Quiz 19: Public Goods and Common Resources

A type of good that is subject to market failure is: A)a public good. B)a private good. C)an uncommon resource. D)None of these goods is subject to market failure.

When a good ends up overconsumed and depleted,we can assume it is: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

When a good ends up undersupplied,we can assume it is: A)a common resource. B)a private good. C)a public good. D)None of these goods can be undersupplied.

The problem caused by goods that are considered common resources is that they: A)are overconsumed. B)are undersupplied. C)are oversupplied. D)are underconsumed.

Public goods,when left to the private market: A)will be undersupplied. B)will be overconsumed. C)will be underconsumed. D)will be oversupplied.

Which of the following is likely to cause a market failure and be overconsumed? A)Grazing pastureland B)Cable TV C)Public health D)Education

Which of the following is likely to cause market failure and be undersupplied? A)Research B)Orange juice C)River water D)Grazing pasture

When faced with a market failure,the government: A)usually tries to redistribute the existing surplus more fairly. B)always takes over the market. C)often encourages the well-functioning firms to stay through protectionist policy. D)None of these statements is true.

Which of the following goods is most likely to be overconsumed? A)Fish in the ocean B)Fish in a pet store C)Fish in the grocery store D)None of these is likely to be overconsumed.

Which of the following goods is most likely to be overconsumed? A)Fish in the ocean B)Chickens on a farm C)Horses on a ranch D)None of these is likely to be overconsumed.

Which of the following is most likely to be overconsumed? A)Sparkling water B)Tap water C)Bottled water D)None of these is likely to be overconsumed.

When a good is excludable: A)it is possible for sellers to prevent its use by those who have not paid for it. B)one person's consumption prevents or decreases others' ability to consume it. C)consumers have a perception of scarcity of that good. D)the government has specific import policies limiting its supply.

When a good is rival in consumption: A)one person's consumption prevents or decreases others' ability to consume it. B)it is possible for sellers to prevent its use by those who have not paid for it. C)consumers have a perception of scarcity of that good. D)the government has specific import policies limiting its supply.

Private goods are: A)not rival in consumption,but excludable. B)rival in consumption and excludable. C)rival in consumption,but not excludable. D)not rival in consumption and not excludable.

Excludability matters because it: A)allows owners to set an enforceable price on a good. B)allows consumers to control the price of a good. C)creates a perceived scarcity that allows the seller to keep the price artificially high. D)creates a perceived scarcity that causes buyers to have an inelastic demand for the good.

If you can't prevent people from consuming something,then: A)they have little reason to pay for using it. B)the good is not excludable. C)individuals will likely use it for free. D)All of these statements are true.

An example of an excludable good is: A)ice cream. B)a movie in a theater. C)a digital camera. D)All of these are excludable goods.

An example of an excludable good is: A)a movie in a theater. B)a city park. C)a rainbow. D)None of these is an excludable good.

An example of a good that is not excludable is: A)fish in the ocean. B)wireless connection to the Internet. C)a movie in a theater. D)None of these is excludable.

Most goods are: A)rival in consumption. B)exclusive. C)public goods. D)None of these statements is true.

An example of a good that is rival in consumption is: A)a hamburger. B)radio signals broadcast over the air. C)national defense. D)None of these goods is rival in consumption.

An example of a good that is rival in consumption is: A)a sports car. B)a paper clip. C)bottled water. D)All of these goods are rival in consumption.

An example of a good that is rival in consumption is: A)a sweater. B)bottled water. C)tap water. D)All of these goods are rival in consumption.

Goods that are rival in consumption and excludable are: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Goods that are rival in consumption,but not excludable are: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Goods that are not rival in consumption,but are excludable are: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Goods that are neither rival in consumption nor excludable are: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

A common resource is: A)rival in consumption and excludable. B)not rival in consumption,but excludable. C)rival in consumption,but not excludable. D)not rival in consumption and not excludable.

A public good is: A)rival in consumption and excludable. B)not rival in consumption,but excludable. C)rival in consumption,but not excludable. D)not rival in consumption and not excludable.

An artificially scarce good is: A)rival in consumption and excludable. B)not rival in consumption,but excludable. C)rival in consumption,but not excludable. D)not rival in consumption and not excludable.

Traffic lights would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Cookies would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Fish in the ocean would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Streaming Netflix movies would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Fireworks would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

A smart phone would be considered: A)a common resource. B)a private good. C)a public good. D)an artificially scarce good.

Markets work well for allocating ____________ efficiently,but not always so well for allocating ______________________. A)private goods;public goods B)public goods;private goods C)common resources;public goods D)public goods;common resources

The similarity between markets for common resources and markets with externalities is that: A)the price that competitive firms charge does not capture the true costs and benefits of consumption. B)the equilibrium quantity is too high in terms of society. C)government involvement is needed to reach an efficient outcome. D)All of these statements are true.

