BR12B: Bridge: Public Goods
Question 1
Generally, the amount of public goods available in a society is ______ what is actually desired.
A. greater than
B. exactly
C. less than
D. either exactly or greater than
Hint
Public goods are nonrival and nonexcludable. Individuals can benefit from goods that are nonrival and nonexcludable without contributing to their costs of production.Answer
C. less than Public goods can be used without paying for their production. Individuals are, as a result, unwilling to pay for the full amount of the public good that they consume. This leads to a level of output less than what society really wants.Question 2
Which is an example of a free rider?
A free-rider would be
A. your roommates when they ask you for a ride to school but will not help out with gas.
B. a panhandler who sneaks onto the subway without paying.
C. a person without health insurance who visits an emergency room, since people cannot be turned away.
D. a neighbor who plants vegetables in her garden and allows others to help themselves to her harvest.
Hint
Public goods are nonexcludable and nonrivalrous in consumption.Answer
C. a person without health insurance who visits an emergency room, since people cannot be turned away. A free rider is an individual who consumes a public good without paying for it. The free-rider problem arises because public goods are nonexcludable. An uninsured individual who obtains emergency medical services–a public good–is a free rider.Question 3
Which would be the best example of a public good?
The best example is
A. clean water at a public lake.
B. public school.
C. snowplowing the streets.
D. a community park.
Hint
A public good is both nonrival and nonexcludable.Answer
C. snowplowing the streets. Snowplowing the streets is both nonrival and nonexcludable. Once a decision to plow has been made, it is difficult to select particular homes on a street to exclude from the service. Furthermore, one more car on a plowed street does not reduce the amount of plowed streets available to others.Question 4
Which best represents a tragedy of the commons?
The best example is
A. a fire that burns an entire apartment complex.
B. a severe traffic jam on the freeway.
C. a shopping mall with no shoppers inside.
D. a ski resort that has closed due to lack of snow.
Hint
The tragedy of the commons involves goods that are collectively owned.Answer
B. a severe traffic jam on the freeway. A severe traffic jam on the freeway may be the result of a large number of motorists acting independently and in their own self-interest while using a collective resource, the freeway.Question 5
Which is the best example of a public good with exclusion?
The best example is
A. a fireworks display that can be seen miles away.
B. fire protection services offered by the city.
C. satellite radio service.
D. a public lake.