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Exam 11: Public Goods and Common Resources

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Question 91

Multiple Choice

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For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is

A) advertising.
B) quality.
C) reputation.
D) price.

E) All of the above
F) C) and D)

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Question 92

Multiple Choice

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The goal of requiring licenses for hunting and fishing is to

A) reduce the use of a common resource.
B) ensure that the people hunting and fishing are qualified.
C) promote hunting and fishing.
D) monitor compliance with federal gun laws.

E) B) and D)
F) None of the above

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Question 93

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Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Which two types of goods are rival in consumption?

Governments that chose to make endangered elephants private goods have met with more success protecting elephants than governments that chose to make killing elephants illegal.

In determining whether and how much of a public good to provide, cost-benefits analysts use the same type of price signals for public goods as are readily available for private goods.

Table 11-2 Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​ $\begin{array} { l l l l l } \hline \text { Hours } & \text { John } & \text { James } & \text { Mary } & \text { Lydia } \\\hline 1 & \$ 30 & \$ 50 & \$ 40 & \$ 10 \\2 & 25 & 40 & 37 & 9 \\3 & 20 & 30 & 34 & 8 \\4 & 15 & 20 & 30 & 7 \\5 & 9 & 10 & 25 & 6 \\6 & 3 & 0 & 15 & 5 \\7 & 0 & 0 & 5 & 4 \\\hline\end{array}$ ​ -Refer to Table 11-2. Suppose the cost to clean the lake is $8 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Why does the commercial value of ivory threaten the elephant, while the commercial value of beef protects the cow?

One person's use of common resources does not reduce the enjoyment other people receive from the resource.

The pollution market failure is an example of the free rider problem.

What particular characteristic do public goods and club goods have in common?

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

The Tragedy of the Commons results when a good is

Six friends decide to meet at a Greek restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except

Both public goods and common resources are

When a good is rival in consumption,

The town of Smallhaven is on a small island connected to Large City by a single bridge. Most of the residents of Smallhaven work in Large City. As a result, the bridge becomes very congested for two hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Smallhaven would likely be most efficient in alleviating the congestion?

Table 11-1 Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park. ​ ​ -Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) , what is the largest park size for which the majority of residents would vote "yes?"

If no one can be prevented from using good x, then good x is one of two types of goods. What are those two types?

Goods that are rival in consumption but not excludable would be considered