Exam 17: Public Goods and Common Resources

Imposing a Pigouvian tax on a good, creating a system of tradable licenses, and assigning property rights are methods to alleviate the problems associated with:

If the extent to which common resources (such as fish in the sea) should be utilized is left to the private market, then:

For a nonrival good like pay-per-view television programs, the private market will lead to:

Assigning property rights helps to correct the problems associated with common resources:

In a market economy, goods that are nonrival in consumption are subject to inefficiently low production.False

For a public good, the marginal social benefit is the horizontal summation of each individual's marginal benefit curve.True

In a market economy, goods that are nonexcludable will be produced at inefficiently low levels (if they are produced at all), while goods that are excludable but nonrival in consumption will suffer from inefficiently low consumption levels.False

You work in an office and one of your co-workers has announced his retirement.You have offered to purchase the retirement gift, so you place a collection jar in the lunch room for anonymous donations to help pay for the gift.After a week you find that very few dollars are in the jar, so you end up paying for a large share of the retirement gift.You are the victim of the:

Figure: Traffic Lights in Plymouth (Figure: Traffic Lights in Plymouth) Plymouth has 1,000 residents.The figure Traffic Lights in Plymouth shows the marginal social benefit and marginal cost of traffic lights in town.We know that each of the residents has the same individual marginal benefit per traffic light.If the government provides traffic lights, the socially efficient quantity is:

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 marginal social benefit from four units of the public good?

Suppose the Alaskan king crab harvest is unregulated and any person with a crab boat and some diesel fuel can go offshore, lower a crab pot, and harvest king crab.As a result, this common resource is overused.Which of the following policy choices might create an outcome in which the king crab harvest is socially optimal?

When comparing the characteristics of common resources and artificially scarce goods, we find that:

The encouragement to voluntarily contribute to the provision of goods:

Computer software that you can download from the Internet for a price is an artificially scarce good because it is ________ but in consumption.

After many years, a small community decides to build a toll road but then discovers it is little used.If it wishes the road to be used at the socially optimal level, the community should:

An artificially scarce good is similar to a public good in that it is , but it is also similar to a private good in that it is _.

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.What is the efficient price of the upgrade?

A public good is a good:

More and more consumers are watching their favorite network television programs from their computers.Suppose that a network begins to charge a small fee to access and download an episode of a popular program.For a television network, the marginal cost of supplying the episode to one more customer is zero.a) What type of good is this Internet television episode download? Explain.b) Will the efficient quantity of television downloads be provided? Explain.

Since the public safety that a police force provides is in consumption, the efficient price _.