Exam 11: Public Goods and Common Resources

Scenario 11-2 Consider the following goods: • fire-protection services provided by a fire department • a beautiful mural on the outside wall of a fire station • a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly explain.

What do we mean when we say that a good is rival in consumption?

When a highway is congested, giving rise to negative externalities, it is appropriate to view the highway as a common resource.

Private companies are most likely to invest in medical research if

Figure 11-1 ​ -Refer to Figure 11-1. For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Which of the following goods is rival and excludable?

Goods that are rival in consumption include both

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

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

One possible solution to the problem of protecting a common resource is to convert that resource to a private good.

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

What causes the Tragedy of the Commons?

A rather large city has only one fire station, two fire trucks, and four firefighters. Is fire protection in this city characterized by rivalry in consumption?

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.

Government agencies, such as the National Science Foundation, subsidize basic research because in the absence of a subsidy too little research would be conducted.

A toll on a congested road is in essence

Who among the following is a free rider?

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

When a good does not have a __________ attached to it, private markets fail to ensure that the good is produced and consumed in the proper amounts.