Post-test Public Goods

A common resource is ____

• both rival in consumption and excludable

• neither rival in consumption nor excludable

• rival in consumption but not excludable

• not rival in consumption but excludable

Public goods are difficult for a private market to provide due to ___

• the public goods problem

• the free-rider problem

• the rivalness problem

• the Tragedy of the Commons

Suppose each of 20 neighbors on a street values a streetlight at $3,000. The cost of the streetlight is $40,000. Which of the following statements is true?

• It is not efficient to have a streetlight.

• It is efficient for each neighbor to pay a $3,000 contribution to installing a streetlight.

• It is efficient for the government to tax the residents $2,000 each and install a streetlight.

• None of the answer choices are correct.

A free rider is a person who _____

• fails to produce goods but is allowed to consume goods

• produces a good but fails to receive payment for the good

• receives the benefit of a good but avoids paying for it

A positive externality affects market efficiency in a manner similar to a _____

• public good

• common resource

• rival good

• private good

Suppose that requiring motorcycle riders to wear helmets reduces the probability of a motorcycle fatality from 0.3 percent to 0.2 percent over the lifetime of a motorcycle rider and that the cost of a lifetime supply of helmets is $500. It is efficient for the government to require riders to wear helmets if human life is valued at ___

• $100 or more

• $150 or more

• $500 or more

• $500,000 or more

The Tragedy of the Commons is a parable that illustrates why ___

• common resources are overconsumed

• club goods are overconsumed

• private goods are underconsumed

• public goods are underproduced

Which of the following are potential solutions to the problem of noise pollution near an airport?

• Auction off noise permits to the airlines.

• Grant rights to peace and quiet to residents near the airport so that airlines must purchase the right to make noise.

• Regulate the amount of noise that an aircraft can make.

• All of the answer choices are correct.

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ___

• that prices are not low enough so firms overproduce

• that prices are not high enough so people overconsume

• that property rights have not been well established

• government regulation

If a person can be prevented from using a good, the good is said to be ____

• excludable

• a public good

• a common resource

• rival in consumption