Externalities and Public Goods Quiz

What is a negative externality?

• A benefit enjoyed by a bystander

• A cost imposed on a bystander

• A product with high demand

• A government-imposed regulation

Which of the following is an example of a positive externality?

• Noise pollution from a factory

• Second-hand smoke in a restaurant

• Vaccinations reducing the spread of disease to bystanders

• Traffic congestion

Which term describes a good that is non-excludable and non-rivalrous?

• Private good

• Common resource

• Club good

• Public good

Which of the following is an example of a public good?

• National defense

• Netflix subscription

• Fish in the ocean

• A restaurant meal

What is the 'tragedy of the commons'?

• The failure of public goods to meet demand

• Overuse and depletion of shared resources

• A government monopoly on public goods

• The mismanagement of government funds

Which economic policy is commonly used to reduce negative externalities?

• Subsidies

• Tariffs

• Taxes

• Price controls

Which of the following is NOT a characteristic of a common resource?

• Non-excludable

• Rivalrous

• Unlimited supply

• Subject to overuse

Why are public goods often provided by the government?

• They are profitable in the private market

• They are non-rivalrous and non-excludable

• They are easy to manage without intervention

• They generate high revenue

What type of externality occurs when bees from a nearby farm pollinate crops for free?

• Positive externality

• Negative externality

• Common resource

• Market failure

Which of the following is an example of the free-rider problem?

• People avoiding taxes by using cash-only businesses

• A customer using a store's Wi-Fi without buying anything

• A company avoiding environmental regulations

• A public park becoming overcrowded