Chapter 11
Public Goods and Common Resources
TRUE/FALSE
- When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.
ANS: T DIF: 2 REF: 11-0
NAT: Analytic LOC: Markets, market failure, and externalities
TOP: Market failure MSC: Interpretive
- Free goods are usually efficiently allocated without government intervention.
ANS: F DIF: 2 REF: 11-0
NAT: Analytic LOC: Markets, market failure, and externalities
TOP: Market failure MSC: Interpretive
- Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.
ANS: T DIF: 1 REF: 11-0
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Private goods MSC: Applicative
- Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.
ANS: F DIF: 2 REF: 11-0
NAT: Analytic LOC: The role of government TOP: Public goods
MSC: Interpretive
- A good that is excludable but not rival is known as a natural monopoly.
ANS: T DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Natural monopolies MSC: Definitional
- National Public Radio would be considered a natural monopoly.
ANS: F DIF: 2 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Natural monopolies MSC: Interpretive
- Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.
ANS: F DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Excludability MSC: Applicative
- A pair of jeans is rival but non-excludable.
ANS: F DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Excludability | Rivalry in consumption MSC: Applicative
- A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.
ANS: F DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Excludability | Rivalry in consumption MSC: Definitional
- Some goods can be classified as either public goods or private goods depending on the circumstances.
ANS: T DIF: 2 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Public goods | Private goods MSC: Interpretive
- Roads can be considered either public goods or common resources, depending on how congested they are.
ANS: T DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Public goods | Common resources MSC: Applicative
- When one person enjoys the benefit of a tornado siren, she reduces the benefit to others.
ANS: F DIF: 1 REF: 11-1
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Rivalry in consumption MSC: Applicative
- Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.
ANS: T DIF: 2 REF: 11-2
NAT: Analytic LOC: Understanding and applying economic models
TOP: Public goods | private goods MSC: Interpretive
- A free-rider is someone who receives the benefit of a good but avoids paying for it.
ANS: T DIF: 1 REF: 11-2
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Free riders MSC: Definitional
- A free rider is a person who pays for a good but does not receive the benefit of it.
ANS: F DIF: 1 REF: 11-2
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Free riders MSC: Definitional
- One benefit to the patent system is that it encourages the production of technical knowledge.
ANS: T DIF: 1 REF: 11-2
NAT: Analytic LOC: Markets, market failure, and externalities
TOP: Excludability MSC: Applicative
- Government agencies, such as the National Science Foundation, subsidize basic research because in the absence of a subsidy too little research would be conducted.
ANS: T DIF: 1 REF: 11-2
NAT: Analytic LOC: Markets, market failure, and externalities
TOP: Public goods MSC: Applicative
- 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.
ANS: F DIF: 2 REF: 11-2
NAT: Analytic LOC: The Study of economics, and definitions in economics
TOP: Public goods MSC: Interpretive
- In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.
ANS: T DIF: 2 REF: 11-2
NAT: Analytic LOC: The role of government TOP: Public goods
MSC: Interpretive
- Even economists who advocate small government agree that national defense is a good that the government should provide.
ANS: T DIF: 1 REF: 11-2
NAT: Analytic LOC: The role of government TOP: Public goods
MSC: Applicative
- Advocates of antipoverty programs claim that fighting poverty is a public good.
ANS: T DIF: 1 REF: 11-2
NAT: Analytic LOC: Understanding and applying economic models
TOP: Public goods MSC: Applicative
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