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Exam 11: Public Goods and Common Resources

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Question 41

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Private decisions about consumption of common resources and production of public goods usually lead to an

A) efficient allocation of resources and external effects.
B) efficient allocation of resources and no external effects.
C) inefficient allocation of resources and external effects.
D) inefficient allocation of resources and no external effects.

E) A) and B)
F) C) and D)

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Question 42

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Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Do any of these goods cause an externality? If so, which one(s)? Positive or negative? Briefly explain.

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Question 43

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The failure of markets to adequately protect the environment can be viewed either as a problem of

Scenario 11-3 Consider the following goods: • a fish fillet served at a restaurant • fish in the ocean • exotic fish in a huge aquarium in a privately-owned building -Refer to Scenario 11-3. Which of these goods is the best example of a private good? Briefly explain.

Market failure associated with the free-rider problem is a result of

Some advocates of antipoverty programs claim that fighting poverty is a public good. Describe why government intervention may be necessary to reduce poverty.

What particular characteristic do private goods and club goods have in common?

If the government decides to build a new community center, the first step would be to conduct a study to determine the value of the project. The study is called a

Hoa owns 40 acres of land. Hoa sells the land to a real estate developer who builds a subdivision with 20 houses. The land is an example of a good that is

National Public Radio would be considered a club good.

When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

The provision of a public good generates a

If Dave and Jesse are the only two fishermen in town and neither is bothered by the other's fishing, the lake they fish in is not a common resource.

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $31 million. If the value of a human life is equal to $8 million, how many people must the policy affect in order for the benefits to exceed the costs?

A free rider is a person who pays for a good but does not receive the benefit of it.

Is basic research excludable? Is it rival in consumption? How do we classify basic research in terms of the four types of goods?

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

Figure 11-1 ​ -Refer to Figure 11-1. Emma's use of good x does not affect anyone else's use of good x. Neither Emma nor anyone else can be prevented from using the good. Good x is an example of the type of good that belongs in

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.

A traffic light at an intersection is