The free rider problem is caused by: A)the nonexcludability of a good leading to the undersupply of it. B)the incentive to oversupply the good since it is nonrival in consumption. C)the rivalness in consumption of a good leading to the overconsumption of that good. D)the rivalness in consumption of a good leading to the undersupply of it.

When a good is not easily excludable,what people pay for it will: A)not necessarily reflect the real value they place on it. B)reflect the real value they place on it. C)exactly equal the social benefit of the good. D)All of these statements are true.

When what people pay does not necessarily reflect the real value they put on a good,it is likely that: A)the free rider problem exists. B)the good will be undersupplied. C)the good is not easily excludable. D)All of these statements are true.

When the free rider problem is present in a market: A)what people pay often does not reflect the real value they put on a good. B)the good will likely be overconsumed. C)the good is rival in consumption. D)All of these statements are true.

When the free rider problem is present in a market: A)the good will be oversupplied. B)the good will be underconsumed. C)the good is rival in consumption. D)the good is not excludable.

Free riders enjoy: A)positive externalities from others' choices to pay for a good. B)negative externalities from others' choices to pay for a good. C)positive externalities transferred from consumers who receive subsidies. D)positive externalities from a good they choose to buy themselves.

Nonexcludable goods tend to be undersupplied because: A)the free rider problem persists. B)people do not pay the true value of the good. C)people rarely willingly pay for something they could get for free,regardless of how much they value it. D)All of these statements are true.

One way to solve the free-rider problem is: A)have the government provides the good at a certain cost. B)make the good or service more excludable. C)tax those who truly value the good. D)tax everyone an equal amount for the good.

An example of a public good is: A)national defense. B)libraries. C)timber. D)All of these are public goods.

An example of a public good is: A)health. B)cleanliness. C)radio signals. D)All of these are public goods.

Wikipedia is an example of: A)a public good. B)a private good. C)a common resource. D)an artificially scarce resource.

Nonexcludability causes: A)people to demand a higher quantity than they would if they had to pay for what they consumed. B)people to demand a lower quantity than they would if they paid for what they consumed. C)firms to supply a lower quantity than they would if they incurred the full costs of the provision of the good. D)firms to supply a higher quantity than they would if they had to pay for what they supplied.

Nonexcludability,in the case of rival goods,causes: A)inefficiently high demand. B)inefficiently low demand. C)efficient,high demand. D)efficient,low demand.

The combination of inefficiently high demand and dwindling quantity leads to what is called: A)the free rider problem. B)nonexcludable consumption. C)rival in consumption. D)the tragedy of the commons.

The tragedy of the commons is: A)the undersupply of a public good due to people not wanting to pay for a publicly common good. B)the disappearance of certain markets due to the lack of willingness to pay by individuals,leading to collective misfortune. C)the depletion of a common resource due to individually rational but collectively inefficient overconsumption. D)None of these statements is correct.

The depletion of a common resource due to individually rational but collectively inefficient overconsumption is called: A)the tragedy of the commons. B)the free rider problem. C)rival in consumption. D)excludability.

The free-rider problem is triggered by being: A)nonexcludable. B)rival in consumption. C)excludable and rival in consumption. D)excludable and nonrival in consumption.

The tragedy of the commons arises from: A)the combination of rivalry and nonexcludability. B)the good being rival. C)the good being excludable. D)the combination of rivalry and excludability.

When a good is not excludable and rival in consumption: A)the free rider problem may arise. B)the tragedy of the commons may arise. C)the good is likely a private good. D)the good is likely a common resource.

When a good is both rivalrous and nonexcludable: A)the free rider problem may arise. B)the tragedy of the commons may arise. C)the good is likely a private good. D)the good is likely an artificially scarce good.

The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________ A)nonexcludable;both rivalrous and nonexcludable. B)rivalrous;both rivalrous and nonexcludable. C)both rivalrous and nonexcludable;rivalrous. D)both rivalrous and nonexcludable;excludable.

In a market where the tragedy of the commons arises,the equilibrium quantity is both individually ____________ and collectively __________. A)rational;inefficient B)inefficient;rational C)irrational;efficient D)efficient;irrational

Not having to pay for a good leads to: A)overconsumption. B)underconsumption. C)oversupply. D)None of these statements is true.

When someone does not have to pay for a good: A)it is rational to overconsume. B)it is irrational to overconsume. C)it is rational to underconsume. D)it means there is zero demand for the good.

Using a common resource: A)creates a positive externality for others. B)maximizes total surplus. C)is an irrational decision. D)imposes a negative externality on others.

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created,their demand curve: A)would shift straight down and they would consume less. B)would shift straight up and they would consume more. C)would shift straight down and they would consume more. D)would shift straight up and they would consume less.

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created: A)an efficient level would be reached. B)total surplus would be maximized for the whole society. C)individuals would consume less. D)All of these statements are true.

