Foundations of Microeconomics, 5e (Bade/Parkin)
Chapter 10 Public Goods and Public Choices
10.1 Classifying Goods and Resources
1) A good is nonexcludable if
A) only the government can produce it.
B) nobody can be excluded from enjoying the benefits of the good.
C) when you pay for the good, you are guaranteed to be the sole consumer.
D) when you consume a unit, that means there is no less for someone else.
E) it is also nonrival.
2) If you can prevent someone from consuming a good, that good is called
A) rival.
B) nonrival.
C) excludable.
D) nonexcludable.
E) a public good.
3) A good or resource is excludable if
A) only the government can produce them.
B) nobody can be excluded from enjoying the benefits of the good or resource.
C) when you pay for the good or resource, you are guaranteed to be the sole consumer.
D) when you consume a unit, that means there is one less for someone else.
E) it is a common resource.
4) Which of the following goods is best described as nonexcludable?
A) a lighthouse
B) pay-per-view television
C) a restaurant meal
D) a college education
E) a cow grazing in a pasture
5) The fact that technology prevents Sam in Nevada from using the email account of Samantha
in Virginia means that email is an example of
A) a good that is nonexcludable.
B) a good that is excludable.
C) a public good.
D) the free-rider problem.
E) the tragedy of the commons.
6) A good is rival if
A) it has substitutes.
B) it can be consumed by many people simultaneously.
C) it is excludable.
D) consumption by one person decreases the quantity available for another person.
E) it has no complements.
7) One person’s rental of the movie Transfomers 2 prevents someone else from renting it. This is
an example of
A) a public good.
B) the rival nature of consumption.
C) the nonrival nature of consumption.
D) nonexcludable goods.
E) a common resource.
8) A good is nonrival if,
A) only the government can produce it.
B) nobody can be excluded from enjoying the benefits of the good.
C) you pay for the good, you are guaranteed to be the sole consumer.
D) when you consume a unit, you have not decreased the amount left for consumption by other
people.
E) anybody can be excluded from enjoying the benefits of the good.
9) A basketball game aired as a pay-per-view show by your local cable network and to which
you can invite your friends to watch is a ________ good.
A) rival
B) nonrival
C) nonexcludable
D) rival and nonexcludable
E) quasi public/quasi private
10) The fact that Florida’s consumption of national defense does not preclude North Dakota from
consuming the same national defense is an example of
A) a private good.
B) a common resource.
C) the rival nature of consumption.
D) excludable goods.
E) a good that is nonrival in consumption.
11) A private good is defined as a good or service
A) that is something tangible.
B) that is rival and excludable.
C) that is rival and nonexcludable.
D) produced by a single country.
E) that is nonrival and nonexcludable.
12) A private good is
A) nonexcludable and nonrival.
B) excludable and rival.
C) excludable and nonrival.
D) nonrival and excludable.
E) subject to the free-riding problem.
13) A good that is both rival and excludable is
A) a good that is impossible to produce.
B) a private good.
C) a common resource.
D) a public good.
E) nonexistent because no good can be both rival and excludable.
14) A good that is ________ and ________ is a ________.
A) rival; excludable; private good
B) rival; excludable; public good
C) nonrival; excludable; public good
D) rival; nonexcludable; private good
E) nonrival; nonexcludable; private good
15) A good is a private good if
A) people who do not pay for the good can enjoy it without paying for it.
B) it is not a common resource.
C) the good is nonrival.
D) the good is excludable and rival.
E) it is both nonexcludable and nonrival.
16) Which of the following is the best example of a private good?
A) a can of Mountain Dew
B) a missile defense system
C) a library in St. Louis
D) a sidewalk in Fargo
E) a cod fish swimming in the middle of the ocean
17) Which of the following is an example of a pure private good?
A) national defense
B) the Florida State Turnpike, a non-congested toll freeway
C) Lake Erie
D) the Metropolitan Museum of Art in New York City
E) the new heat pump your neighbor bought for her house
18) An office in the Empire State Building is
A) a private good.
B) nonexcludable, because it is possible to restrict access to it.
C) a common resource.
D) a public good because many people can be in the Empire State Building.
E) excludable and nonrival.
19) A professional football game played in a completely full stadium is NOT a public good
because it is
A) nonexcludable and nonrival.
B) excludable and nonrival.
C) excludable and rival.
D) nonexcludable and rival.
E) not supplied by the government.
20) One important feature that distinguishes a private good from a public good is that
A) only the government can produce private goods.
B) nobody can be excluded from enjoying the benefits of a private good.
