Market Failure and Government Intervention Quiz

Jospeh and Eunice are at a park discussing what makes the park's clean air special as a public good. Which of the following is a key characteristic of a public good?

• It is non-excludable and non-rivalrous.

• It is excludable and rivalrous.

• It is always provided at a price.

• It is produced only by private firms.

Weng and Raphael are planning a neighborhood fireworks show, which everyone can enjoy even if they don't chip in. Why does this kind of public good often lead to the free rider problem?

• Because they are always under government control.

• Because individuals can benefit without paying for them.

• Because consumption by one person reduces availability for others.

• Because people can be excluded from using them.

Evien and Eunice are sitting in a park discussing what makes something a public good. They consider several examples. Which of the following is the best example of a public good?

• National defense

• Restaurant meal

• Private tutoring

• Concert ticket

Damien, Eunice, and Benjamin are visiting a city park together. As they walk around, they discuss what makes the park a public good. Which of the following is NOT a characteristic of a public good?

• Available to all

• Non-excludability

• Excludability

• Non-rivalry

Benjamin, Noushin, and Evien love using the free Wi-Fi at their local library. How will this affect the market?

• No effective Demand

• No effective supply

• Non Provision of the good

• Requires government intervention

Benjamin and Weng are walking home from school when they start talking about things they all benefit from in their neighborhood. Which of the following is most likely to be provided by the government because it's a public good?

• Fast food meals

• Street lighting

• Private swimming lessons

• Designer clothing

Imagine Joseph, Benjamin, and Evien are in charge of providing public goods like parks and streetlights. What might happen if they leave it all up to private markets?

• They will become excludable

• They will be overproduced

• They may be underprovided due to lack of profit incentive

• They will be efficiently provided to everyone

Imagine Damien and Sri are trying to organize a neighborhood fireworks show that everyone can watch, whether they pay or not. Why do governments often step in to help provide things like this?

• To ensure that only paying customers benefit

• To prevent overconsumption by individuals

• To address market failure caused by non-excludability and non-rivalry

• To increase competition among private firms

In their neighborhood, Brandon and Felix notice that the local park is not being maintained because everyone expects someone else to take care of it. What is one common government policy to resolve underprovision of public goods like their park?

• Subsidizing private consumption

• Direct government provision of the good

• Imposing user fees on all goods

• Eliminating all public funding

Eunice, Benjamin, and Raphael are members of a city council discussing how to manage waste collection in their community. Which of the following is an example of using regulation to ensure public good provision?

• Letting private firms decide whether to provide the good

• Making the good rivalrous

• Allowing only those who pay to use the service

• Requiring all households to pay for waste collection services