Deck 11: Public Goods and Common Resources

Question 1

You and your friends watch a movie in your bedroom. For you and your friends, the enjoyment that you get from watching the movie is not rival in consumption.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

A good that is excludable but not rival is known as a club good.

Answer 3

True

Question 4

Roads can be considered either public goods or common resources, depending on how congested they are.

Question 5

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

Question 6

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

Question 7

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

Question 8

Private goods and club goods have in common that they are excludable, but are different in that private goods are rival while club goods are not rival in consumption.

Question 9

All goods that are excludable are also rival in consumption, but not all goods that are rival in consumption are excludable.

Question 10

A free rider is a person who pays for a good but does not receive the benefit of it.

Question 11

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

Question 12

You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

Question 13

A pair of jeans is rival but non-excludable.

Question 14

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

Question 15

A good that is excludable is one that someone can be prevented from using if she did not pay for it.

Question 16

National Public Radio would be considered a club good.

Question 17

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Question 18

Some goods can be classified as either public goods or private goods depending on the circumstances.

Question 19

Free goods are usually efficiently allocated without government intervention.

Question 20

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Question 21

When free riders are present in a market, the market generally fails to provide the efficient outcome.

Question 22

One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

Question 23

Even economists who advocate small government agree that national defense is a good that the government should provide.

Question 24

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Question 25

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

Question 26

Although national defense is currently a public good, economists who advocate small government generally agree that the U.S. should privatize national defense to increase the efficiency of the good.

Question 27

One benefit of the patent system is that it encourages the production of technical knowledge.

Question 28

Economists argue that we can calculate the value of a human life by observing voluntary risks that people take every day.

Question 29

The free-rider problem makes it unlikely that poverty will be entirely eliminated through private charity.

Question 30

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

Question 31

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Question 32

The free-rider problem arises when the number of beneficiaries is large and exclusion of any of them is impossible.

Question 33

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Question 34

Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.

Question 35

Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Question 36

Aristotle writes, "What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others." In this statement, Aristotle is referring to the free-rider problem that occurs when a person receives the benefit of a good without paying for it.

Question 37

An example of the "Tragedy of the Commons" is litter in the picnic area of a local park.

Question 38

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

Question 39

Government agencies, such as the National Science Foundation, subsidize basic research because in the absence of a subsidy too little research would be conducted.

Question 40

Advocates of antipoverty programs claim that fighting poverty is a public good.

Question 41

A traffic light would be considered a common resource.

Question 42

When a highway is congested, giving rise to negative externalities, it is appropriate to view the highway as a common resource.

Question 43

"Given that most people like to get 'free stuff,' it follows that goods that are available free of charge are produced and consumed in the proper amounts in a market economy." What is wrong with this statement?

Question 44

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.

Question 45

Pollution is a negative externality, but it is not appropriate to view the problem of pollution as a common-resource problem.

Question 46

What do we mean when we say that a good is excludable?

Question 47

Nontoll roads can be either public goods or common resources, depending upon the degree of congestion.

Question 48

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

Question 49

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

Question 50

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

Question 51

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​
​
​Refer to Table 11-6. Suppose the cost to clean the lake is $8 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Question 52

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​
​
Refer to Table 11-6. Suppose the cost to clean the lake is $32 per hour and that the residents have agreed to split the cost of cleaning the lake equally. It would maximize Lydia's surplus if 6 hours of cleaning is done.
​

Question 53

When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts.

Question 54

Tolls are not effective in altering people's incentives to drive during rush hour.

Question 55

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​
​
Refer to Table 11-6. Suppose the cost to clean the lake is $32 per hour and that the residents have agreed to split the cost of cleaning the lake equally. It would maximize Mary's surplus if 3 hours of cleaning is done.
​

Question 56

If Dave and Jesse are the only two fishermen in town and neither is bothered by the other's fishing, the lake they fish in is not a common resource.

Question 57

The pollution market failure is an example of the free rider problem.

Question 58

Depending on congestion, national parks can be either a common resource or a public good.

Question 59

The profit motive that stems from private ownership means that elephant populations are best protected as common resources.

Question 60

Markets may fail to allocate resources efficiently when property rights are not well established.

Question 61

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a club good? Briefly explain.

Question 62

What particular characteristic do private goods and club goods have in common?

Question 63

If one person's use of good x diminishes other people's use of it, then good x is one of two types of goods. What are those two types?

Question 64

Are public goods excludable? Are they rival in consumption?

Question 65

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Do any of these goods cause an externality? If so, which one(s)? Positive or negative? Briefly explain.

Question 66

Which two types of goods are excludable?

Question 67

What particular characteristic do private goods and common resources have in common?

Question 68

If no one can be prevented from using good x, then good x is one of two types of goods. What are those two types?

Question 69

A rather large city has only one fire station, two fire trucks, and four firefighters. Is fire protection in this city characterized by rivalry in consumption?

Question 70

What particular characteristic do public goods and club goods have in common?

Question 71

What do we mean when we say that a good is rival in consumption?

Question 72

What particular characteristic do public goods and common resources have in common?

Question 73

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

Question 74

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a club good? Briefly explain.

Question 75

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a common resource? Briefly explain.

Question 76

Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
Refer to Scenario 11-3. Which of these goods is the best example of a private good? Briefly explain.

Question 77

Are common resources excludable? Are they rival in consumption?

Question 78

Why is cable TV reception regarded as a club good?

Question 79

Which two types of goods are rival in consumption?

Question 80

Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter's helmet
Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly explain.