Question

Both public goods and common resources are

	a.	nonexcludable.
	b.	excludable.
	c.	nonrival in consumption.
	d.	rival in consumption.

When the absence of property rights causes a market failure, the government can potentially solve the problem

	a.	by clearly defining property rights.
	b.	through regulation.
	c.	by supplying the good itself.
	d.	All of the above are correct.

Answer 1

Public Goods and common resources are nonexcludable. In the sense, noone can be excluded to use these goods. Public goods are non rival in consumption but common resources are rival in consumption in the sense, consumption by one individual reduces the resources available for consumption to other individuals. (a) is correct.

When the absence of property rights causes a market failure, the government can potentially solve the problem through regulation. So (b) is correct.