Exam 11: Public Goods and Common Resources

Excludability is the property of a good whereby

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential), the troubling implication is that

One benefit of the patent system is that it encourages the production of technical knowledge.

Table 11-2 Consider a small town with only three families, the Greene family, the Brown family, and the Black 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 $360 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?"

Who among the following is a free rider?

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

Fire protection is a

The Tragedy of the Commons results when a good is

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 common resource? Briefly explain.

The national defense of the United States is not excludable because

The U.S. military defends Jacob from foreign attackers. The fact that Jacob enjoys this protection does not detract from others Americans' enjoyment of it. For this reason, we say that national defense is

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

Pollution is a

The mayor of Newton is considering proposals to deal with an unsafe intersection. She could install a traffic light at a cost of $50,000 or she could install stop signs at a cost of $5,000. The traffic light is expected to reduce the risk of fatality by 0.45 percent and the stop signs are expected to reduce the risk of fatality by 0.054 percent. If the value of human life is estimated to be $10 million, what choice should the mayor make? Briefly explain.

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm,

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

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

Which of the following is not a common resource?

Knowledge that is patented is a

A congested side street in your neighborhood is