F.5 Economics Book 3 Chapter 17 externality and public goods

If there is a harmful externality, then the government may

• A. subsidise economic agents which generate the external costs.

• B. restrict the output level to reduce the deadweight loss.

• C. do nothing because the market will always solve the problem itself.

• D. take over all private firms because only public firms can produce without generating an external cost.

If there is a positive externality, which of the following measures may be used by the government to correct the problem?

• A. Taxation

• B. Price ceiling

• C. Quota

• D. Subsidy

Which of the following is an external cost of a fireworks show organised by the government?

• A. Payment to fireworks manufacturers

• B. Increase in revenue of nearby shops

• C. Police manpower employed to maintain order in the area

• D. Light pollution

Which of the following is a private good provided by public enterprises?

• A. Public hospital services

• B. National defence

• C. TV programmes provided by the government

• D. An article written by Li Ka Shing

Which of the following comes closest to a private good?

• A. A song sung by Joey Yung

• B. A smartphone

• C. Philosophical articles written by Henry David Thoreau

• D. A well-maintained garden

Public goods are goods which are

• A. rival and excludable in consumption.

• B. rival and non-excludable in consumption.

• C. non-rival and excludable in consumption.

• D. non-rival and non-excludable in consumption.

Which of the following is an example of public goods?

• A. Free music on the web

• B. Fish in the sea

• C. Medical services

• D. A public library

National defence is an example of a public good because

• A. all citizens are willing to pay for it.

• B. it can be consumed by all citizens at the same time.

• C. it is paid for with public funds.

• D. it is provided by the government.