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Exam 10: Public Goods, Common Resources and Merit Goods

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Question 31

Multiple Choice

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To achieve the optimal provision of public goods the

A) market should be allowed to find its equilibrium without government intervention.
B) government must limit the provision of the goods.
C) government must tax producers of these goods.
D) government must either provide the goods or subsidise their production.

E) B) and C)
F) A) and D)

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Question 32

Multiple Choice

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

A) excludable.
B) a common resource.
C) a public good.
D) rival.

E) A) and C)
F) B) and C)

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Question 33

Multiple Choice

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Suppose each of 20 neighbours on a street values street repairs at R3 000. The cost of the street repair is R40 000. Which of the following statements is true?

A public good is both rival and excludable.

The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on fuel to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

The three most important public goods are national defence, basic research, and

Place each of the following in the correct location in the table. $\begin{array}{c}\text { Rival? }\\\text { Excludable? }\begin{array}{|l|l|l|}\hline&\text { Yes }&\text { No }\\\hline \text { Yes }& \text { Private Goods } & \text { Club Goods } \\\hline \text { No }&\text { Common Resources } & \text { Public Goods }\\\hline\end{array}\end{array}$ a. Congested toll roads b. Knowledge c. Fish in the ocean d. National defence e. Congested non-toll roads f. DSTV g. The environment h. Fire protection i. Chocolate j. Uncongested toll roads k. Clothing l. Uncongested non-toll roads

Which of the following would be the best example of a public good?

Which of the following could be a merit good?

Merit goods are goods that governments feel without subsidies or extra taxes would be under- or over-consumed.

A private good is

Which of the following are potential solutions to the problem of air pollution?

A television signal is an example of

A person who regularly watches SABC television programmes in South Africa but fails to pay their TV licence fee is known as

A common resource is neither rival nor excludable.

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

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

A free rider is a person who