Deck 19: Public Goods and Common Resources

Question 1

Identify whether each of the following goods is usually excludable or nonexcludable.a. AM/FM radio.
b. A round of golf on a course.
c. Street art.
d. A museum exhibition.
e. Toll roads.

Answer 1

Excludable goods:
Excludable goods are those where it is possible to prevent individual who have not paid for it. Private goods are excludable goods.Non-excludable good:
Non-excludable goods are those where it is impossible to prevent individual who have not paid for it. Public goods are non-excludable.a.
AM/FM radio:
AM/FM radio is non excludable because people are enjoying without giving any fees. It is impossible to prevent individual who have not paid for it.b.
A round of golf on a course:
It is a private good. It is possible to prevent individual who have not paid for it. So, this is excludable.c.
Street art:
Street art is a public good. Any individual can enjoy the benefit and it is impossible to prevent individual who have not paid for it. So, this is non-excludable.
d.
A museum exhibition:
There have entry fees of museum exhibition. So, this is excludable goods.e.
Toll roads:
There have fee for crossing the toll roads. So, it is possible to prevent individual who have not paid for it. So, this is excludable.f.
Income tax exemption for charity donation:
When government gives tax exemption then it reduces the government revenue. On the other hand, it induces the people to spend more amounts for the charitable activity that reduces the tax. This change the behavior of people.

Question 2

Popular software can cost thousands of dollars even though the marginal cost of producing another copy on CD or via download is near zero. What kind of good are these programs?

Answer 2

Scarce goods:
Scarce goods are those goods which are excludable and non-rival in nature. Excludable goods are those goods where it can be possible to prevent from using these goods, which have no paid for it. Non-rival goods indicate those goods that people can be used without reducing the amount left for others.Software copies:
This is possible to restrict people from access of software if they don't purchase a license. So, this is an excludable good. The marginal cost of producing software copies is particularly zero, and purchasing a copy of software by one person does not deplete the supply for others to purchase, so the copies of software are non-rival. Therefore, a software copy is a scarce good.

Question 3

Identify whether each of the following goods is rival or nonrival.a. Cable TV.
b. A pair of jeans.
c. Street signs.
d. Attending a baseball game.

Answer 3

A pair of jeans is rival , because consumption of a pair of jeans by one individual prevents the consumption for other individual from using it.c.
Street signs:
Street signs are the public goods for everybody. Getting benefit by using one individual doesn't reduce the benefit of other consumer from using this. So, this is non-rival.d.
Attending a baseball game:
Consumption of attending a baseball game by one individual prevents the consumption for other individual from playing it. So, it is rival.

Question 4

Suppose a popular band decides to hold a free concert in its hometown. Admission is available on a first-come, first-served basis. Is the concert a public good?

Question 5

Consider community safety or defense, meaning freedom from crime and threats, to answer the following questions.
a. What sort of good is community safety?
b. If you lived in a place with no governmentfunded police force, would you expect community safety to be oversupplied or undersupplied?
c. Suppose that some neighbors get together and organize a block watch group. What term do economists use to describe someone who lives in the neighborhood but chooses not to volunteer as part of the block watch?

Question 6

A talented musician plays for tips on the street, but never seems to make very much money. Explain why his tip jar is never very full.

Question 7

From the list below, which of the following do you expect to suffer from a free-rider problem? Check all that apply.
a. Pay-what-you-can yoga classes.
b. Unlimited yoga classes with monthly membership dues.
c. Fundraiser for public television.
d. Neighborhood park cleanup day.
e. Housecleaning business operating in your neighborhood.
f. Suggested museum-admission donation.

Question 8

Suppose a community garden in your neighborhood has both individually owned plots and a large, common plot. If soil and sunlight conditions are the same everywhere in the garden, explain why tomatoes grown in individually owned plots are so much better than tomatoes grown in the common plot.

