Chapter 15

Question 1

common resource

Answer 1

a resource that is rival and nonexcludable

Question 2

excludable

Answer 2

it is possible to prevent someone from enjoying the benefit of it

Question 3

free-rider problem

Answer 3

the problem that the market would provide an inefficiently small quantity of a public good

Question 4

natural monopoly good

Answer 4

nonrival and excludable; when buyers can be excluded if they don’t pay but the good is nonrival, marginal cost is zero

Question 5

nonexcludable

Answer 5

impossible (or extremely costly) to prevent someone form enjoying its benefits

Question 6

nonrival

Answer 6

it’s use by one person does not decreases the quantity available for someone else

Question 7

principle of minimum differentiation

Answer 7

the tendency for competitors to make themselves similar to appeal to the maximum number of clients or voters

Question 8

private good

Answer 8

both rival and excludable

Question 9

public good

Answer 9

both nonrival and nonexcludable; can be consumed simultaneously by everyone and no one can be excluded from enjoying its benefits

Question 10

rival

Answer 10

its use by one person decreases the quantity available for someone else

Question 11

tragedy of the commons

Answer 11

the overuse of a common resource that arises when its users have no incentive to conserve it and use it sustainably and efficiently

Question 12

individual transferable quota (ITQ)

Answer 12

a production limit that is assigned to an individual who is then free to transfer (sell) the quota to someone else