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Exam 11: Public Goods and Common Resources

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Question 91

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

A) reduced travel time during peak hours
B) reduced need for public transportation
C) improved environmental quality
D) improved valuation of a common resource

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

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Question 92

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Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Alta, Utah. Suppose that the lift lines at the ski resort become more congested when the ten additional people start to ski. Which of the following statements is not correct?

A) Use of the ski resort by the ten new skiers will yield a negative externality.
B) The ski resort can reduce the congestion externality by raising lift ticket prices.
C) An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion.
D) Each of the ten friends would have been better off staying at home.

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

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Question 93

Multiple Choice

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

Resources tend to be allocated inefficiently when goods

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.

Table 11-6 Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​ ​ -Refer to Table 11-6. Suppose the cost to clean the lake is $20 per hour. How many hours should be spent cleaning the lake to maximize total surplus for the residents in Widgetapolis?

On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?

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,

Private goods are both

Private goods and club goods have in common that they are excludable, but are different in that private goods are rival while club goods are not rival in consumption.

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 $380 and the 4 homeowners have agreed to split all tree-planting costs equally. Which homeowner(s) would be opposed to planting any trees?

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

Goods that are not excludable are usually

The privately-owned school system in Smalltown has a virtually unlimited capacity. It accepts all applicants and operates on both tuition and private donations. Although every resident places value on having an educated community, the school's revenues have suffered lately due to a large decline in private donations from the elderly population. Since the benefit that each citizen receives from having an educated community is a public good, which of the following would not be correct?

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. How many acres should the park be to maximize total surplus from the park in Springfield?

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

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

Figure 11-1 -Refer to Figure 11-1. The box labeled B represents

What do we mean when we say that a good is excludable?

A cable television broadcast of a movie is