Goods differ on the basis of whether their consumption is rival and excludable. Explain the terms "rival," nonrival," "excludable," and "nonexcludable" as they are used to define goods
List the four categories of goods and define these categories in terms of rivalry and excludability.
Rivalry occurs when only one party at a time can enjoy a good.
Nonrivalry occurs when many people can enjoy a good simultaneously.
Excludability means that a producer can prevent people from consuming a good.
Nonexcludability means that a producer has difficulty from preventing people from consuming a good.
1. Pure private good: Rival and excludable
2. Pure public good: nonrival and nonexcludable
3. Club good: nonrival and excludable
4. Common pool resource: rival and nonexcludable
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Which of the following items is likely to have the highest positive income elasticity of demand?
a. Bread b. Jewelry c. Soap d. A plumber's service e. Table salt
Which of the following must always be true as the quantity of output increases?
a. Marginal cost must rise. b. Average total cost must rise. c. Average variable cost must rise. d. Average fixed cost must fall.
One of the differences between the GDP deflator and the consumer price index is
a. the GDP deflator includes income earned by American citizens working in foreign countries and the consumer price index is based solely on purchases made in the U.S. b. the consumer price index basket of goods is updated constantly by the Bureau of Labor Statistics whereas the GDP deflator is updated only occasionally. c. the consumer price index includes items not included in the GDP deflator such as airplanes purchased by the Air Force. d. the GDP deflator reflects prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.
NAFTA probably helped productivity in Mexico's maquiladora sector, but:
a. trade with China has taken on more importance. b. world competition and the close relationship with the United States may have limited its comeback. c. both governments have reversed some of the tariff reductions. d. Mexico has raised taxes on the maquiladoras, and that has caused international tension.