When goods are subject to market failure,one possible solution is to: A)change social norms. B)have government either regulate the market or provide the good. C)privatize the good. D)All of these are possible solutions.

All solutions to market failures in markets for public goods or common resources: A)try to force the internalization of externalities. B)must be provided by the government. C)are not perfect,and total surplus cannot be maximized in these markets. D)need to be accepted by the affected parties to be effective.

When government tries to change social norms,they: A)might run an extensive ad campaign. B)are trying to change people's opinions about their actions. C)try to get consumers to internalize the cost or benefit they cause by their market decision. D)All of these statements are true.

If the government runs an ad campaign to shame litterers,they are: A)wasting a lot of money. B)trying to get individuals to internalize the negative externality created by their decision to litter. C)using protectionist policy to help the trash-collecting industry. D)All of these statements are true.

In order to eliminate a free rider problem or tragedy of the commons problem: A)the social costs must be realized by the individual. B)something must be done to alter individuals' trade-offs. C)market participants must internalize the value of the externality. D)All of these statements are true.

When we consider solving a free rider problem through changing social norms,it is helpful to remember: A)all costs aren't financial. B)social disapproval can be considered a cost. C)conflict with those in your community can be considered a cost. D)All of these statements are true.

Social disapproval carries a higher cost in places where you: A)know the people around you. B)care about the opinions of people around you. C)expect to interact with the people around you again in the future. D)All of these statements are true.

Social disapproval is likely to be more effective: A)in a small town than a large city. B)in solving a free rider problem than a tragedy of the commons problem. C)than taxation. D)All of these statements are true.

One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is: A)clear distinctions between who is and is not allowed to access the resource. B)the participation of resource users in setting the rules for use. C)the ability of users to monitor one another. D)All of these are important to the effectiveness of community-based solutions.

One "design principle" that makes informal,community-based solutions to public goods and common resource problems more effective is: A)the government setting clear rules for use. B)individual pledges to self-monitor their actions. C)clear distinctions between who is and is not allowed to access the resource. D)All of these are important to the effectiveness of community-based solutions.

Elinor Ostrom won the 2009 Nobel Prize in economics for her research showing: A)social norms can sometimes be powerful enough for commonly held property to be managed extremely well. B)social norms are not an effective solution for the management of commonly held property. C)that privatization of public goods is the most effective solution to market failure associated with commonly held property. D)government provision of public goods is the most efficient solution to the tragedy of the commons problem.

In 2009,the Nobel Prize in economics was awarded for work on the effectiveness of social norms in the management of commonly held property to: A)Arthur Pigou. B)Gary Becker. C)Elinor Ostrom. D)Ronald Coase.

Government intervention can be productive and efficiency enhancing: A)whenever it regulates a market. B)in markets for public goods and common resources. C)because the government always acts with altruistic motives. D)except in markets for public goods.

Because government bodies have the power to impose limits on how much of a resource is consumed: A)it can be efficiency enhancing in markets for common resources. B)it will always cause deadweight loss. C)they decide what is the "right" amount for the public to consume. D)they will often correct a market before testing the effectiveness of social norms to correct the problem.

Because government bodies have the power to make up for inadequate supply of a good: A)its presence as a producer is in virtually every market. B)it can be efficiency enhancing in markets for public goods. C)they have incentive to compete with local businesses. D)None of these statements is true.

One way the government can enhance efficiency through the management of public goods and common resources is by: A)banning the good. B)setting quotas for the good. C)government provision of the good. D)All of these can be effective and efficiency-enhancing solutions.

When the government bans a good: A)it is attempting to solve the nonexcludability problem. B)it makes acquiring that good illegal. C)the cost of breaking the ban changes the trade-offs consumers face. D)All of these statements are true.

When the government bans a good: A)it is an easy,but often ineffective,solution to the nonexcludability problem. B)it creates a more efficient solution than any other to the nonexcludability problem. C)it increases surplus more than any other solution to the nonexcludability problem. D)it is the easiest and most effective solution to the nonexcludability problem.

When the government bans a good: A)the cost of breaking the ban needs to be sufficiently high in order to be effective. B)it changes the trade-offs consumers face. C)it will only be effective if it can be easily enforced. D)All of these statements are true.

The costs involved with breaking a ban placed on a good: A)depend on the punishment associated with rule breaking. B)depend on the likelihood of being caught. C)depend on the likelihood of being punished if caught. D)All of these can affect costs involved with breaking a ban placed on a good.

If the punishment associated with breaking a ban is not severe enough,it may: A)not alter the trade-offs enough to change the consumption patterns of the banned good. B)cause even more consumption of the good,exaggerating the problem. C)still decrease the consumption of the good if the price of the good changes. D)still be effective if it gains media attention.

