Public Goods And Common Resources

2.

The property of a good whereby one person's use diminshes other people's use.

Excludibility
Externality
Rivalry
Natural Monopoly

Correct Answer

A. Rivalry

Explanation

Rivalry refers to the property of a good where one person's use diminishes other people's use. In other words, when one person consumes or uses a good, it reduces the availability or benefit of that good for others. This creates competition or rivalry among individuals for the use or consumption of the good.

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3.

A public good is

Excludable and rival
Neither excludable nor rival
Rival but not excludable
Excludable but not rival

Correct Answer

A. Neither excludable nor rival

Explanation

A public good is considered neither excludable nor rival. This means that it is not possible to exclude individuals from consuming the good, and one person's consumption of the good does not diminish its availability for others. Public goods are typically provided by the government or other public entities as they are difficult for private markets to efficiently provide due to the free-rider problem. Examples of public goods include national defense, street lighting, and clean air.

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4.

A common resource is

Excludable and rival
Neither ecludable nor rival
Rival but not excludable
Excludable but not rival

Correct Answer

A. Rival but not excludable

Explanation

A common resource that is "rival but not excludable" means that multiple individuals can use and benefit from the resource simultaneously, but it is difficult or impossible to prevent others from accessing or using it. This suggests that the resource is limited in quantity and can be depleted or degraded through use, but it is difficult to control or restrict access to it. An example of such a resource could be a public park, where multiple people can enjoy the space at the same time but it is challenging to exclude others from entering or using it.

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5.

Study that compares the costs and benefits to society of providing public goods

Empirical Test
Cost-Benefit Analysis
Correlational Study
Experiment

Correct Answer

A. Cost-Benefit Analysis

Explanation

A cost-benefit analysis is a study that compares the costs and benefits of providing public goods to society. This analysis involves weighing the potential costs of implementing a public good against the potential benefits it may bring to society. It helps decision-makers determine whether the benefits of providing a public good outweigh the costs and if it is worth pursuing. This type of study is often used in policy-making and resource allocation to make informed decisions about the allocation of resources and public investments.

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6.

Why does the government provide public goods?

Private market will not produce efficient quantity
Private market will produce efficient quantity

Correct Answer

A. Private market will not produce efficient quantity

Explanation

The government provides public goods because the private market will not produce an efficient quantity. Public goods are non-excludable and non-rivalrous, meaning that once they are provided, everyone can benefit from them and one person's use does not diminish its availability to others. In a private market, producers are motivated by profit and may not have an incentive to provide public goods as they cannot exclude non-payers and may not be able to recoup their costs. Therefore, the government steps in to ensure the provision of public goods for the benefit of society as a whole.

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7.

Parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole.

Natural Monopoly
Tragedy of the Commons
Externality
Free Rider Problem

Correct Answer

A. Tragedy of the Commons

Explanation

The term "Tragedy of the Commons" refers to a situation where individuals, acting independently and rationally, deplete a shared resource for their own benefit, leading to the resource's degradation or depletion. This parable highlights the tendency for common resources to be overused because individuals are motivated by self-interest rather than considering the long-term well-being of the community. The concept emphasizes the need for collective action and regulation to prevent the tragedy of overuse and ensure sustainable use of common resources.

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8.

A free rider is a person who receives the benefit of a good but avoids paying for it

True
False

Correct Answer

A. True

Explanation

A free rider is a term used to describe a person who takes advantage of a good or service without contributing to its cost. In other words, they receive the benefits of the good without paying for it. This concept is often seen in situations where public goods or services are provided, such as public transportation or national defense. Free riders can be seen as benefiting from the contributions of others without making their own fair share of contributions. Therefore, the statement that a free rider is a person who receives the benefit of a good but avoids paying for it is true.

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Public Goods And Common Resources

The property of a good whereby a person can be prevented from using it when they don't pay for it.

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The property of a good whereby one person's use diminshes other people's use.

A public good is

A common resource is

Study that compares the costs and benefits to society of providing public goods

Why does the government provide public goods?

Parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole.

A free rider is a person who receives the benefit of a good but avoids paying for it