When goods are available free of charge, _________ - answer the market
forces that normally allocate resources in our economy are absent
When a good does not have a price attached to it, ________ - answer private
markets cannot ensure that the good is produced and consumed in the
proper amounts
Excludability - answer the property of a good whereby a person can be
prevented from using it
Rivalry - answer the property of a good whereby one person's use of the
good diminishes other people's ability to use that good
Private goods - answer goods that are both excludable and rival in
consumption (ex. ice cream, clothing, congested toll roads)
Public goods - answer goods that are neither excludable nor rival in
consumption (ex. tornado siren, national defense, noncongested nontoll
roads)
Common resources - answer goods that are rival in consumption but not
excludable (ex. fishing in the ocean, environment, congested nontoll roads)
Natural monopolies (club goods) - answer goods that are excludable but not
rival in consumption (ex. fire protection, internet service providers,
noncongested toll roads)
Public goods and common resources both create ________ - answer
externalities
Even if public goods and common resources were offered in the market at
some price, their market allocation will be _________ due to the presence of
_________ - answer inefficient, externalities
, Natural monopolies provide _________ goods, but sometimes may choose to
provide their goods free of charge so they seem like __________ - answer
excludable, public goods
The externalities associated with public goods are __________ - answer
positive
The externalities associated with common resources are _________ - answer
negative
The social value of a _________ is greater than the private value (nonrival) -
answer public good
Free-market equilibrium quantity of a public good is _______ - answer less
than the efficient quantity
The use of common resources by one person _________ - answer reduces the
amount available for others
The social cost of a _________ is greater than the private cost - answer
common resource
Free-rider - answer a person who receives the benefit of a good but avoids
paying for it
_________ prevent private markets from supplying public goods - answer free-
riders
How can the government solve the free rider problem? - answer the
government can make everyone better off by providing the public good and
paying for it with tax revenue
forces that normally allocate resources in our economy are absent
When a good does not have a price attached to it, ________ - answer private
markets cannot ensure that the good is produced and consumed in the
proper amounts
Excludability - answer the property of a good whereby a person can be
prevented from using it
Rivalry - answer the property of a good whereby one person's use of the
good diminishes other people's ability to use that good
Private goods - answer goods that are both excludable and rival in
consumption (ex. ice cream, clothing, congested toll roads)
Public goods - answer goods that are neither excludable nor rival in
consumption (ex. tornado siren, national defense, noncongested nontoll
roads)
Common resources - answer goods that are rival in consumption but not
excludable (ex. fishing in the ocean, environment, congested nontoll roads)
Natural monopolies (club goods) - answer goods that are excludable but not
rival in consumption (ex. fire protection, internet service providers,
noncongested toll roads)
Public goods and common resources both create ________ - answer
externalities
Even if public goods and common resources were offered in the market at
some price, their market allocation will be _________ due to the presence of
_________ - answer inefficient, externalities
, Natural monopolies provide _________ goods, but sometimes may choose to
provide their goods free of charge so they seem like __________ - answer
excludable, public goods
The externalities associated with public goods are __________ - answer
positive
The externalities associated with common resources are _________ - answer
negative
The social value of a _________ is greater than the private value (nonrival) -
answer public good
Free-market equilibrium quantity of a public good is _______ - answer less
than the efficient quantity
The use of common resources by one person _________ - answer reduces the
amount available for others
The social cost of a _________ is greater than the private cost - answer
common resource
Free-rider - answer a person who receives the benefit of a good but avoids
paying for it
_________ prevent private markets from supplying public goods - answer free-
riders
How can the government solve the free rider problem? - answer the
government can make everyone better off by providing the public good and
paying for it with tax revenue
