Question

27) A pure public good is one that is

	A. rivalrous in consumption and nonexcludable
	B. none of the other answers is correct
	C. nonrivalrous in consumption and excludable
	D. nonrivalrous in consumption and nonexcludable
	E. rivalrous in consumption and excludable

28) A key feature of government provision of a pure public good like national defense is that everyone must end up with the same amount of the good. What conclusion does the book come to about this situation?

	A. There will be a broad consensus in favor of a particular amount of national defense.
	B. The government will provide too little national defense.
	C. Many people will end up being dissatisfied with the amount of national defense provided by the government.
	D. The government will provide too much national defense.

29) Some goods may not be pure private or pure public goods. City streets during rush hour are

	A. nonrivalrous and excludable
	B. rivalrous and excludable
	C. rivalrous and nonexcludable
	D. nonrivalrous and nonexcludable

30) The “free rider problem” arises from the fact that a public good is

	A. rivalrous
	B. asymmetric
	C. nonexcludable
	D. nonrivalrous
	E. excludable

31) Suppose that a person with auto insurance is less likely to be as careful about her driving than without the insurance. This is an example of

	A. nonrival consumption
	B. moral hazard
	C. the free rider problem
	D. a negative externality
	E. adverse selection

Answer 1

27) A pure public good is one that is

D. nonrivalrous in consumption and nonexcludable (a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others)

28) A key feature of government provision of a pure public good like national defense is that everyone must end up with the same amount of the good. What conclusion does the book come to about this situation?

A. There will be a broad consensus in favor of a particular amount of national defense.

29) Some goods may not be pure private or pure public goods. City streets during rush hour are

C. rivalrous and nonexcludable (it's non-excludable but certainly rivalrous, making it a common-pool resource. However, if it's a lonely rural highway, or even a city street late at night, it's neither excludable nor rivalrous.)

30) The “free rider problem” arises from the fact that a public good is

C. nonexcludable (which means that when providing something that's supposed to be for everyone, there's no way to stop anyone from using it)

31) Suppose that a person with auto insurance is less likely to be as careful about her driving than without the insurance. This is an example of

B. moral hazard.