Chapter 11: Public Goods and Common Resources

The Tragedy of the Commons results when a good is...

rival in consumption and not excludable

The most important common resources (private decision makers use the common resource too much so government often regulate behavior or impose fees to lessen the problem of overuse.)

-Clean air & water -Congested roads -Fish, Whales, and other Wildlife

The three most important public goods:

-national defense: -basic research: -fighting poverty:

In a certain city, the government is considering acquiring some land and turning it into a park (without any fences or gates). In an attempt to determine the extent to which residents of the city would value the park, residents are asked to fill out a questionnaire. Which of the following is correct?

All of the answers provided are correct: -on the questionnaire, some residents are likely to exaggerate the costs they associate with the park. -on the questionnare, some residents are likely to exaggerate the value they associate with the park. -the use of such a questionnaire in cost-benefit analysis is likely to produce only rough approximations of residents' perceptions of the costs and benefits of a park.

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

The aquifer is a common resource which will be overused if no one owns it.

Under which of the following scenarios would a park be considered a common resource?

Visitors can enter the park free of charge, but frequently all of the picnic tables are in use.

Which of the following is rival in consumption and excludable?

a box of sparklers

Tragedy of the Commons

a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole

free rider

a person who receives the benefit of a good but avoids paying for it

cost-benefit analysis

a study that compares the costs and benefits to society of providing a public good

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could..

auction off a limited number of sheep-grazing permits

Consider a public road that anyone is allowed to drive on. If the road if often congested, the road would be considered a...

common resource

Goods that are rival in consumption include both...

common resources and private goods.

private goods

goods that are both excludable and rival in consumption

natural monopolies/club goods

goods that are excludable but not rival in consumption

public goods

goods that are neither excludable nor rival in consumption

common resources

goods that are rival in consumption but not excludable

Because it is...

neither excludable nor rival in consumption, a tornado siren is a PUBLIC GOOD

When a good is rival in consumption,

one person's use of the good diminishes another person's ability to use it.

excludability

the property of a good whereby a person can be prevented from using it

rivalry in consumption

the property of a good whereby one person's use diminishes other people's use