Microeconomics chapter 11

quote that illustrates the Tragedy of the Commons

"What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others"

producers have little incentive to produce a public good because

there is a free-rider problem

Excludability is the property of a good whereby

a person can be prevented from using it

a lighthouse is considered to be a public good because

all passing ships are able to enjoy the benefits of the lighthouse without paying

when an infinite value is placed on human life, policymakers who rely on cost-benefit analysis

are forced to pursue any project in which a single human life is saved

which is not a characteristic of a public good?

because it is a free good, there is no opportunity cost

Governments can improve market outcomes for

both public goods and common resources

Using a toll to reduce traffic when congestion is greatest is an example of a

corrective solution

both private goods and club goods are

excludable

a free-rider problem

explains why many local governments supply public goods

advocates of antipoverty claim that fighting poverty

is a public good

national defense is a classic example of a public good because

it is difficult to exclude people from receiving the benefits from national defense once it is provided

Both public goods and common resources are

nonexcludable

an AM radio transmission of a baseball game is

not excludable and not rival in consumption

a local park filled with picnickers is

not excludable and rival in consumption

When a good is rival in consumption

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

most goods in the economy are

private goods

goods that are excludable include both

private goods and club goods

a free-rider is a person who

receives the benefit of a good but avoids paying for it

if one person's use of a good diminishes another person's enjoyment of it, the good is

rival in consumption

when a free-rider problem exists

the market will devote too few resources to the production of the good

in a cost-benefit analysis, the value of a human life is sometimes calculated on the basis of

the risks that a person voluntarily exposes herself to in her job and/or recreational choices

example of a common resource

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

example of a club good

visitors to the park must pay an admittance fee, but there are always plenty of empty picnic tables