A blog for better streets and public spaces in Portland, Maine.

Wednesday, June 10, 2009


A reader of the Planet Money blog reports on an unintentionally funny economics question:
I recently bought the foreign service exam study guide since I am taking the test this Friday. The test consists of, among other things, basic economics questions. I was so amused by one of the sample questions that I just had to share:

All of the following are examples of United States products that would typically fail to be produced to optimal output without government intervention EXCEPT:

A. national defense products.
B. light provided by lighthouses.
C. new automobiles.
D. new highways.

And in the answer section:

C. This is the correct answer. Automobiles are not a public good. Optimal production of automobiles is related to the demand for them by individual consumers.

1 comment:

Turboglacier said...

That is some funny.

Although, actually, it's not completely off base- the government support of car companies isn't for the purpose of making sure we have enough cars. No one has really suggested that there would be an automobile shortage if GM/Chrysler/Ford were to go out of business.

Rather the opposite of lighthouses, where all the lighthouse keepers got fired as soon as there was a reliable way of keeping the lights on without their presence. Though arguably we don't need lighthouse lights at all anymore. Wonder what the total annual electric bill for them is...