Exam 17: Public Goods and Common Resources

If left to the private market, the amount of fire protection provided in a city would be ________ than it is now, and free riders would pay for fire protection.

Josh has an iPhone and frequently downloads songs from the iTunes website.He pays a small fee for each download, but downloading a song does not remove it from the iTunes inventory.Other consumers can also pay the fee and download a song that Josh might have already accessed.The iTunes service is best described as:

Figure: Demand and Marginal Revenue (Figure: Demand and Marginal Revenue) The figure Demand and Marginal Revenue refers to a software upgrade.The producer incurred fixed costs of $10 million to produce the upgrade; the marginal cost of allowing consumers to download the upgrade is zero.In order to maximize profit, the producer will set a price of ________ and produce upgrades.

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 The figure Correcting for Market Failure.If the government forces the private-sector firms to face the external cost, then:

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

Public goods are not sold in efficient quantities in the marketplace because:

A whale is a common resource because the private market prevent consumption by people who do not pay for it, and the same unit be consumed by more than one Person at the same time.

If the market supply and demand curves for a common resource include all costs, then:

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.Providing E street lights is _______ because _.

(Table: Total Cost and Total Individual Benefit) The table Total Cost and Total Individual Benefit refers to animal control for residents of a small town.If there are 1,000 residents, what is the marginal social benefit of the fourth animal control officer?

(Table: Street Cleanings) Peter and Wendy both benefit from having cleaner streets.The table Street Cleanings shows the relationship between the number of street cleanings per month and the total benefit they get.Increasing the number of street cleanings per month from ________ would yield a marginal social benefit (for Peter and Wendy together) equal to $12.

(Table: Street Cleanings) Peter and Wendy both benefit from having cleaner streets.The table Street Cleanings shows the relationship between the number of street cleanings per month and the total benefit they get.What is the marginal social benefit for Peter and Wendy together when the number of street cleanings per month increases from 4 to 5?

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.Providing G street lights is _______ because _.

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, what is the total benefit of the level of the public good that maximizes society's welfare?

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.What is the total social benefit from four units of the public good?

If the use of a common resource is determined in the private market, the resource:

(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 third security guard is ________, and the marginal social benefit is _.

An example of a good that is rival in consumption and nonexcludable is:

The marginal cost of producing an artificially scarce good is equal to:

Pharmaceutical companies typically face very high fixed costs when developing new drugs.The marginal cost of producing a drug after development is very low.When these companies set price and output to maximize profit, patients pay a ________ price for amounts of the drug than are socially optimal.