ECON 201: Final Exam (Chapter 11)

A new drone that you take turns flying with your friends, ice-cream cones, fish in private pond clothing, and congested toll roads.

What is an example of a private good?

A large, beautiful clock in a town square, tornado siren, national defense, basic research on lifestyle and cholesterol levels and uncongested nontoll roads.

What is an example of a public good?

Club Goods

What is excludable and not rival in consumption and one type of natural monopoly?

Private Goods

What is excludable and rival in consumption?

Public Goods

What is not excludable and not rival in consumption and are positive externalities?

Excludability

What is property of a good whereby a person can be prevented from using it?

Rival in Consumption

What is property of a good whereby one person's use diminishes other people's use?

Common Resources

What is rival in consumption and not excludable and negative externalities?

Cows are a private good and elephants are a common resource.

What type of goods are cows and elephants considered?

When they are made into a private good.

Where do we see elephant populations starting to rise?

Elephants

Which are going extinct: elephants or cows?

Tablet computer, national defense

Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is not excludable and not rival in consumption?

Sidewalk

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

Ernie listens to National Public Radio, but does not contribute to any fundraising efforts.

Who among the following is a free rider?

people can be prevented from using it.

A good is excludable if

If left unregulated, the lobster population will likely increase.

A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population. Which of the following statements is not correct?

private good and the knowledge that one gains from reading the book is a public good.

A textbook is a

common resources and private goods.

Goods that are rival in consumption include both

Regulation or taxes to reduce consumption of the common resource or turn the common resource into a private good?

How can the government solve the problem with The Tragedy of the Commons?

Both are rival in consumption but elephants are not excludable.

How is an elephant like a cow in terms of Ch. 11? Different?

Exclude elephants.

How is it possible to turn an elephant into a cow?

club good, whereas knowledge that is not patented is a public good.

Knowledge that is patented is a

Do not install the park benches because the costs outweigh the benefits.

Miguel, Maria, and Marcos all would like a place to sit while waiting at their children's bus stop. The neighborhood association is considering installing several park benches at the bus stop. Miguel values the benches at $20, Maria at $30, and Marcos at $40. The park benches and labor for installation cost $100. If Miguel, Maria, and Marcos are the only residents who value the benches, what should the neighborhood association do?

True

T/F: Public roads can be considered either public goods or common resources, depending on how congested they are.

rival in consumption and not excludable.

The Tragedy of the Commons results when a good is

clean air and clean water.

The parable called the Tragedy of the Commons applies to goods such as

Public goods are not excludable, prevents the private market from supplying the goods, and market failure.

What are some free-rider problems?

National defense (very expensive public good $744b in 2017), basic research and antipoverty programs financed by taxes (welfare system, food stamps, and government housing programs).

What are some important public goods?

Cost-Benefit Analysis

What compares the costs and benefits to society of providing a public good, doesn't have any price signals to observe, and government findings: rough approximations at best?

Tragedy of the Commons

What is a parable that shows why common resources are used more than desirable (from society's standpoint), social and private incentives differ and arises because of a negative externality?

Free Rider

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

A large private beach at a beach side resort, satellite TV, fire protection, Netflix shows, specific research on a cholesterol-lowering drug for which a patent can be obtained and uncongested nontoll roads.

What is an example of a club good?

A Hammock along a beach that is open to the public, fish in the ocean, pheasants on public land, the environment and congested nontoll roads.

What is an example of a common resources?

Yes, the government can raise taxes to $7.

You and your neighbors (about 1,000 people) would love to have a water fountain in the neighborhood park.Each of you values having the fountain at $10. The neighborhood association finds a construction firm that will build the fountain for $7,000. A hat is passed around for the contributions, but once the money is counted, there are only $3,000 collected. Can the government help build the fountain? How?

Free riders did not contribute, so the fountain won't be built because there's not enough money to cover the costs.

You and your neighbors (about 1,000 people) would love to have a water fountain in the neighborhood park.Each of you values having the fountain at $10. The neighborhood association finds a construction firm that will build the fountain for $7,000. A hat is passed around for the contributions, but once the money is counted, there are only $3,000 collected. What happened? Will the fountain be built?

7,000 / 1,000 = $7

You and your neighbors (about 1,000 people) would love to have a water fountain in the neighborhood park.Each of you values having the fountain at $10. The neighborhood association finds a construction firm that will build the fountain for $7,000. How much should each neighbor pay?

Yes, the benefit of $10,000 (1,000 x 10) outweighs the cost of $7,000.

You and your neighbors (about 1,000 people) would love to have a water fountain in the neighborhood park.Each of you values having the fountain at $10. The neighborhood association finds a construction firm that will build the fountain for $7,000. Should the fountain be built?