Question : 71) Which of the following statements about public goods true? A) : 1384312

71) Which of the following statements about public goods is true?

A) They cannot be publicly provided.

B) They are unlikely to be provided by private, profit-seeking firms.

C) They are essentially negative externalities.

D) They respond to market signals.

E) The firms producing them must be listed on a public stock exchange.

72) A good example of a public good is

A) a municipal swimming pool.

B) a seat on an airplane flight.

C) light from a lighthouse.

D) a school bus.

E) a publicly owned subway system.

73) An example of a public good is

A) apples on a tree in a public park.

B) insurance.

C) street lighting.

D) air travel.

E) municipal transit service.

74) One reason that national defence is a classic example of a public good is that

A) all citizens want national defence.

B) society deems it to be too important to be provided by the private sector.

C) the benefits of national defence cannot be kept from those who do not pay.

D) military technology is too expensive for private firms to provide.

E) it would be immoral for private firms to provide this essential commodity.

75) One reason that national defence is a classic example of a public good is that

A) all citizens want national defence.

B) society deems it to be too important to be provided by the private sector.

C) the benefits that accrue to one person do not diminish the benefits available to others.

D) military technology is too expensive for private firms to provide.

E) it would be immoral for private firms to provide this essential commodity.

76) An efficient amount of a public good is unlikely to be produced in a free market because             

A) there is no way to prevent a person who is not willing to pay for the good from receiving benefits from the good.

B) of the high cost of producing the public good.

C) social benefits exceed social costs.

D) of the existence of moral hazard.

E) of the existence of adverse selection.

77) Private markets will always provide too few public goods because

A) the private marginal cost is less than the social marginal cost.

B) it is unlawful for private firms to provide public goods.

C) of the negative externalities associated with these goods.

D) private markets will never provide goods at a price of zero, which is the efficient price.

E) private markets will never provide goods that they know the government could provide.

78) An efficient level of provision of a public good is achieved when

A) the cost of providing an extra unit of the good is equal to the valuation of each consumer of the extra unit.

B) the cost of providing an extra unit of the good is equal to the sum of the valuations of all consumers for that unit.

C) the cost of providing an extra unit of the good is equal to the price of the good.

D) the valuation of each consumer for the last unit of the good produced is zero.

E) voters are satisfied that an adequate amount of the good is being produced.

79) The fact that it is difficult to prevent people from using public goods once they are produced, even if they have not paid, is known as

A) the easy-rider problem.

B) the over-consumption problem.

C) moral hazard.

D) the free-rider problem.

E) adverse selection.

80) Consider a childhood vaccination program that is fully effective if all children are vaccinated. Now suppose that all children except one are vaccinated – and as a result that one child will not contract the disease. In economics, we can compare this situation to

A) moral hazard.

B) adverse selection.

C) the free-rider problem.

D) asymmetric information.

E) common property problem.