Exam 11: Public Goods and Common Resources

Nico, Mikey and Jess are on a road trip and are trying to decide how much food to take with them in the car. They decide that whoever values the food most highly will have to go and buy it for everyone before they depart. One problem with this approach is:

Andy is deciding whether to undertake some scientific research into developing a new supercomputer. He believes he can make a lot of money from his research. What are some problems he might encounter in obtaining remuneration for his work?

One way to eliminate the Tragedy of the Commons is to:

Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item from the menu and they will share all dishes. When the final bill for the meal comes, they decide that they will split the cost evenly among each of the people at the table. In this particular case, a Tragedy of the Commons problem is likely because:

Common resources get overused typically because:

Explain the fundamental reason that common resources have a tendency to be exploited in private markets.

Businesses that buy illegally harvested timber products from tropical rainforests are influenced by the external effect of their decision.

Overuse and pollution of rivers can potentially be resolved by governments that:

Fish are public goods because there are always enough left to keep reproducing and thus stocks never run out.

Cost-benefit analysis is important in determining the role of government in our economy because:

If everyone prefers a society without poverty, then which of the following statements is true:

Market failure with common resources occurs because:

Why do elephants face the threat of extinction while cows do not?

In nearly all cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Markets work well for some goods, but poorly for others. For which of the following goods would markets be expected to work well?

In modern industrialised economies there are goods that can be consumed without paying for them.

If an entrepreneur provides a service that people enjoy without paying for, but can be excluded from the service, these people are known as free riders.

Prices will always regulate consumption adequately because of the different types of goods in the economy.

Some workers are in occupations where the risk of death is higher than others. These risks can be used to evaluate the value of human life. You would expect these workers to:

Jack criticises the idea of road tolls to fix congestion problems because he says they would allow the rich to drive more than the poor. You counter-argue by saying that road tolls could potentially address these equity issues and offer even an egalitarian solution. You propose to Jack that each automobile owner be given a specified debit card balance every year and that those who are willing to drive less can sell their unused balance to those who want to drive more. Jack likes your proposal, especially because of the manner in which your plan redistributes income. What groups of people might benefit from this implicit redistribution of income?