Overview
Chapter 11:
MC-Public Goods and Common Resources
Multiple Choice
1. For most goods in an economy, the signal that guides the decisions of buyers and sellers is
a. greed.
b. consumer surplus.
c. prices.
d. profits.
ANS: C
PTS: 1 DIF: 1 REF: 11-0 TOP: Private goods
MSC: Applicative
2. When goods do not have a price, which of the following primarily ensures that the good is produced?
a. entrepreneurs
b. the government
c. charities
d. the market
ANS: B
PTS: 1 DIF: 1 REF: 11-0 TOP: Public goods
MSC: Applicative
3. When a good is excludable,
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 using the good.
ANS: B
PTS: 1 DIF: 1 REF: 11-1 TOP: Excludability
MSC: Definitional
4. A good is excludable if
a. one person’s use of the good diminishes another person’s enjoyment of it.
b. the government can regulate its availability.
c. it is not a normal good.
d. people can be prevented from using it.
ANS: D
PTS: 1 DIF: 1 REF: 11-1 TOP: Excludability
MSC: Definitional
5. Excludability is the property of a good whereby
a. one person’s use diminishes other people’s use.
b. a person can be prevented from using it.
c. a good is private, not public.
d. a good is public, not private.
ANS: B
PTS: 1 DIF: 1 REF: 11-1 TOP: Excludability
MSC: Definitional
6. Goods that are excludable include both
a. natural monopolies and public goods.
b. public goods and common resources.
c. common resources and private goods.
d. private goods and natural monopolies.
ANS: D
PTS: 1 DIF: 2 REF: 11-1 TOP: Excludability
MSC: Applicative
7. Goods that are not excludable include both
a. private goods and public goods.
b. natural monopolies and common resources.
c. common resources and public goods.
d. private goods and natural monopolies.
ANS: C
PTS: 1 DIF: 2 REF: 11-1 TOP: Excludability
MSC: Applicative
8. Both public goods and common resources are
a. rival in consumption.
b. nonrival in consumption.
c. excludable.
d. nonexcludable.
ANS: D
PTS: 1 DIF: 2 REF: 11-1 TOP: Excludability
MSC: Applicative
9. Goods that are not excludable are usually
a. higher priced than excludable goods.
b. higher priced than rival goods.
c. in short supply.
d. free of charge.
ANS: D
PTS: 1 DIF: 2 REF: 11-1 TOP: Excludability
MSC: Interpretive
10. When something of value has no price attached to it,
a. externalities will be present.
b. the product cannot be produced at any price.
c. a natural monopoly will eventually produce the product, and the good will no longer be free.
d. private companies will eventually produce the product, and the good will no longer be free.
ANS: A
PTS: 1 DIF: 2 REF: 11-1 TOP: Excludability
MSC: Interpretive
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