Exam 11: Public Goods and Common Resources

You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.The cost to build the library is $500,000.Which of the following is the most efficient option?

The free-rider problem

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could

On hot summer days,electricity-generating capacity is sometimes stretched to the limit.At these times,electric companies may ask people to voluntarily cut back on their use of electricity.An economist would suggest that

Goods that are not excludable include both

If people can be prevented from using a certain good,then that good is called

Goods that are not rival in consumption include both

In the Tragedy of the Commons,joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

As with many public goods,determining the appropriate level of government support for the production of general knowledge is difficult because

The creation of knowledge is a public good.Because knowledge is a public good,profit-seeking firms tend to free-ride on the knowledge created by others and,as a result,devote too few resources to the creation of knowledge.How does the U.S.government correct for this apparent market failure?

Private markets usually fail to provide lighthouses because

Imagine a 2,000-acre park with picnic benches,trees,and a pond.Suppose it is publicly owned,and people are invited to enjoy its beauty.When the weather is nice,it is difficult to find parking,and the trash cans overflow with food wrappers on summer afternoons.Otherwise,it is a great place.The park is a common resource because

Reggie owns 3 acres of beautiful wooded land.When Reggie decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park.This state park is large enough that it is not congested.It is an example of a good that is

A cable television broadcast of a movie is

Suppose that you want to put on a fireworks display in your hometown of 1,000 people this July.The cost of the display is $6,000,and each person values the display at $5.After a month,you have only sold 50 tickets at $5 each.The result is that

Which of the following is not an advantage to congestion charges for motorists who wish to drive on busy streets?

Table 11-2 Consider a small town with only three families,the Johnson family,the Marshall family,and the Walker family.The town does not currently have any streetlights so it is very dark at night.The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install.The table below shows each family's willingness to pay for each streetlight. -Refer to Table 11-2.Suppose the cost to install each streetlight is $180.How many streetlights should the town install to maximize total surplus from the streetlights?

You and your friends watch a movie in your bedroom.For you and your friends,the enjoyment that you get from watching the movie is not rival in consumption.

One economically efficient way to eliminate the Tragedy of the Commons is to

Figure 11-1 -Refer to Figure 11-1.Cable TV is an example of the type of good represented by Box