Exam 11: Public Goods and Common Resources

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Advocates of antipoverty programs claim that

When a free-rider problem exists,

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

Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.

Using a toll to reduce traffic when congestion is greatest is an example of a

Which of the following goods is rival and excludable?

When good X is produced, some people benefit. A free-rider problem arises when

Concerts in arenas are not excludable because it is virtually impossible to prevent someone from seeing the show.

If one person's use of a good diminishes another person's enjoyment of it, the good is

An economics professor, upset about the rising cost of textbooks, proposed that his department purchase 50 copies of a statistics book so the students in the statistics class would not have to purchase their own books but rather could borrow a book for the semester and then return it for the next class to use. Which of the following strategies would not prevent a common resource problem with the textbooks?

Which of the following represents a potential solution to the problem of environmental pollution?

Fire protection is a

In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?

The Occupational Safety and Health Administration (OSHA) has determined that 100 workers are exposed to a hazardous chemical used in the production of diet soft drinks. The cost of imposing a regulation that would ban the chemical is $10 million. OSHA has calculated that each person saved by this regulation has a value equal to $10 million. If the benefits are exactly equal to the costs, what probability is OSHA using to assess the likelihood of a fatality from exposure to this chemical?

Table 11-1 Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. -Refer to Table 11-1. Suppose the cost to build the park is $9 per acre and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park size for which the majority of residents would vote "yes?"

Private markets usually fail to provide lighthouses because

Identify the externality that arises when basic research leads to new general knowledge. Is the externality positive or negative?

The overuse of a common resource relative to its economically efficient use is called