Exam 11: Public Goods and Common Resources

Is a congested nontoll road excludable? Is it rival in consumption? How do we classify a congested nontoll road in terms of the four types of goods?

Depending on congestion, national parks can be either a common resource or a public good.

Table 11-5 A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. -Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Restaurant 1 prefer to have?

Because it is

Resources tend to be allocated inefficiently when goods

Figure 11-1 Rival in Consumption? Yes No Excludable? ^Yes No -Refer to Figure 11-1. Which of the following statements is correct?

In a cost-benefit analysis, the value of a human life is sometimes calculated on the basis of

Each of the following explains why cost-benefit analysis is difficult except

Which of the following would not be considered a private good?

The commercial value of ivory is a threat to the elephant, but the commercial value of beef is a guardian of the cow. This is because

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 $24 per acre and that the residents have agreed to split the cost of building the park equally. To maximize his own surplus, how many acres would Cedric like Springfield to build?

Scenario 11-2 Consider the following goods: -fire-protection services provided by a fire department -a beautiful mural on the outside wall of a fire station -a firefighter's helmet -Refer to Scenario 11-2. Which of these goods is the best example of a club good? Briefly explain.

Economists think that the best way to determine the value of a human life is to

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

Most goods in the economy are

What particular characteristic do public goods and common resources have in common?

A cable television broadcast of a movie is

Which of the following goods is excludable but not rival in consumption?

A free-rider problem exists for any good that is not

A good that is rival in consumption and not excludable is called a