Exam 17: Public Goods and Common Resources

The tendency of people or firms to consume a public good without paying for it is called the ________ problem.

If the marginal social benefit of a public good is greater than the marginal social cost of providing the good, then:

Which of the following statements is true?

(Table: Marginal Benefit from Additional Streetlights) Dave and Art live in a new housing development and would like to have streetlights installed.The table Marginal Benefit from Additional Streetlights shows Dave's and Art's individual marginal benefit of different numbers of streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the maximum that Art would be willing to pay to have one streetlight installed in the neighborhood?

Figure: An Individual's Marginal Benefit from a Public Good (Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good; each individual has the same marginal benefit curve as the one shown in the figure.If the marginal cost of the good is $8, how much of the public good will be provided by the private market?

The best example of a good whose consumption is excludable in consumption is:

What is difficult about estimating the level of a public good that will maximize social welfare using cost-benefit analysis?

Artificially scarce goods are inefficiently consumed because the market price is zero.True

An electronic book is an artificially scarce good because the private market prevent consumption by people who do not pay for it.Further, the same e-Book be Consumed by more than one person at the same time.

If a good is subject to the free-rider problem and an inefficiently low level of production, the good must be a(n):

If the marginal benefit received from a good is equal to the marginal social cost of production, then:

(Table: Security in a Residential Community) The table Security in a Residential Community shows the total cost of hiring a 24-hour security service in a community of 100 residents and each individual resident's total benefit from the service.The marginal cost of hiring the second security guard is ________, and the marginal social benefit is _.

Figure: Correcting for Market Failure (Figure: Correcting for Market Failure) Assume that there is an external cost involved in the market illustrated in the figure Correcting for Market Failure.Economists argue that in an unregulated private market, is produced.In the figure, the supply curve (S1) reflects ________ cost.

(Table: Security in a Residential Community) The table Security in a Residential Community shows the total cost of hiring a 24-hour security service in a community of 100 residents and each individual resident's total benefit from the service.The efficient number of security guards is _.

(Table: Marginal Benefit, Cost, and Consumer Surplus) The table Marginal Benefit, Cost, and Consumer Surplus shows six consumers' willingness to pay (his or her individual marginal benefit) for one iTunes download of a Jack Johnson song.If the marginal social cost is constant at ________, then consumers will purchase this good and consumer Surplus is _.

The free-rider problem refers to:

Goods are said to be "rival in consumption" because they are substitutes in consumption, e.g., coffee and tea, or road travel and air travel.True

A good that is nonexcludable but rival in consumption is considered a:

Figure: Market Failure (Figure: Market Failure) Look at the figure Market Failure.Suppose the supply curve represents the marginal cost of providing street lights in a neighborhood that is composed of two people, Ann and Joe.The demand curve represents the marginal benefit that Ann receives from the street lights.Suppose that Joe's marginal benefit from the street lights is a constant amount equal to AC.How much is Ann willing to pay for F street lights?

In the United Kingdom, most television programming is paid for by a yearly license fee assessed on every television owner."Television detection vans" go through neighborhoods to detect unlicensed households and keep them from viewing without paying.This is a good example of the ________ provision of _.