Econ 102 9-19

Question 1

Figure 11-1

Rival in Consumption?
Yes No

Excludable? Yes A B
No C D

9. Refer to Figure 11-1. The box labeled A represents what type of good?

Answer 1

Private Good

Question 2

Figure 11-1

Rival in Consumption?
Yes No

Excludable? Yes A B
No C D

10. Refer to Figure 11-1. The box labeled C represents what type of good?

Answer 2

Common Resource

Question 3

11. Refer to Figure 11-1. The box labeled B represents what type of good?

Answer 3

Club Good

Question 4

12. Refer to Figure 11-1. The box labeled D represents what type of good?

Answer 4

Public Good

Question 5

15. Which two types of goods are rival in consumption?

Answer 5

Private goods and common resources are rival in consumption.

Question 6

16. Which two types of goods are excludable?

Answer 6

16. Private goods and club goods are excludable.

Question 7

Why might the private market not reach the socially optimal level of traffic without the help of government?

Answer 7

The private incentive to fix the problem is small, so government policies such as tolls and gasoline taxes may improve social welfare.

Question 8

e. How does the U.S. government correct for this apparent market failure?

Answer 8

The U.S. government also subsidizes basic research in many different fields.