Exam 17: Public Goods and Common Resources

An inefficient allocation of resources will occur when:

(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 socially optimal number of streetlights in the neighborhood?

Which of the following is used to provide public goods?

An example of a common resource is:

Scenario: Alexander and Vanessa Two individuals, Alexander and Vanessa, benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where Q refers to the amount of research undertaken and P is the price Alexander is willing to pay for such research.Vanessa's marginal private benefit from such research is given by the equation P = 100 - Q.Suppose the marginal social cost of engaging in such research is constant at $100. (Scenario: Alexander and Vanessa) Given the information in the scenario Alexander and Vanessa, what is the socially optimal amount of scientific research for this economy?

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 $24, how much of the public good will be provided by the private market?

Figure: Market Failure (Figure: Market Failure) In the figure Market Failure, if production in this competitive market is at quantity F, then:

A public good is a good or service for which exclusion is:

Bluefin tuna travel in schools throughout the world's oceans.Fishing boats from many nations harvest bluefin tuna as the schools migrate through their national waters.The schools of bluefin tuna are best described as:

An individual is more likely to be a free rider when a good is:

An artificially scarce good is a good or service for which exclusion is:

Public goods differ from common resources in that:

(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.If Dave had to pay for streetlights on his own, how many streetlights would there be?

Figure: Marginal Social Cost and Supply (Figure: Marginal Social Cost and Supply) In the figure Marginal Social Cost and Supply, the marginal social cost curve lies above the supply curve:

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 G street lights?

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.The market would provide street lights.The efficient Quantity of street lights is _.

For which of the following goods is the marginal social benefit necessarily greater than the marginal private benefit?

The government can intervene to achieve the socially optimal quantity of a common resource by:

Figure: Market Failure (Figure: Market Failure) In the figure Market Failure, the equilibrium price is and the Equilibrium quantity is for a competitive market.

A key element that a public good displays is: