowing categorized as a public good or common resource. Once a street is plowed it is not excludable, because everyone enjoys the service.

Which of the following would be the best example of a public good? a) Clean water at the public lake. b) A community park. c) Snowplowing the streets. d) Public school.

b) Public television It is not possible to exclude non-payers from enjoying public television.

______ would be MOST likely to have a free rider problem. a) Satellite television b) Public television c) A professional sporting event d) A rock concert