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51.Which of the following best represents the concept of a public good?

(a)Measures taken to combat air pollution

(b)Automobile insurance

(c)Safety features on cars

(d)Automobile repair services

52.Which of the following best represents the concept of a public good?

(a)Copying and printing services

(b)Tax preparation services

(c)Baby-sitting services

(d)Police protection

53.Which of the following is the best example of a public good?

(a)Inoculation against a contagious disease

(b)A streetlight

(c)Garbage collection

(d)Internet access

54.Why are public goods provided by the government, rather than by the private sector?

(a)Because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds.

(b)Because it would be difficult for a private sector firm to make a profit providing a public good, as the consumers who benefit would not have to pay for it.

(c)Because no one really benefits from public goods.

(d)Because private sector firms do not have the foresight to plan for public goods.

55.Why does our government enforce antitrust legislation?

(a)Because monopolies are known to be unfair to their stockholders.

(b)Because monopolies are known to be unfair to their employees.

(c)Because the government wants to create competition in markets in the interests of promoting efficiency.

(d)Because the government wants to create competition in markets in the interests of promoting an equal distribution of income.

56.The United States antitrust laws

(a)aid monopolies in their quest to dominate the market for a good or service.

(b)are outdated and rarely used anymore.

(c)promote competition.

(d)are administered by the Department of Commerce.

57.Which one of the following characterizes public goods?

(a)They are produced by oligopolies.

(b)They generate negative externalities.

(c)They are profitably provided by the public sector.

(d)One additional consumer can enjoy the good without diminishing the benefit enjoyed by others.

58.Which policy would correct a positive externality?

(a)Regulation of the industry to restrict production.

(b)Subsidize production or consumption of the good.

(c)Tax production or consumption of the good.

(d)Allow the firms producing the good to operate as a cartel.

59.Which of the following characterizes public goods?

(a)The principle of rival consumption

(b)The law of increasing marginal utility

(c)Producers of the good cannot collect payment from all who benefit.

(d)They will be overproduced by the private sector.

05x01

Figure 8.1

60.In Figure 8.1, market equilibrium occurs at X, but X* is the socially optimal quantity.
This indicates that

(a)production of the good generates a negative externality.

(b)production of the good generates a positive externality.

(c)the good represented is a public good.

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