C) a private good is excludable and a public good is nonexcludable.
D) if you consume a unit of a private, that means there is no less for someone else.
E) a private good is nonrival and a public good is rival.
21) One important feature that distinguishes a public good from a private good is that
A) only the government can produce public goods.
B) it is impossible to prevent a person from enjoying the benefits from a public good.
C) if you pay for a unit of a public good, you are guaranteed to be the sole consumer.
D) if you consume a unit of a public good, there is one unit less for someone else.
E) Both answers C and D are correct.
22) A good or resource that is both nonrival and nonexcludable is
A) a good that is impossible to produce.
B) a private good.
C) a common resource.
D) a public good.
E) nonexistent because it is impossible for a good or resource to be both nonrival and
nonexcludable.
23) A public good is
A) rival and excludable.
B) rival and nonexcludable.
C) nonrival and excludable.
D) nonrival and nonexcludable.
E) a good that has an infinite number of substitutes.
24) A public good
A) only yield benefits to those that decide to buy it.
B) is the same as a common resource.
C) is nonrival and nonexcludable.
D) is rival.
25) A good or resource from which no one can be excluded and which is nonrival is a
A) government good.
B) private good.
C) common good.
D) public good.
E) common resource.
26) If no one can be excluded from receiving the benefits of a good or service and the
consumption of the good or service does not decrease the amount available to someone else from
consuming it, then the good
A) is a private good.
B) is a common resource.
C) is a public good.
D) is a natural monopoly.
E) Both answers B and C are correct.
27) If a good or resource is rival, it could be a
A) public good.
B) private good.
C) common resource.
D) Both answers B and C are correct.
E) Both answers A and C are correct.
28) A common resource is
A) a service rather than a good.
B) nonrival and nonexcludable.
C) rival and excludable.
D) rival and nonexcludable.
E) nonrival and excludable.
29) A common resource is
A) rival and excludable.
B) rival and nonexcludable.
C) nonrival and excludable.
D) nonrival and nonexcludable.
E) None of the above answers is correct.
30) An example of a common resource is a
A) bridge.
B) non-crowded movie theater.
C) tuna in the ocean.
D) national defense.
E) All of the above answers are correct.
31) To hunters, deer in the woods are an example of a
A) public good.
B) private good.
C) common resource.
D) public resource.
E) natural monopoly.
32) A mother notices that when she divides brownies equally between her two children and gives
each child her share on a separate plate, the brownies last a long time. But when she gives her
children a plate to share, the brownies are gone pretty quickly. The mother concludes from this
that brownies given on a single plate are
A) excludable but they might either be rival or nonrival.
B) nonexcludable and nonrival.
C) excludable and rival.
D) excludable and nonrival.
E) nonexcludable and rival.
33) Which of the following goods is excludable and nonrival?
A) food
B) air
C) the Internet
D) a streetlight
E) a two liter bottle of Mt. Dew
34) A mixed good is
A) A private good where the production or consumption of that good creates an externality.
B) nonrival and nonexcludable.
C) rival and excludable.
D) nonrival and excludable.
E) rival and nonexcludable.
35) A good where the production or consumption of that good creates an externality is called a
A) common resource.
B) public good.
C) private good.
D) natural monopoly good.
E) mixed good.
36) By its definition, a mixed good must
A) create an externality in either its production or consumption.
B) be nonrival.
C) be nonexcludable.
D) be excludable and rival.
E) be excludable and nonrival.
37) Which of the following statements are correct?
i. Externalities can only be costs.
ii. Externalities can only be created by production.
iii. Goods with an externality are called mixed goods.
A) i and ii.
B) ii only.
C) ii and iii.
D) i only.
E) iii only.
38) Producing paper can create water pollution, a cost that is not paid by the producers or
consumers of paper. In this case, paper is classified as a
A) common resource.
B) public good.
C) private good.
D) natural monopoly good.
E) mixed good.
39) Samantha plants a beautiful garden that delights people passing by. Samantha’s garden is best
classified as a
A) common resource.
B) public good.
C) private good.
D) natural monopoly good.
E) mixed good.
40) Generating electricity can emit carbon dioxide, which can lead to global warming. In this
case, electricity is a
A) common resource.
B) public good.
C) private good.
D) natural monopoly good.
E) mixed good.
41) Externalities
A) can be either benefits or costs.
B) always create extra social costs.
C) always make society better off.
D) cannot be expressed in dollar amounts.
E) are always part of private costs or private benefits.
42) A cost that arises from the production or consumption that falls on someone other than the
producer or consumer is called
A) a mixed good.
