Micro Econ Exam 3

What is NOT a common resource

A vegetable garden

A toll on a congested road is in essence

a Corrective Tax

What is the fundamental basis for trade among nations

Comparative Advantage

When a country that imports a particular good imposes a tariff on that good...

Consumer Surplus decreases and Total Surplus decreases in the market for that good

For most goods in an economy, the primary signal that guides the decisions of buyers and seller is

Price

A Textbook is a

Private Good and the knowledge that one gains from reading the book is a Public Good

What is NOT a reason why government agencies subsidize basic research

The government wants to attract the brightest researcher away from private research firms

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

auction off a limited number or sheep-grazing permits

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

clean air and clean water

A Free Rider is a person who

receives the benefit of a good but avoids paying for it

If a sawmill creates too much noise for local residents

the government can raise economic well-being through noise-control regulations

What is a Disadvantage of government provision of a public good

the government lacks information about the value people place on the good