Week 11

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 common resource problem

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 that anyone may use without paying any fees. This state beach...

all of the above -will tend to be overused because it is nonexcludable. -is a common resource when it becomes crowded on sunny summer weekends. -is rival in consumption when it becomes crowded on sunny summer weekends

Resources tend to be allocated inefficiently when goods...

are available free of charge

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being...

non-excludable

non-rival and excludable

club good

rival and non-excludable

common resource

A free-rider problem exists for any good that is not...

excludable

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm,

he is providing a good that is not rival and not excludable

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because...

if too many people use it, one person's use diminishes other peoples' use

A good or service is considered to be nonexcludable:

if you cannot keep people who did not pay for the item from enjoying its benefits.

Which of the following is not a common resource?

national defense

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is....

non-rival and non-excludable

Because public goods are...

not excludable, people have an incentive to be free riders

A good is excludable if...

people can be prevented from using it

For private goods allocated in markets,

prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources

rival and excludable

private goods

non-rival and non-excludable

public good

A free rider is a person who...

receives the benefit of a good but avoids paying for it

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the local road is...

rival and non-excludable

If large numbers of individuals choose to behave as free riders,

the public good may never be provided

Public schools, parks, libraries, and roads are paid for largely through tax revenue because...

these goods create a free rider problem