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Exam 11: Public Goods and Common Resources

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Question 211

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Public schools, parks, libraries, and roads are paid for largely through tax revenue because

A) society finds them so valuable that citizens are happy to pay for their full cost.
B) these goods create a free-rider problem.
C) if they were funded privately, too many of these goods would be produced.
D) All of the above are correct.

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

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Question 212

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Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?

A) Use of the beach by the nine new beachgoers will yield a negative externality.
B) The town can reduce the congestion externality by raising the fee to access the beach.
C) An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion.
D) Each of the nine friends would have been better off staying at home.

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

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Question 213

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A vacation home in Malibu is

The value and cost of goods are easiest to determine when the goods are

Governments can improve market outcomes for

The Tragedy of the Commons results when a good is

To achieve the optimal provision of public goods, the

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

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

When the value of a human life is calculated according to the economic contribution a person makes to society (as reflected in her income-earning potential) , the troubling implication is that

A congested side street in your neighborhood is

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. Then total surplus for the 4 business owners is

Scenario 11-1 Becky is a single mother of two young children who spend their days at a daycare center while Becky goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late. -Refer to Scenario 11-1. Due to traffic, Becky expects to be 20 minutes late to pick up her children. How much would she be willing to pay for a variable toll road that would get her to the daycare center on time?

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 $120 and the 4 homeowners have agreed to split all tree-planting costs equally. How many trees would Adams prefer to plant?

Producers have little incentive to produce a public good because

What is the main difficulty facing cost-benefit analysts when they attempt to evaluate the worthiness of proposed public projects?

Table 11-2 Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight. -Refer to Table 11-2. Suppose the cost to install each streetlight is $900 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Black's like the town to install?

Under which of the following scenarios would a park be considered a public good?

A good that is excludable but not rival is known as a club good.

Elephant populations in some African countries have started to rise because