Understanding the concept of Public Goods

9. Which of the following is nonrival and nonexcludable?

a.The defense services provided by a new stealth bomber

b.A pair of pants

c.A beautiful sunset

d.An uncrowded theme park such as Walt Disney World

10. To two fishermen, a salmon swimming in the middle of the ocean is a good that is

a.nonrival and nonexcludable.

b.nonrival and excludable.

c.rival and nonexcludable.

d.rival and excludable.

11. To two farmers, a bullock (owned by one of the farmers) grazing in the middle of the farmer’s pasture is

a.nonrival and nonexcludable.

b.nonrival and excludable.

c.rival and nonexcludable.

d.rival and excludable

12. A free rider is someone who

a.does not pay taxes.

b.cannot be excluded from consuming a public good even though he or she did not pay for the good.

c.paid more than his or her fair share for the provision of a public good.

d.cannot be forced to pay for his or her consumption of a private good.

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.

5. When markets fail to allocate resources efficiently, the ultimate source of the problem is usually: 

6. Spending on national defense is a good example of a:

a. private good

b. public good

c. merit good

d. none of the above

7. The tragedy of commons is a parable that illustrates why

8. A television signal an example of a good that is:

a. private

b. social

c. nonrival in consumption

d. nonexcludable in production

1. A public good is