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Exam 11: Public Goods and Common Resources

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Question 141

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The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. Which of the following statements about the aquifer is correct?

A) The aquifer is a public good which must be publicly owned to be used efficiently.
B) The aquifer is a private good which must be privately owned to be used efficiently.
C) The aquifer is a common resource which will be overused if no one owns it.
D) The aquifer is a club good which should be left as it is.

E) A) and D)
F) None of the above

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Question 142

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Which of the following is an example of general knowledge, as opposed to specific knowledge that can be patented?

A) the invention of a longer-lasting battery
B) a mathematical theorem
C) a method for constructing a high-performance microchip
D) the chemical formula for an adhesive

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

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Question 143

Multiple Choice

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When goods do not have a price, which of the following primarily ensures that the good is produced?

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm,

A toll on a congested road is in essence

To increase safety at a bad intersection, the mayor must decide whether to install a traffic light at a cost of $45,000. If the traffic light reduces the risk of fatality by 0.4 percent, and the value of a human life is estimated to be $10 million, the mayor should

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. Which of the following statements is correct?

Suppose that the Town of Mapledale is considering hiring an additional firefighter. The expected benefit is estimated to be worth $5 for each of Mapledale's 15,000 residents. What should the city do?

The Tragedy of the Commons results when a good is

Are whales excludable? Are they rival in consumption? How do we classify whales in terms of the four types of goods?

Table 11-4 There are four homes along Belmont Circle, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners -- Adams, Benitez, Chen, and Davis -- are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward each tree. -Refer to Table 11-4. Suppose the cost to plant each tree is $90. How many trees should be planted to maximize the total surplus of the four homeowners?

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

In what way do common resources give rise to negative externalities?

Which parable describes the problem of wild animals that are hunted to the point of extinction?

Because the benefits of basic research are obvious and easy to measure, it is likely that the public sector pays for the right amount and the right kinds of basic research.

Both private goods and club goods are

Most goods in our economy are allocated in markets, where buyers pay for what they receive and sellers are paid for what they provide.

A view of a spectacular sunset along a private beach is an example of a

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

Resources tend to be allocated inefficiently when goods