Question

QUESTION 10

The sign on a church in your neighborhood reads “All are welcome at Sunday Service.” Because the church has limited seating and is usually full, the Sunday Service is

	a.	a club good.
	b.	a common resource.
	c.	a public good.
	d.	a private good.

4 points   

QUESTION 11

It is commonly argued that national defense is a public good. Nevertheless, the weapons used by the U.S. military are produced by private firms. We can conclude that

	a.	weapons are rival in consumption and excludable, but national defense is not rival in consumption and not excludable.
	b.	national defense is rival in consumption and excludable, but weapons are not rival in consumption and not excludable.
	c.	resources would be used more efficiently if private firms provided national defense.
	d.	resources would be used more efficiently if the government produced the weapons.

4 points   

QUESTION 12

Consider a public road that anyone is allowed to drive on. If the road is often congested, the road would be considered a

	a.	club good.
	b.	private good.
	c.	public good.
	d.	common resource.

4 points   

QUESTION 13

Which of the following is a disadvantage of government provision of a public good such as national defense?

(i)	The government does not know the exact willingness of consumers to pay for the public good.
(ii)	The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good.
(iii)	Taxpayers do not agree on the optimal quantity of the public good that the government should provide.

	a.	(i) only
	b.	(i) and (iii) only
	c.	(i), (ii), and (iii)
	d.	(i) and (ii) only

Answer 1

Answer 10. The corect answer is B- Common Resource are goods that are free for the Public like fish in an ocean and they are rivalrous and non excludable. Church service is open for all and hence no exclusion can be made of people as it is free for all but rivalry is present. This is because there are limited number of seats available and consumption if such seat by one person will lead to lesser number of seat availablility by another person and eventually no seats will be left. Hence the correct option is Common resource.

Answer 11. The correct option is A. Weapon production is rivalrous as production by one firm will eliminate the production of such weapons by another firm and they are also excludable as the persons who are paying for such weapons can be easily excluded from the people who are not paying for them. But since in case of national defence there is no question of it being rivalrous as it cannot be handed over to some other entity other than the government. And it is non excludable as it is provided to all the US citizens. We cannot comment upon the optimum utilisation of resources by private firms and the government based on the above information. Hence option A is the most appropriate answer.

Answer 12. The correct option is D. If the road becomes congested then the consumption of it by more people will prevent the other people from consuming it and since in this the people who are paying for it cannot be seperates from people who are not paying for it thus, it is non excludable. Hence eventually it will become a common resource. Another example of common resouce is fish in the lake and hence it can be consumed only upto a certain level till the number of fishes that makes it rivalrous.

Answer 13. The correct answer is C. Providing a public good will lead to free rider problem as wveryone is getting benefit from it. Also there will be a misfit between the exact want of public for such goods and what they are gwtting. Similarly the payment which is considered optimum for such goods will be considered different by public and different by government. These problems pose certain level of disadvantages.