Question 1

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.

Accepted Answer

Private goods are those that are rival and excludable, meaning that if one person consumes the good, others cannot consume the same unit and people can be prevented from consuming the good if they do not pay for it. Prices guide the decisions of buyers and sellers in the market, where they interact to exchange goods and services. These market interactions lead to an efficient allocation of resources, meaning that goods and services are produced and distributed in a way that maximizes the satisfaction of wants and needs of individuals, considering the available resources and technology. Market prices signal the scarcity or abundance of resources and allow individuals and firms to make trade-offs and allocate resources in the most valuable uses.

Question 2

A tornado siren is a
A)private good.
B)club good.
C)common resource.
D)public good.

Accepted Answer

A tornado siren is a public good because it is non-excludable (everyone in the area can hear it) and non-rivalrous (one person hearing it does not prevent another person from hearing it). It is also provided by the government and funded by taxpayers, making it a public good.

Question 3

Government policy can potentially raise economic well-being
A)in all markets for goods and services.
B)in economic models, but not in reality.
C)when a good does not have a price attached to it.
D)never.

Accepted Answer

The answer of Government policy can potentially raise economic well-being
A)in...

Question 4

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.

Accepted Answer

Traffic lights at an intersection are not rival because one person's use does not diminish the ability of others to use it, and they are not excludable because it is not feasible to prevent anyone from using them.

Question 5

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.

Accepted Answer

Price is the most significant signal that guides the decisions of buyers and sellers, as it reflects the supply and demand forces in the market. Consumers adjust their spending habits based on the prices of goods and services, and businesses make production and pricing decisions accordingly.

Question 6

If good x is available free of charge, then
A)good x must be provided by nature.
B)good x must be provided by the government.
C)the private market cannot ensure an efficient allocation of resources in the market for good x.
D)government policy is incapable of increasing total surplus in the market for good x.

Accepted Answer

The answer of If good x is available free of...

Question 7

When goods do not have a price, which of the following primarily ensures that the good is produced?
A)buyers
B)sellers
C)government
D)the market

Accepted Answer

When goods do not have a price, such as in the case of public goods like national defense or environmental protection, the government plays a primary role in ensuring that these goods are produced. The government may allocate funds for production or provide incentives for private producers to create these goods.

Question 8

Resources tend to be allocated inefficiently when goods
A)are private goods.
B)are rival in consumption and excludable.
C)are available free of charge.
D)are available only at very high prices.

Accepted Answer

When goods are available free of charge, there is no price mechanism to direct their allocation efficiently. People may over-consume these goods, leading to a tragedy of the commons or a waste of resources.

Question 9

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.

Accepted Answer

Governments can provide public goods through funding and regulation and can also regulate and limit the use of common resources to prevent overuse and depletion.

Question 10

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 a fee to enjoy these goods.
D)The invisible hand is at work to ensure these goods are provided in the market

Accepted Answer

Government-provided goods are usually provided for free or at a very low cost compared to their actual value. This is because these goods are considered public goods, which means they are non-excludable and non-rivalrous. Non-excludable means that it is difficult to exclude anyone from consuming the good or service, even if they do not pay for it. Non-rivalrous means that one person's consumption of the good does not reduce another person's consumption of it. As a result, providing these goods through the market would be inefficient and unfair, since some people would be able to enjoy the good without paying for it, while others would have to pay. Therefore, the government usually provides these goods and services through taxation or other forms of revenue collection.

Question 11

The old lyric "the best things in life are free"
A)is not true for any goods.
B)is even true for some goods that have a price.
C)refers to goods provided by nature or the government.
D)refers to goods provided by the market.

Accepted Answer

The answer of The old lyric "the best things in...

Question 12

A traffic light at an intersection is
A)a public good.
B)a private good.
C)a club good.
D)a common good.

Accepted Answer

The answer of A traffic light at an intersection is
A)a...

Quiz 11: Public Goods and Common Resources

For private goods allocated in markets,

A tornado siren is a

Government policy can potentially raise economic well-being

A traffic light at an intersection is

For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is

If good x is available free of charge, then

When goods do not have a price, which of the following primarily ensures that the good is produced?

Resources tend to be allocated inefficiently when goods

Governments can improve market outcomes for

Which of the following is usually true about government-provided goods?

The old lyric "the best things in life are free"

A traffic light at an intersection is