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Exam 11: Public Goods and Common Resources

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Question 161

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Mike Miller is the town manager of Medfield, a town with 50,000 residents. At a recent town meeting, several citizens proposed building a large public swimming pool in the center of town for all of the residents to enjoy. A survey of all 50,000 residents revealed that the pool would be worth $50 to each of them. Because the cost to build the swimming pool is only $1,000,000, Manager Miller arranges to have the pool built. Everyone in town enjoys the pool, but when Manager Miller asks for donations to pay for the pool, he only collects $250,000. Manager Miller soon realizes that

A) the survey was conducted improperly.
B) the cost of the pool exceeded the social benefits.
C) the pool is a club good.
D) most residents of the town are probably free-riders at the pool.

E) None of the above
F) A) and B)

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Question 162

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A traffic light at an intersection is

A) rival and excludable in consumption.
B) not rival but excludable in consumption.
C) rival but not excludable in consumption.
D) not rival and not excludable in consumption.

E) B) and C)
F) A) and C)

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Question 163

Multiple Choice

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The value and cost of goods are easiest to determine when the goods are

When a good is rival in consumption,

Advocates of antipoverty programs claim that

Governments can grant private property rights over resources that were previously viewed as public, such as fish or elephants. Why would governments want to do so?

Table 11-6 Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​ ​ -Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will James receive in total?

At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a

Figure 11-1 -Refer to Figure 11-1. The box labeled D represents

Which of the following goods is rival and excludable?

The idea of requiring motorists to pay to use the busiest streets in a city

National Public Radio would be considered a club good.

Which of the following statements is correct?

Pete is a non-union employee at The Electric Co. The majority of the employees at The Electric Co. are unionized. The union at The Electric Co. has negotiated very good benefits. Even though he is not a union member and he does not have to pay union dues, Pete receives all the benefits that the union has negotiated. Pete's behavior is an example of

Under which of the following scenarios would a park be considered a public good?

Table 11-1 Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. -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 decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Sophia receive?

Table 11-6 Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​ ​ -Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will Lydia receive in total?

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

The free-rider problem exists with

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to