1. Recall the Application 1 in the textbook. Clearing Space Debris. Fill in the blanks: The clearing of space debris is an example of a _____ that suffers from the _____ problem.
A) free rider, public good
B) public good, free rider
C) public good, external benefit
D) private good, external benefit
2. True or False: When a good generates external benefits, collective decision making generates more efficient choices.
A) True
B) False
3. The free-rider problem arises because .
A) once provided, a public good is available to all regardless of whether they paid for it.
B) poor people cannot afford to contribute to public goods.
C) enforcement of tax laws is inadequate.
D) people disagree with how the government spends it s money.
4. During pledge week your local public television station asks viewers to contribute to the station. People who watch public television but do NOT contribute are
A) free-riding.
B) engaged in moral hazard.
C) those who do not value public television .
D) causing adverse selection .
5. Which of the following is likely to overcome the free-rider problem?
A) offer people a private gift for contributing
B) arrange for matching contributions
C) appeal to peoples' sense of civic or moral responsibility
D) all of the above