test 7 public goods
1) Which statement is correct?
Option A
Free-riding behaviour is a direct result of the fact that public goods are non-excludable.
Option B
Non-rivalry implies that the marginal cost of production is zero.
Option C
The fish stocks in the ocean are "common goods", they are excludable.
Option D
The fish stocks in the ocean are "common goods". There is no rivalry.
Answers c and d are wrong. Fish stocks are commons, implying that they are non-excludable, but rival.
non-rivalry implies that the MC of extra consumption of the public good is 0 not that the MC of producing that unit of public good is 0
Answer a is correct.A
2) The 'Manneken Pis' statue in Brussels best meets the characteristics of a:
Option A
private good.
Option B
public good.
Option C
club good.
Option D
common good
Answer b is correct. A public statue has the characteristics of public good, it is non-excludable and non-rival.B
3) A wild chestnut that falls on the ground in the city park most closely resembles the characteristics of a:
Option A
club good;
Option B
common good;
Option C
private good;
Option D
public good;
wild chestnuts in the woods are rival and non-excludable, so common goods. Answer b B
4) Which statement is correct?
Option A
Free-riding behaviour is a direct consequence of the non-rivalry of public goods.
Option B
Walnuts that fall on the ground in a public forest are closest to the characteristics of a public good (rather than a private good, club good or common resource).
Option C
A fitness subscription is a club good as there is rivalry and non-exclusion.
Option D
Free market forces generally lead to underproduction of public goods.
Answer a is wrong. freebooter behavior is the result of non-excludability
Answer b is wrong. walnuts in forest are commons
Answer c is wrong. is a club good because there is excludability but non-rivalry
Answer d is correct. D
5) The free functioning of private market leads to insufficient provision of public goods because:
Option A
the government will produce public goods in such a way that the private market no longer has a role to play.
Option B
there is no way of making people pay for consuming public goods once they are made available to one person.
Option C
the marginal cost of producing public goods is zero.
Option D
the government must save to keep its budget in balance.
Answer a is wrong. government must be responsible for organization, but not necessarily for production. there is therefore still a role for the private market
Answer b is correct. as a result of non-excludability and non-rivalry
Answer c is wrong. marginal cost of extra use is zero, not marginal cost of production
Answer d is not relevant.B
6) The free-riding problem in public goods stems from the fact that:
Option A
everyone has to pay taxes.
Option B
the good is offered by the government.
Option C
the marginal cost of additional consumption is equal to zero.
Option D
no one can be excluded from consumption.
the free rider problem originates from the fact that once the good is there no one can be excluded from consumption. So answer d.D
7 ) Which of the following is a public good?
Option A
The formula for calculating the area of a circle;
Option B
A free barrel of beer at a school party;
Option C
The information on the KUL internal Toledo website;
Option D
A seat in a football stadium.
Answer a is correct. Non-excludable, non-rival
Answer b is wrong. Non-excludable, rival
Answer c is wrong. Excludable, non-rival
Answer d is wrong. Excludable, rival A
8)A lecture "Managerial Economics" at KUL (in normal, non-corona circumstances) most closely reflects the characteristics of a:
Option A
private good;
Option B
public good;
Option C
common good;
Option D
club good.
The classes in Microeconomics are excludable (only for KUL students) but not rival. So answer d D