30) The “free rider problem” arises from the fact that a public good is (2pts) n

Question

30)

The “free rider problem” arises from the fact that a public good is

(2pts)

nonrivalrous

asymmetric

rivalrous

excludable

nonexcludable

31)

Suppose that a person with auto insurance is less likely to be as careful about her driving than without the insurance. This is an example of

(2pts)

moral hazard

the free rider problem

adverse selection

a negative externality

nonrival consumption

32)

To illustrate the problem of adverse selection, the textbook uses which of the following examples?

(2pts)

lighthouses

people driving less safely when they have auto insurance

used cars

all the above

none of the above

33)

Moral hazard and adverse selection both arise from a more general phenomenon known as

(2pts)

the free rider problem

asymmetric information

spillover effects

nonexcludability

rent-seeling

Explanation / Answer

30.A public good is both non rivalrous and non exclusive.The free rider problem arises from its non excludable property because if no one can be excluded from the consumption of a goods,then no one will be willing to pay for the good.

Answer-Non excludable.

31.It is an example of moral hazard

32.people driving with life insurances.

33.asymmetric information

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