Question 9

In much of the United States and Canada, logging takes place in both privately owned and government-owned forests.
a. Are privately owned forests excludable? Are they rival? What type of good are they?
b. Suppose that anyone is legally allowed to enter a government-owned forest and start logging. What type of good are these forests?
c. Do you expect the rate of logging in government-owned forests to be faster, slower, or equal to the efficient level?

Question 10

Aquifers are underground sources of clean water that stretch over thousands of square miles. People who own land over the aquifer are free to take as much as they want. What is likely to happen to water supplies in an aquifer? Is this efficient?

Question 11

Suppose that the government decides to start regulating use of its forests, charging anyone who wants to log. Which of the following ways of calculating the price to charge for each acre will lead to an efficient quantity of logging?
a. The sum of the marginal social value of each acre to all logging companies.
b. The average price citizens say they would be willing to pay for an acre.
c. The external cost that logging an acre imposes on all citizens.

Question 12

Which do you expect to be more sustainable: grazing on public land or grazing on privately owned pastures? Why?

Question 13

Which of the following subway announcements are attempts to establish or enforce a social norm?
a. "Loud music and phone conversations are discourteous to fellow riders. Please keep the noise down."
b. "If you see something, say something."
c. "Please watch your step as you exit. Be careful of the gap between the train and the platform edge."
d. "Please be patient and allow others to exit the train before you attempt to enter."
e. "The train is being held at the station due to traffic ahead. We apologize for the inconvenience."

Question 14

Even though many school zones don't have much traffic and aren't regularly monitored by the police for speed, most drivers are very careful to drive at or below speed limits when near schools. Why might this be the case even in the absence of strong government intervention?

Question 15

Would you expect tourists or locals to be more likely to give up their seat on a bus to an elderly person?

Question 16

Consider a fundraising campaign for your school's library. What is the free-rider problem in this situation? How might publically listing the names of donors to the library fund affect this problem?

Question 17

Determine whether each of the following policy interventions is designed to increase supply or decrease demand for a public good or common resource.a. A city government increases the frequency of street sweeping.
b. London begins charging a toll to all vehicles that drive within the city limits.
c. A gated community passes a bylaw requiring all homeowners to mow their lawns once a week during the summer.
d. The National Park Service increases the cost of a pass to enter the Everglades.

Question 18

The government of India has made killing Bengal tigers illegal, but poaching of the endangered animal continues. List some possible reasons that the ban hasn't been very successful, and suggest an alternative approach.

Question 19

Consider the following government-provided goods. Which of these goods necessarily require funding via general taxation (as opposed to direct user fees)?
a. Street lights.
b. A park.
c. A fireworks display.
d. Public radio.
e. A library.

Question 20

Why is it difficult for private markets to provide the optimal quantity of a public good? Why is it difficult for government to provide the optimal quantity of a public good?

Question 21

Public-opinion polls in a small city have revealed that citizens want more resources spent on public safety, an annual fireworks display, and more community swimming pools. Which of these three citizen requests could be privatized by assigning property rights?

Question 22

The U.S. government is concerned about the huge numbers of people converging on Yellowstone Park every year. Government officials are worried that the park might be getting overused and the natural beauty will be ruined as a result. Suppose someone suggests dividing the park into private lots and selling it to individuals. How might this solution address the tragedy of the commons that is occurring?

Question 23

For each of the following examples, state which of these approaches is being taken to manage a common resource or supply a public good: social norms, quota, tradable allowance, government provision, or property rights.a. A nonprofit organization spray-paints signs on storm drains reminding everyone that it "drains to the ocean" with a picture of a fish.
b. A city starts a free program that collects recyclable glass, paper, and plastic from residents' doorsteps.
c. In England, municipal-waste authorities are given a percentage of an overall limit that can be put in the landfill each year. These percentages can be traded among municipalities.
d. American bison, which once roamed freely across the Great Plains, are now raised on ranches for commercial purposes.

Question 24

Consider a proposal to privatize street lighting. Would this be feasible? Why or why not? Does street lighting suffer from a tragedy of the commons problem?