Question

1). Which of the following is not a consideration when attempting to eliminate a free rider problem or tragedy of the commons problem?

Multiple Choice

• Something must be done to alter individuals' trade-offs.

• Market participants must internalize the value of the externality.

• Firms must be forced to provide the good or service at a price that is below profit maximizing price.

• The social costs must be realized by the individual.

2). Which of the following is not an example of a public good that the government has made excludable?

Multiple Choice

• City buses

• State colleges

• Fire Protection

• Toll roads

Answer 1

1.

C

It is not the solution to resolve the problem of free riders or tragedy of commons. Rather, ownership of public goods is given to the private parties, so that resources are better taken care off.

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2.

C

Fire protection service is a public good that is not made to be excludable. Rather, this service is made available to everyone.