SPEA V-186 Midterm Exam Questions and
Correct Answers
Characteristics of the private sector?
-markets
-exchange
-property rights
-rights of exclusion
-appropriability (ability to capture and retain value from production and diffusion of goods and
services that an individual or firm creates for its own benefit)
characteristics of the public sector?
-notable absence of markets
-non-exchange relations
-absence of clear property rights
-non-excludability
-non-appropriatory
Rival Goods
exhaustion through consumption of the same good
non-rival goods
are not exhausted through consumption of the same good
excludable good
you can exclude people who do not pay for the good
, non-excludable good
exclusion of non-payers is not allowed
elements of a pure private good
1.) rival
2.) excludable
elements of a pure public good
1.) non-rival
2.) non-excludable
market failure
the under-provision or over-provision of a good or service if provided solely by a private market
ex.) disease control
externalities
goods whose full range of costs or benefits aren't captured in market prices. These can be
negative or positive
ex.) pollution (-), disease (-), education (+), conservation (+)
what are second hand smoke, car exhaust, and manufacturing emissions all examples of?
externalities
what would be described as a common resource pool?
an aquifier
Correct Answers
Characteristics of the private sector?
-markets
-exchange
-property rights
-rights of exclusion
-appropriability (ability to capture and retain value from production and diffusion of goods and
services that an individual or firm creates for its own benefit)
characteristics of the public sector?
-notable absence of markets
-non-exchange relations
-absence of clear property rights
-non-excludability
-non-appropriatory
Rival Goods
exhaustion through consumption of the same good
non-rival goods
are not exhausted through consumption of the same good
excludable good
you can exclude people who do not pay for the good
, non-excludable good
exclusion of non-payers is not allowed
elements of a pure private good
1.) rival
2.) excludable
elements of a pure public good
1.) non-rival
2.) non-excludable
market failure
the under-provision or over-provision of a good or service if provided solely by a private market
ex.) disease control
externalities
goods whose full range of costs or benefits aren't captured in market prices. These can be
negative or positive
ex.) pollution (-), disease (-), education (+), conservation (+)
what are second hand smoke, car exhaust, and manufacturing emissions all examples of?
externalities
what would be described as a common resource pool?
an aquifier
