Chapter 11 mi amor study micro

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 following table 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 and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park size for which the majority of residents would vote "yes?"

2 acres

Which of the following is not a characteristic of a public good?

Because it is a free good, there is no opportunity cost.

For which two boxes is it the case that externalities arise because something of value has no price attached to it?

Box C and Box D

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

Cable TV service

What causes the Tragedy of the Commons?

Social and private incentives differ, and common resources are not excludable but are rival in consumption.

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. On these days, electricity is

excludable and rival in consumption.

Because public goods are

not excludable, people have an incentive to be free riders.

Cost-benefit analysts often encounter the problem that those who would benefit from government provision of a public good tend to

overstate the benefit they would receive from the public good and those who would be harmed by government provision of a public good tend to overstate the costs they would incur from the public good.