Exam 11: Public Goods and Common Resources

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

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

The Tragedy of the Commons

What causes the Tragedy of the Commons? (i)Social and private incentives differ. (ii)Common resources are not rival in consumption and are not excludable. (iii)Common resources are not excludable but are rival in consumption.

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents

London drivers who choose to drive in "congestion zones" pay a tax designed to reduce traffic congestion.

In what way do public goods give rise to positive externalities?

The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?

Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed

The Tragedy of the Commons can be corrected by

Which of the following goods is nonrival in consumption and excludable?

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

Table 11-6 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. ​ ​ -​Refer to Table 11-6. 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.

A traffic light at an intersection is

A cost-benefit analysis of a highway is difficult to conduct because analysts

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

For private goods allocated in markets,

The town of Isle is on a small island connected to Big City by a single bridge. Most of the residents of Isle work in Big City. As a result, the bridge becomes very congested for 2 hours each day at the typical morning and evening commute times. Which of the following policies considered by the mayor of Isle would likely be most effective in alleviating the congestion?

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

Table 11-6 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. ​ ​ -Refer to Table 11-6. Suppose the cost of cleaning the lake is $40 per hour, and that the residents have agreed to split the cost of cleaning the lake equally. If the residents vote to determine the number of hours spent cleaning the lake, basing their decision solely on what maximizes their own surplus, what is the most number of hours for which all four residents would vote "yes?"