Final Flashcards
A good is excludable if:
the supplier of that good can prevent people who do not pay for it from consuming it.
A good is rival in consumption if:
The same unit of the good cannot be consumed by more than one person at the same time
Which of the following characteristics is essential if a good is to be efficiently provided by a market economy?
the good should be subject to the free-rider program
The free-rider problem arises when
there is overuse of a common resource
The cleanup of the Thames River in London in the mid-nineteenth century:
Is an example of a good that was subject to the free-rider problem
Which of the following is TRUE about public goods?
They are non excludable
An example of a public good would be?
A flood-control dam
Why is it that the free market fails to provide the efficient quantity of a public good?
because it is impossible to force those who benefit from the good to pay for it
Suppose a local manufacturing plant undertakes measures to reduce the amount of harmful emissions it releases into the air. This action is an example of:
a public good.
A common resource is both:
nonexcludable and rival in consumption.
Traffic congestion is an example of:
Overuse of a common resource
When the supplier of an artificially scarce good charges a price greater than zero then:
he supplier reduces consumer surplus from what it would be if the price were zero.
Which of the following is an example of an artificially scarce good?
weather forecast provided only to those who pay for the forecasting service
A rational decision maker chooses that available option that leads to the outcome that:
he or she most prefers.
Rational decision makers often prefer a worse economic payoff EXCEPT for:
risk aversion
