Econ Final

Private markets will NOT provide the efficient quantity of a public good because

of the free-rider problem.

Which of the following is the BEST example of a public good?

Fourth of July fireworks

Which of the following are examples of positive externalities?

Investments in private education raise your country's standard of living. You are a bird watcher, and your neighbor puts up birdhouses and gardens to attract birds.

Which of the following are examples of market-based policies, rather than command-and-control policies?

The federal government pays fishermen to preserve wild salmon. A state charges an emissions tax on the quantity of carbon emitted by each firm.

Which of the following would be classified as a positive externality?

The increase in neighborhood property values from converting a derelict empty lot to a public vegetable garden.

Which of the following is the BEST example of a private good?

a can of Mountain Dew

A public choice is

a decision that affects an entire society.

Which of the following is the BEST example a public good?

a stop sign

A museum is NOT a public good if

an entry fee is charged and people are denied entry if they do not pay.

Using the term "spillover" is a less formal means of describing

an externality.

An uncrowded toll road is ________ because it is ________.

not a public good; nonrival but excludable

A cost imposed on others outside of any market exchange is:

not taken into account by those imposing the cost. leads to overproduction of the good/service in question. an external cost.

Which of the following is the BEST example of a good that is nonrival and excludable?

cable television

Which of the following is the BEST example of a public good?

clean air

If pollutants are emitted into the air and water, what costs might be incurred as a result?

decreased property values loss from destruction of wildlife habitat compromised recreation possibilities

A free rider is someone who

enjoys the benefits of a good without paying for it.

Which of the following is an example of economic activity that can injure the environment?

excessive clear-cutting of wood resources by logging companies gold mine discharging arsenic into a natural lake that it's using for a tailings pond paper mill discharging raw chemical waste into a river

Education at a private university is NOT a pure public good because it is

excludable

Market failure describes a situation in which the market itself ________ in a way that balances social costs and benefits.

fails to allocate resources efficiently

When government action leads to inefficiency, it is known as

government failure.

Public goods are those for which

individuals who do not pay cannot be excluded from consuming the good.

A good or service or a resource is nonexcludable if

it is not possible to prevent someone from benefiting from it.

If a public good was left to be provided by the private sector

less than the efficient quantity would be produced

Which of the following is the BEST example of a public good?

national defense

If it is impossible or very costly to prevent someone from benefiting from a good even if the person does NOT pay for it, the good is

nonexcludable

If it is impossible to prevent someone from benefiting from a good regardless of whether or not the person paid for it, then the good is

nonexcludable

If the consumption of a good or service by one person does NOT decrease the quantity available for another person, the good or service is

nonrival.

Because of the free-rider problem

private provision leads to the production of less than the efficient quantity of a public good.

If a government wants to establish a marketable permit program, it must begin by determining ________.

the overall quantity of a certain pollutant that will be allowed

A pollution charge is a form of tax imposed on

the quantity of pollution that a firm emits.