Question

cThe Role Of Government in the Economy Quick Check
1. What is a public good?
A) A public good is a product or service that one consumer can prevent another consumer from using, and is accessible without payment.
B) A public good is a product or service that one consumer can prevent another consumer from using, and is not accessible without payment.
C) A public good is a product or service that one consumer cannot prevent another consumer from using, and is not accessible without payment.
D) A public good is a product or service that one consumer cannot prevent another consumer from using, and is accessible without payment.

2. What is the negative externality?
A) Negative externalities occur when the social cost of a good or service is lower than the private cost.
B) Negative externalities occur when the social cost of a good or service is higher than the private cost.
C) Negative externalities are goods or services that one consumer can limit another consumer's use of.
D) Negative externalities are goods or services that are subject to the free-rider problem.

3. What is a positive externality?
A) Positive externalities occur when there is both a social benefit and private benefit from a good or service.
B) Positive externalities occur whenever there is a social benefit to a good or service.
C) Positive externalities occur when a service is available without cost.
D) Positive externalities occur whenever there is a private benefit to a good or service.

4. What does excludability mean for goods and services?
A) An excludable good or service's availability to one consumer can be affected by another consumer.
B) An excludable good or service's availability is dependent on payment.
C) The good or service has a higher social cost than the private cost.
D) The good or service is subject to the free-rider problem.

5. Why does the government need to handle market failures?
A) The natural forces of a free market tend to overcorrect for market failures.
B) Market failures occur when goods or services are excludable.
C) Market failures indicate a scarcity of resources, so it must be managed.
D) The natural forces of a free market do not tend to fix market failures.

Answer 1

The Government plays an important role in controlling the economy of a country through various economic policies.

1. A public good  is a product or service that one consumer cannot prevent another consumer from using, and is accessible without payment ( C )   example is the law enforcement agencies
2. Negative externality occur when the social cost of a good or service is higher than the private cost ( B )  example air pollution
3. Positive externality occurs whenever there is a social benefit to a good or service ( B )  
4. Excludability means : An excludable good or service's availability is dependent on payment
5. Government need to handle market failures because market failures indicate a scarcity of resources so it must be managed ( C )

Public goods and services are goods and services provided for use to the public by the government or individual free of charges.

Negative externalities  of a good are the consequences arising from the production or consumption of good that affects a third party ( not directly involved in the consumption or production of the goods.) e.g. air pollution

Positive externalities is the vice versa of negative externalities .

Excludable goods are otherwise known as private goods are goods that are accessible to consumers at a certain price.

Market failures can be caused by the creation of  artificial scarcity by producers

Hence we can conclude that public good , Negative and positive externalities , excludable goods and market failures are as described above

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