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Exam 11: Public Goods and Common Resources

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Question 41

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What particular characteristic do private goods and common resources have in common?

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Private goods and co...

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Question 42

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Which of the following is not a characteristic of a public good?

A) It is not excludable.
B) It is not diminished or depreciated as additional people consume the good.
C) Its benefits cannot be withheld from anyone.
D) Because it is a free good, there is no opportunity cost.

E) A) and B)
F) A) and C)

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Question 43

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Each of the following would be considered a common resource except a

Table 11-5 A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. -Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $500. How many ferry trips should there be to maximize the total surplus of the four business owners?

Both public goods and common resources are

Are common resources excludable? Are they rival in consumption?

Goods that are rival in consumption and excludable would be considered

You and your friends watch a movie in your bedroom. For you and your friends, the enjoyment that you get from watching the movie is not rival in consumption.

An example of a private good would be

Markets do not ensure that the air we breathe is clean because

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. With which of the boxes - A, B, C, or D - do we associate the Tragedy of the Commons?

A tax on gasoline often reduces road congestion because gasoline

Figure 11-1 Rival in Consumption? Yes No Excludable? Yes No -Refer to Figure 11-1. A mathematical theorem is an example of general knowledge. In which of the boxes - A, B, C, or D - does a mathematical theorem belong?

On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. An overcrowded picnic area is an example of

The national defense of the United States is not rival because

Suppose that installing an overhead pedestrian walkway would cost a college town $150,000. The walkway is expected to reduce the risk of fatality by 3 percent, and the cost of a human life is estimated at $10 million. The town should

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Neither public goods nor common resources are

Scenario 11-3 Consider the following goods: -a fish fillet served at a restaurant -fish in the ocean -exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a club good? Briefly explain.

On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. Suppose that the Minnesota State Park Service institutes a variable fee structure. On weekdays when the picnic areas get little use, the fee is zero. On normal weekends, the fee is $8 per person. On holiday weekends, the fee is $14 per person. The fee system corrects a problem known as the