Name: 
 

Chapter 11 Practice Questions



Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 

When a good is excludable it means that
a.
one person's use of the good diminishes another person's ability to use it.
b.
people can be prevented from using the good.
c.
no more than one person can use the good at the same time.
d.
everyone will be excluded from obtaining the good.
 

2. 

When a good is rival it means that
a.
one person's use of the good diminishes another person's ability to use it.
b.
people can be prevented from using the good.
c.
no more than one person can use the good at the same time.
d.
everyone will be excluded from obtaining the good.
 

3. 

Which of the following would be considered a private good?
a.
national defense
b.
a public beach
c.
local cable television service
d.
a bottle of natural mineral water
 

4. 

If the local government in Richmond, Missouri decides to put on a public fireworks display, the display would be
a.
excludable.
b.
rival.
c.
a public good.
d.
All of the above are correct.
 

5. 

When goods are not excludable
a.
the good will be produced as a private good but not as a public good.
b.
the good will not be produced since no one values it.
c.
the free-rider problem prevents the private market from supplying them.
d.
everyone can have all they want and the good will have a zero price.
 

6. 

National defense is a classic example of a public good because
a.
private security services are very difficult to find.
b.
it is difficult to exclude people from receiving the benefits from national defense once it is provided.
c.
everyone agrees that some level of national defense is important, but only the government knows the optimal amount.
d.
if individuals were required to purchase their own armored tank, there wouldn't be enough to go around.
 

7. 

The government provides public goods because
a.
private markets are incapable of producing public goods.
b.
free-riders make it difficult for private markets to supply the socially optimal quantity.
c.
markets are always better off with some government oversight.
d.
external benefits will occur to private producers.
 

8. 

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because
a.
benefits are hard to measure.
b.
patents correct for an unknown portion of the externality.
c.
members of Congress are often experts in the sciences.
d.
the costs always exceed the benefits.
 

9. 

A lighthouse is typically considered a good example of a public good because
a.
the owner of the lighthouse is able to exclude beneficiaries from enjoying the lighthouse.
b.
there is rarely another lighthouse nearby to provide competition.
c.
a nearby port authority cannot avoid paying fees to the lighthouse owner.
d.
all passing ships are able to enjoy the benefits of the lighthouse without paying.
 

10. 

Simply asking people how much they value a highway is not a reliable way of measuring the benefits and costs because
a.
those who stand to gain have an incentive to tell the truth.
b.
those who stand to lose have an incentive to exaggerate their true costs.
c.
answers to the survey questions will always be downwardly biased.
d.
not everyone asked will be using the highway.
 



 
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