06.03

Which of the following characterizes a pure public good?

ANSWER CHOICES:

A)It is entirely paid for through taxes.

B)Its production has no deadweight loss.

C)One person consuming it prevents another's consumption, and nonpayers cannot be excluded.

D)Only the free market will supply it efficiently.

E)It is non-excludable and non-rival.

Which of the following combinations can lead to the tragedy of the commons?

ANSWER CHOICES:

A)A significant positive consumption externality

B)A rival and non-excludable good

C)A rival and excludable good

D)A non-rival and non-excludable good

E)A non-rival and excludable good

A good with a very high social benefit is completely non-excludable. To achieve social efficiency, the government will

ANSWER CHOICES:

A)allow the free market to clear at the natural equilibrium

B)impose a per-unit production tax

C)either directly provide or regulate the quantity of the good

D)make the good artificially scarce to allow supplier profits

E)impose a per-unit consumption tax

Why might a government supplement a private good's free market production and offer it without charge?

ANSWER CHOICES:

A)The good offers a significant positive externality.

B)The good would otherwise suffer the tragedy of the commons.

C)The good is imported.

D)The good is neither excludable nor rival.

E)The good's marginal cost of production is zero.

Which of the following describes a good that is excludable but non-rival in terms of the consumption of the good?

ANSWER CHOICES:

A)Private with a negative production externality

B)Artificially scarce

C)Directly produced by the government in every case

D)Underused by society

E)Public with a high marginal cost to society