Question

Question 4 (1 point)

Which of the following statements is true?

a	Excludability occurs when one’s consumption of a good makes it unavailable for others, and it comes in units that are small enough to be afforded by individual buyers.
b	Rivalry occurs when those who are unable and unwilling to pay for the good do not have access to the benefits of the good.
c	Since private goods have rivalry and excludability, private, firms can produce and sell them for a profit.
d	All of the above.
e	Only a) and b)

Question 5 (1 point)

Which of the following statements is true?

a	Public goods are often supplied by the government, and have two key characteristics: nonrivalry and nonexcludability.
b	The demand for a public good may underreport how much consumers are willing and able to pay.
c	Nonexcludability occurs when one’s consumption of the good does not preclude another person from consuming the good.
d	All of the above.
e	Only a) and b)

Question 6 (1 point)

Which of the following statements is true?

a	Nonrivalry occurs when no one can be prevented from enjoying the benefits of a public good.
b	Because of nonrivalry and nonexcludability, public goods suffer from the free-rider problem, which means that many people can benefit from the good without paying for it.
c	The free-rider problem makes the production of the good unprofitable for firms, since they have no way to ensure that only-paying consumers will enjoy the good. As a result, the government often supplies public goods.
d	All of the above.
e	Only b) and c)

Answer 1

Excludability means someone could be denied the use of the good. Non excludability means no one could be denied the use.

Revalry means consumption by one affect the consumption of other and non rivalry means consumption by one does not affect the consumption of others.

Q4 Answer is C.

Private goods are both excludable and rivalry in nature.

Q5 Answer is E. Option a and b only.

Q6 Answer is E.

Free rider is a problem in which consumer does not pay for the good but uses the good. For example if local government levied the tax that will be used for park and someone said that he will not pay the tax because he will not use the park but later he uses the park. This is free rider problem.

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