EC 201 Quiz 5 Study Guide

It is harder to find a solution to the tragedy of the commons within a small village or tribal group.

False

Schooling is a public good

False

In economics, what is the meaning of the phrase 'the tragedy of the commons?'

People will overuse or misuse a common resource that is not excludable but is rivalrous.

Clothing is what type of good?

Private Good

Hamburgers are what type of good?

Private Good

Ice Cream cones are what type of good?

Private Good

Hamburgers are example of goods that are:

rival and excludable.

Cable TV is what type of good?

Club Good

Cell phone service is what type of good?

Club Good

Command and control policies are examples of a tradable allowance, which is a solution to the tragedy of the commons.

False

If the market in this figure is in equilibrium, the hourly wage paid to plumbers is ______, and the marginal product of a plumber is ______.

$40; $40

Select the best definition of a public good.

a good that is nonexcludable and nonrival in consumption

Refer to the table. A Major League Baseball team is considering increasing the quality of its pitching staff by hiring all-star quality pitchers. If the going salary for an all-star pitcher is $12 million per season, this team will hire ________ pitchers.

2

Assume that television broadcasts are nonrival and nonexcludable (some TV stations, such as those on cable TV, are excludable, but many are not) and that there are no live TV recording devices, such as VCRs or DVRs like TiVo. how can advertising solve the free-rider problem?

Advertising acts in a method similar to a fee. People who watch TV broadcasts must watch ads, which they would rather not do. TV stations turn this into money by selling airtime to advertisers.

Maple Havens, an expensive gated community, has tasteful light displays sponsored by the neighborhood association. Only those who know the code to unlock the gates are able to drive through the streets and enjoy the lights. Maple Haven's lights are...

Club Goods

Lighthouses are what type of good?

Common Resource

The environment is what type of good?

Common Resource

The fish in the ocean are what type of good?

Common Resource

In the town of Merryweather, citizens are very serious about their Christmas light displays. Consider each scenario and the type of good described. Bob's Hardware Store stocks a large selection of the most commonly used lights for sale. Bob's lights are...

Common Resources

A firm will hire workers as long as the marginal product of labor is:

Greater Than The Wage

Wages for low-skilled positions are typically higher in developed countries than are wages for identical positions in less-developed countries. Which of the following explains why this is the case? I. There is a greater supply of low-skilled labor in less-developed countries. II. There is a greater demand for low-skilled labor in developed countries. III. There is a greater demand for low-skilled labor in less-developed countries.

I and II only

Which condition is crucial for advertising to solve the free‑rider problem?

People cannot cheaply avoid the advertisements.

Classify the according to whether they are rivalrous, nonrivalrous, excludable, or nonexcludable. Rivalrous is also referred to as rival in consumption: A sports team t-shirt

Nonrivalrius and Excludable

Wealthy industrialist Henry Hawk fears an asteroid hitting Earth and is willing and able to pay $15 billion to develop an asteroid deflection system. Suppose asteroid deflection costs only $10 billion and Hawk makes asteroid deflection a reality. What type of good has Henry Hawk provided?

Public Good

As part of the holiday celebration, the local church bells play carols every evening. The church bells are...

Public Goods

Because other firms are willing to pay to advertise with them, suppliers of nonrival private goods often modify their products to take on the qualities of what type of goods in distribution?

Public Goods

A tornado warning siren is what type of good?

Public good

National Defense is what type of good?

Public good

Creating individual transferable quotas (ITQs) while also defining property rights has resulted in some success in addressing the tragedy of the commons.

True

Wikipedia is one of the world's largest and most popular public goods. Students around the world are able to access archives of information for homework, general knowledge, and random wasting of time on the internet. However, Wikipedia is not free to operate, as it requires money to pay its staff and maintain its servers. Freeriding is one of the biggest issues for Wikipedia, as millions of people use it daily without incurring any of the costs. Assuming Wikipedia thinks they have too many free riders, which solution would NOT reduce, or offset, the free-rider problem?

Wikipedia creates a duplicate website, Wekepedia, with the same content as Wikipedia, but costs $25 a year. Wikipedia would remain free to the public.

An individual's labor supply curve

can be either positively or negatively sloped, or perfectly inelastic

Free riders are people who:

enjoy public goods without paying for them

The market supply of labor is upward sloping because

higher wages would attract more workers into the industry

Common Resources are

nonexcludable and rival

A public good is:

nonrival and nonexcludable

Classify the according to whether they are rivalrous, nonrivalrous, excludable, or nonexcludable. Rivalrous is also referred to as rival in consumption: A toll road in normal traffic

nonrivalrous and excludable, nonrivalrous and excludable

Classify the according to whether they are rivalrous, nonrivalrous, excludable, or nonexcludable. Rivalrous is also referred to as rival in consumption: The air we breathe

nonrivalrous and excludable, nonrivalrous and nonexcludable

The tragedy of the commons refers to the:

overuse of a rival but nonexcludable good.

When a good is excludable:

people can be prevented from using the good

Classify the according to whether they are rivalrous, nonrivalrous, excludable, or nonexcludable. Rivalrous is also referred to as rival in consumption: Atlantic bluefin tuna in the Mediterranean Sea

rivalrous and nonexcludable

The firm in this figure will hire ______ worker(s) at a wage of $10 and two workers at a wage of _______.

three; $15

Small tribes may be able to solve the tragedy of the commons by:

using social norms to punish and ostracize those that overuse a common resource.