A government ban on a good that suffers from overconsumption may be ineffective if: A)the likelihood of being caught breaking the ban is very low. B)the likelihood of being caught breaking the ban is sufficiently high. C)the punishment for breaking the ban is severe. D)the public did not participate in setting the punishments.

If the punishment is _________,or the likelihood of getting caught is _________,the cost associated with breaking a ban may not be high enough to change the trade-off that consumers face. A)not severe;low B)severe;high C)severe;low D)not severe;high

Bans and quotas ___________ in situations where it is difficult or costly for authorities to monitor and punish rule-breakers. A)rarely succeed B)often succeed C)sometimes succeed D)always succeed

Bans or quotas that limit the use of common resources are straightforward public-policy approaches to solving the problem of overuse if: A)countries have the resources to enforce them. B)the community agrees to aid in its enforcement. C)the community affected participates in setting the punishments for breaking the policy. D)None of these statements is true.

When the optimal quantity of consumption is zero for a given good: A)a ban is often the best solution. B)changing social norms is often the best solution. C)privatizing the good is often the best solution. D)government provision of the good is often the best solution.

Bans are applied to: A)common-resource problems. B)reduce the inefficiency created by overuse. C)situations where the optimal quantity of consumption is zero. D)All of these statements are true.

To combat the undersupply of public goods,a solution is: A)for the government to step in and provide it directly. B)to place a quota on the consumption of the good. C)to change social norms around consumption of the good. D)All of these are effective ways to deal with the undersupply of public goods.

In a functioning market,people will buy a good up to the point where: A)the marginal benefit of the last unit is equal to the marginal cost of that unit. B)the marginal benefit of each unit is equal to the marginal cost of each unit. C)the total benefit of the good is equal to the total cost of the good. D)they can no longer afford it.

If the marginal benefit were greater than the cost of a good: A)consumers could increase their utility by buying more. B)consumers could increase their utility by buying less. C)producers should decrease production. D)None of these is true.

If the cost were greater than the marginal benefit of a good: A)consumers could increase their utility by buying more. B)consumers could increase their utility by buying less. C)producers should increase production. D)None of these is true.

If the government is supplying a public good,the efficient quantity is where: A)the marginal social benefit equals the cost. B)the total social benefit equals the cost. C)the marginal social benefit is greater than the cost. D)the total social benefit outweighs the total cost.

The marginal social benefit is: A)the sum of the marginal benefit gained by each individual user. B)the benefit gained by the last user. C)the total benefit gained by the last user. D)the sum of the benefit gained by each individual user.

When choosing the right amount of a public good to supply,the government: A)often guesses,because people have an incentive to overstate a good's value. B)often provides too much,because people have an incentive to understate a good's value. C)often provides too little,because people have an incentive to overstate a good's value. D)often fails to provide it,because people have an incentive to understate a good's value.

One way the government decides how to pay for public goods is: A)how easy it is to exclude people who don't pay. B)determining who uses the good the most and increasing their property taxes. C)comparing individual's marginal benefits of the good. D)None of these statements is true.

One way the government decides how to pay for a public good is: A)if they can make the good excludable and charge its users. B)the ease of collecting payout. C)the transfer of surplus. D)All of these are ways the government allocates payment of public goods.

An example of a public good that the government has made excludable is: A)toll roads. B)city buses. C)state colleges. D)All of these are excludable public goods.

An example of a public good that the government has made excludable is: A)city buses. B)sewer systems. C)police protection. D)All of these are excludable public goods.

An example of a public good that is difficult to make excludable is: A)sewer systems. B)fire protection. C)national defense. D)All of these are nonexcludable public goods.

An example of a public good that is difficult to make excludable is: A)toll roads. B)city buses. C)state universities. D)None of these is a nonexcludable public good.

A modern example of privatizing a common resource is: A)patents. B)quotas. C)taxes. D)subsidies.

When the government privatizes a common resource,it: A)forces the owner to consider all the costs and benefits of their consumption choices. B)creates excludability. C)increases efficiency. D)All of these statements are true.

One of the difficulties of the government privatizing a common resource is: A)figuring out who owns what when many are using the resource. B)deciding which individuals will have to decrease their consumption. C)compounded the more users there are. D)All of these statements are true.

Using tradable allowances instead of quotas may be a better solution to the provision of common resources because: A)tradable allowances allocate the good in the most efficient way,and quotas do not. B)tradable allowances ensure that the resource is allocated to those with the highest willingness to pay,while quotas do not. C)tradable allowances assign private property rights-and an incentive,as owners,to make sure that the common resource does not get overused,and quotas do not. D)All of these statements are true.

Like negative externalities,tradable permits are useful in allocating common resources because: A)the depletion of common resources imposes a negative externality. B)the problem present in both is overconsumption. C)the socially optimal quantity is not the same as the individual consumers in either case. D)All of these statements are true.