Quiz: Government Regulation and Public Goods for High Schoolers

📚 Quick Study Guide

• 🏛️ Government Regulation: Government intervention in the economy to achieve specific goals, such as consumer protection, environmental sustainability, or market stability.
• ⚖️ Antitrust Laws: Laws designed to prevent monopolies and promote competition in the marketplace. Examples include the Sherman Antitrust Act and the Clayton Act.
• 🛡️ Public Goods: Goods that are non-excludable (difficult to prevent people from using them) and non-rivalrous (one person's use does not diminish another person's use). Examples include national defense and clean air.
• 💰 Free Rider Problem: The issue that arises when people benefit from a public good without contributing to its cost, leading to under-provision of the good.
• 📈 Externalities: Costs or benefits that affect a third party who is not directly involved in a transaction. Can be positive (e.g., education) or negative (e.g., pollution).
• 💡 Correcting Externalities: Governments can use taxes (to discourage negative externalities) and subsidies (to encourage positive externalities) to correct market failures.
• 📊 Cost-Benefit Analysis: A systematic approach to estimating the strengths and weaknesses of alternatives; used to determine options which provide the best approach to achieving benefits while preserving savings.

Practice Quiz

1. Which of the following is the BEST example of a public good?
   1. A. A slice of pizza
   2. B. A private swimming pool
   3. C. National defense
   4. D. A movie ticket
2. What is the primary purpose of antitrust laws?
   1. A. To encourage monopolies
   2. B. To prevent competition
   3. C. To promote competition
   4. D. To regulate international trade
3. The "free rider problem" is most associated with which type of good?
   1. A. Private goods
   2. B. Public goods
   3. C. Common resources
   4. D. Club goods
4. Which of the following is an example of a negative externality?
   1. A. A beautiful garden
   2. B. Air pollution from a factory
   3. C. A neighbor's education
   4. D. Honey production
5. What is a common government intervention used to correct negative externalities?
   1. A. Subsidies
   2. B. Price floors
   3. C. Taxes
   4. D. Price ceilings
6. What is the main goal of cost-benefit analysis?
   1. A. To maximize costs
   2. B. To minimize benefits
   3. C. To determine the optimal allocation of resources
   4. D. To ignore all costs
7. Which of the following describes a good that is non-excludable?
   1. A. A good that is easy to prevent people from using
   2. B. A good that only one person can use at a time
   3. C. A good that is difficult to prevent people from using
   4. D. A good that is rivalrous in consumption