B) a public choice impact.
C) a positive externality.
D) a negative externality.
E) a private good.
43) A cost or a benefit that arises from the production or consumption that falls on someone
other than the producer or consumer is called
A) an externality.
B) a mixed good.
C) a public choice impact.
D) a public good.
E) a private good.
44) Evidence of external costs in the production of a product is present if
A) the price of the product is higher than it should be.
B) the production cost increases because of an increase in the minimum wage.
C) non-buyers and/or non-producers of the product experience a loss for which they are not
compensated.
D) buyers refuse to purchase the product.
E) producers pay all of the costs of producing the good or service.
45) An example of someone bearing the burden of a negative production externality would be
A) Taylor living downwind from a smelly feedlot where pigs are raised.
B) Jess’s roommate smokes and she doesn’t.
C) Lynna’s neighbors play loud music late at night.
D) All of these are examples someone bearing the burden of a negative production externality.
E) None of these are examples someone bearing the burden of a negative production externality.
46) An example of someone bearing the burden of a negative consumption externality would be
A) Taylor living downwind from a feedlot.
B) LaShawn grows beautiful roses in her garden.
C) Jess’s roommate smokes and she doesn’t.
D) All of these are examples someone bearing the burden of a negative consumption externality.
E) None of these are examples someone bearing the burden of a negative consumption
externality.
47) An example of a mixed good with an external cost includes
A) electricity generation that produces carbon dioxide emissions that contribute toward global
warming.
B) logging that destroys wildlife habitat.
C) Jess smoking near her non-smoking roommate.
D) noise pollution from aircraft.
E) All of these are examples of mixed goods with external costs.
48) To ensure all students are protected from getting the flu this year, your school offers free flu
shots. What type of externality exists in this example?
A) Negative consumption externality.
B) Positive consumption externality.
C) Positive production externality.
D) Negative production externality.
E) Neutral externality.
49) Which of the following is NOT an example of a mixed good with an external cost?
A) electricity generation that produces carbon dioxide emissions that contribute toward global
warming.
B) logging that destroys wildlife habitat.
C) Jess smoking near her non-smoking roommate.
D) Ahmed works at a bank and he gets a flu shot each fall.
E) noise pollution from aircraft.
50) When use of a good decreases the quantity available for someone else, the good is
A) rival.
B) nonrival.
C) excludable.
D) nonexcludable.
E) a public good.
51) The fact that Sha’s enjoyment of a sunset on Saint Simon’s Island does not preclude Lou from
enjoying the sunset is an example of
A) a good that is nonrival.
B) a good that is excludable.
C) a private good.
D) the rival nature of consumption.
E) a common resource.
52) A private good is ________ and ________.
A) rival; excludable
B) rival; nonexcludable
C) nonrival; excludable
D) nonrival; nonexcludable
E) scarce; expensive
53) If I order a pizza and invite my neighbors to eat it, the pizza is
A) a private good.
B) a common resource.
C) a public good because many people ate it.
D) either a common resource or a public good depending on whether it is overused.
E) produced by a natural monopoly.
54) A public good is ________ and ________.
A) rival; excludable
B) rival; nonexcludable
C) nonrival; excludable
D) nonrival; nonexcludable
E) cheap; available
55) A public good
A) can only be consumed by one person at a time.
B) can be consumed simultaneously by many people.
C) is any good provided by a company owned by a member of the public.
D) is any good provided by government.
E) is both rival and excludable.
56) Which of the following is the best example of a public good?
A) national defense
B) a Ford Thunderbird
C) Yosemite national park
D) a Mountain Dew
E) satellite radio
57) Which of the following is the best example of a common resource?
A) national defense
B) a Ford Thunderbird
C) Yosemite national park
D) a can of Mountain Dew
E) a cable television network
10.2 Public Goods and the Free-Rider Problem
1) The free-rider problem exists because
A) private goods or services cause some people to want to take them for free.
B) some goods or services are excludable and cause envy for those who don’t have them.
C) some goods or services that are rival and leave some people without them.
D) people cannot be excluded from consuming public goods even if they don’t pay for them.
E) people must all consume the same public good and so everyone wants to pay for it.
2) The free-rider problem is associated with
A) public goods.
B) private goods.
C) common resources.
D) any type of good.
E) natural monopolies.
3) Public goods create a free-rider problem because
A) only people who pay for the good or service can enjoy the good or service.
B) people do not want to consume public goods.
C) the good or service is rival in nature.
D) the good or service is excludable.
E) people can enjoy the good or service no matter whether or not they pay for it.