Public Goods and Common Resources

2. 11 Public Goods and Common Resources CLICKER QUESTIONS

3. Checkpoint 11.2 Checkpoint 11.3 Checkpoint 11.1 Question 7 Question 1 Question 4 Question 8 Question 2 Question 5 Question 9 Question 6 Question 3 Question 10

4. CHECKPOINT 11.1 Question 1 A public good ___________. • can only be consumed by one person at a time • can be consumed simultaneously by many people • is any good provided by a company owned by a member of the public • is any good provided by government • is both rival and excludable

5. CHECKPOINT 11.1 Question 2 Which of the following items best describes an externality? • something that is external to the economy • a tax on a good in addition to the market price • an effect of a transaction felt by someone other than the consumer or producer • anything produced in another country • a change from what is normal

6. CHECKPOINT 11.1 Question 3 Which of the following is the best example of a mixed good with external costs? • national defense • a Ford Thunderbird • Yosemite national park • logging in the Amazon basin • Internet

7. CHECKPOINT 11.2 Question 4 The marginal benefit of a public good is the ___________. • average of the marginal benefits of all the people in the economy at each quantity of the good • marginal benefit of the person who places the lowest value on the good, multiplied by the number of people in the economy • marginal benefit of the person who places the highest value on the good, multiplied by the number of people in the economy • benefit of the last person’s consumption • sum of the marginal benefits of all the people in the economy at each quantity

8. CHECKPOINT 11.2 Question 5 The efficient quantity of a public good is ________. • the quantity that private firms produce • the quantity at which the marginal benefit from the good equals the marginal cost of producing it • impossible to determine because each person’s marginal benefit is different • the quantity at which the marginal benefit exceeds the marginal cost by the largest possible amount • where the quantity demanded of the good equals the quantity supplied of the good

9. CHECKPOINT 11.2 Question 6 Government bureaucracies overprovide public goods because of their goal of _____ combined with the _____ of the voters. • budget maximization; irrational exuberance • budget minimization; irrational intelligence • budget maximization; minimum differentiation • budget maximization; rational ignorance • minimum differentiation; budget maximization

10. CHECKPOINT 11.3 Question 7 The tragedy of the commons is the absence of incentives to _______. • correctly measure the marginal cost of using the resource • prevent underutilization of the common resource • prevent overuse and depletion of the common resource • discover the resource • prevent the free-rider problem

11. CHECKPOINT 11.3 Question 8 For a common resource, the marginal private benefit from a given quantity of the resource is _______. • greater than the marginal social benefit • equal to the marginal social benefit • less than the marginal social benefit • not related to the marginal social benefit • not defined because the resource is nonexcludable

12. CHECKPOINT 11.3 Question 9 Efficient use of a common resource requires that its ____. • marginal private benefit equals marginal cost • marginal social benefit equals marginal cost • marginal private benefit equals marginal social benefit • marginal private cost equals marginal cost • marginal private benefit equals marginal social cost

13. CHECKPOINT 11.3 Question 10 If the government assigns private property rights to a common resource, then ________. • the resource will be underutilized • the marginal social benefit becomes the marginal private benefit • the government must set a quota to achieve efficient use • the resource becomes a private good and cannot be used • a free-riding problem will emerge