Exam 11: Public Goods and Common Resources

Reggie owns 3 acres of beautiful wooded land.When Reggie decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

Figure 11-1 -Refer to Figure 11-1.The box labeled D represents what type of good?

When free riders are present in a market,the market generally fails to provide the efficient outcome.

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 $180.How many streetlights should the town install to maximize total surplus from the streetlights?

A study that compares the costs and benefits to society of providing a public good is called externality analysis.

The idea of requiring motorists to pay to use the busiest streets in a city

Which of the following statements is correct?

The local fire department wants to buy some new equipment at a cost of $300,000.If a human life is worth $10 million,the equipment is worth buying if it reduces the risk of someone dying in a fire over the life of the equipment by at least

On the Fourth of July,there is no fireworks display in the small town of Yankeeville,even though it would be efficient for such a display to be produced.Which of the following statements is correct?

Knowledge is an example of a

Antonio,Vanessa,and Norah all enjoy looking at flowers blooming in gardens in their neighborhood.The neighborhood association is considering planting a flower garden around the sign at the entrance to the neighborhood.Antonio values the garden at $25,Vanessa at $15,and Norah at $30.The flowers and labor for the garden cost $55.What should the neighborhood association do?

A view of a spectacular sunset along a private beach is an example of a

Cost-benefit analysis is important to determine the role of government in our economy because

Each of the following would be considered a common resource except

Table 11-4 There are four homes along Belmont Circle,which surrounds a small plot of land.The land currently has no trees,and the 4 homeowners -- Adams,Benitez,Chen,and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees.The table represents their willingness to pay,that is,the maximum amount that each homeowner is willing to contribute toward each tree. -Refer to Table 11-4.Suppose the cost to plant each tree is $380 and the 4 homeowners have agreed to split all tree-planting costs equally.Which homeowner(s)would be opposed to planting any trees?

Which of the following goods is excludable but not rival in consumption?

Consider a public road that anyone is allowed to drive on.If the road is often congested,the road would be considered a

A good is excludable if

Table 11-1 Consider the town of Anywhere with only three residents,Mary,Bill,and Tricia.The three residents are trying to determine how large,in acres,they should build the public park.The table below 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 $16 per acre.How large should the park be to maximize total surplus from the park in Anywhere?

Nontoll roads can be either public goods or common resources,depending upon the degree of congestion.