Exam 11: Public Goods and Common Resources

Table 11-1 Three wealthy families - the Johnsons,the Lincolns,and the Washingtons -are the only residents of a certain neighborhood in which the lawns are large and the streets are wide.The three families are considering the placement of one,two,or three elegant statues at entrances to the neighborhood.The table represents the individual families' willingness to pay,that is,the maximum amount that each family is willing to contribute to purchase and erect each statue. -Refer to Table 11-1.Suppose the cost of each statue is $24,000.How many statues should be erected to maximize the total surplus of the three families?

Which of the following statements is true of the tax on gasoline?

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

Before considering any public project,the government should (i) Compare the total cost and total benefits of the project. (ii) Conduct a cost-benefit analysis. (iii) Infer that citizens who vote for a project are willing to pay equally for it.

Which of the following statements is not correct?

Roads can be considered either public goods or common resources,depending on how congested they are.

Private decisions about consumption of common resources and production of public goods usually lead to an

It would always be a mistake to view

Table 11-2 Consider a small town with only three families,the Johnson family,the Marshall family,and the Walker family.The town does not currently have any streetlights so it is very dark at night.The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install.The table below shows each family's willingness to pay for each streetlight. -Refer to Table 11-2.Suppose the cost to install each streetlight is $450 and the families have agreed to split the cost of the streetlights equally.If the families vote to determine the number of streetlights to install,basing their decision solely on their own willingness to pay (and trying to maximize their own surplus),what is the greatest number of streetlights for which the majority of families would vote "yes?"

At the local park there is a playground that anyone may use.There is rarely anyone using the playground,so children who use the playground receive full enjoyment from its use.The playground is

In which of the following examples are property rights not well established?

Elephant populations in some African countries have started to rise because

Which of the following is an example of the free-rider problem?

To achieve the optimal provision of public goods,the

The Mansfield Public Library has a large number of books that anyone with a library card may borrow.Anyone can obtain a card for free.Because the number of copies of each book is limited,not everyone can have the same book at the same time.What type of good would the library books be classified as in this case?

The difference between specific knowledge and general knowledge is that

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full,the Sunday Service is

A town engineer comes to the city council with a proposal to install a traffic light at a certain intersection that currently has a stop sign.The benefit of the traffic light is increased safety because the light will reduce the incidence of fatal traffic accidents by 50 percent per year.Which of the following statements is correct?

Drivers have to pay a toll to drive on certain roads.In essence,a toll is a corrective tax on the externality of __________.

In what sense is it meaningful to say that fighting poverty is a public good?