Microeconomics Chapter Eleven

d. Both a and b are possible solutions to this example of the Tragedy of the Commons

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? a. The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot. b. The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year. c. The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce. d. Both a and b are possible solutions to this example of the Tragedy of the Commons

c. They are all the result of a failure to establish clear property rights over something of value.

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near- extinction of the wild rhinoceros. What do these problems have in common? a. Private markets could easily solve them if governments left the markets alone. b. They would all go away if the government sponsored an intensive public-information campaign. c. They are all the result of a failure to establish clear property rights over something of value. d. They are all the result of a failure of corrective taxes.

a. a common resource problem.

Four roommates share an off-campus house and equally share the cost of rent. Everyone says that she values a clean house, yet the house is usually dirty. To an economist, a clean house in this case represents a. a common resource problem. b. a public good. c. a club good. d. All of the above are correct.

b. B.

Refer to Figure 11-1. A gym membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box a. A. b. B. c. C. d. D.

d. D.

Refer to Figure 11-1. A tornado siren in a small town is an example of the type of good represented by Box a. A. b. B. c. C. d. D.

c. 2 acres

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?" a. 0 acres b. 1 acre c. 2 acres d. 3 acres

a. 0 acres

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. To maximize his own surplus, how many acres would Cedric like Springfield to build? a. 0 acres b. 1 acre c. 2 acres d. 3 acres

c. 3 acres

Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield? a. 1 acres b. 2 acres c. 3 acres d. 4 acres

c. are available free of charge.

Resources tend to be allocated inefficiently when goods a. are private goods. b. are rival in consumption and excludable. c. are available free of charge. d. are available only at very high prices.

c. an entry fee be charged on summer weekend days when many people tend to visit the beach.

Seymour owns 3 acres of beautiful waterfront property on a large inland lake. In his will, Seymour donates the land to the state with the understanding that the land will be used as a state beach. Seymour wants an efficient way to prevent overcrowding at the beach, so he should require a. that all beach visitors pay the same entry fee regardless of the day of the week or time of the year. b. that the beach limit the number of visitors to 500 per day, without an entry fee. c. an entry fee be charged on summer weekend days when many people tend to visit the beach. d. that only local residents be admitted to the beach.

True

T/F: An example of the "Tragedy of the Commons" is litter in the picnic area of a local park.

True

T/F: Depending on congestion, national parks can be either a common resource or a public good.

False

T/F: Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

True

T/F: If Dave and Jesse are the only two fishermen in town and neither is bothered by the other's fishing, the lake they fish in is not a common resource.

True

T/F: Markets may fail to allocate resources efficiently when property rights are not well established.

True

T/F: One solution to the "Tragedy of the Commons" is to turn the common resource into a private good.

False

T/F: Pollution is a negative externality, but it is not appropriate to view the problem of pollution as a common-resource problem.

True

T/F: Some goods, such as lighthouses, can switch between being public goods and being private goods depending on the circumstances.

True

T/F: When goods are available free of charge, the market forces that normally allocate resources in our economy are absent.

True

T/F: You and your friends eat potato chips in your bedroom. For you and your friends, the potato chips are rival in consumption.

c. common resources

The Mansfield Public Library has a large number of books that anyone with a library card may borrow. Anyone can obtain a card for free. Because the number of copies of each book is limited, not everyone can have the same book at the same time. What type of good would the library books be classified as in this case? a. private goods b. club goods c. common resources d. public goods

a. private good

The Pennsylvania Turnpike is a tolled freeway running through the state of Pennsylvania. Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway. Suppose that despite the tolls, many motorists in the urban areas use the Turnpike causing traffic to slow during peak times. What type of good would the Turnpike be classified as in this case? a. private good b. club good c. common resource d. public good

c. both public goods and common resources.

The idea that "externalities arise because something of value has no price attached to it" is associated with a. public goods, but not with common resources. b. common resources, but not with public goods. c. both public goods and common resources. d. neither public goods nor common resources.

c. a box of sparklers

Which of the following goods is rival in consumption and excludable? a. a fireworks display b. national defense c. a box of sparklers d. a parade

c. turning the common resource into a public good

Which of the following is not a way for the government to solve the problem of excessive use of common resources? a. regulation b. taxes c. turning the common resource into a public good d. turning the common resource into a private good