Understanding the concept of Public Goods
With this skill you will learn
- Definition and example of a Public Good
- Defining characteristics of a public good
- Understandng the Free Rider Problem of Public Goods: Prisoner’s Dilemma
- Identifying the Common Resources and the “Tragedy of the Commons”
Understanding the concept of Public Goods Questions
13. Governments provide pure public goods such as national defense because
a. of the free-rider problems that result in underproduction by private markets.
b. governments know how to produce these goods.
c. people do not value national defense very highly.
d. of the potential that private firms will make excess profits.
14. The economy’s marginal benefit curve for a public good is obtained by
a. summing the individual marginal cost curves horizontally.
b. summing the individual marginal benefit curves vertically.
c. summing the individual marginal benefit curves horizontally.
d. summing the individual marginal cost curves vertically.
15. Suppose that the marginal benefit from another unit of a public good exceeds the marginal cost of producing it. Then
a. more of the product should be produced because its provision is less than the efficient level.
b. the net benefit from the product is at its maximum, but the provision of the product is not at its efficient level.
c. less of the product should be produced because its provision exceeds the efficient level.
d. the net benefit from the product is at its maximum, and its provision is at an efficient level.