2914 Public Goods and Common Resources
7. Are common resources excludable? Are they rival in consumption?
8. Are public goods excludable? Are they rival in consumption?
9. Which two types of goods are rival in consumption?
10. Which two types of goods are excludable?
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11. What particular characteristic do private goods and club goods have in common?
12. What particular characteristic do private goods and common resources have in common?
13. What particular characteristic do public goods and common resources have in common?
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14. What particular characteristic do public goods and club goods have in common?
Scenario 11-2
Consider the following goods:
• fire-protection services provided by a fire department
• a beautiful mural on the outside wall of a fire station
• a firefighter’s helmet
15. Refer to Scenario 11-2. Which of these goods is the best example of a private good? Briefly
explain.
16. Refer to Scenario 11-2. Which of these goods is the best example of a public good? Briefly
explain.
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17. Refer to Scenario 11-2. Which of these goods is the best example of a club good? Briefly
explain.
Scenario 11-3
Consider the following goods:
• a fish fillet served at a restaurant
• fish in the ocean
• exotic fish in a huge aquarium in a privately-owned building
18. Refer to Scenario 11-3. Which of these goods is the best example of a private good? Briefly
explain.
2918 Public Goods and Common Resources
19. Refer to Scenario 11–3. Which of these goods is the best example of a club good? Briefly
explain.
20. Refer to Scenario 11-3. Which of these goods is the best example of a common resource?
Briefly explain.
21. Refer to Scenario 11-3. Do any of these goods cause an externality? If so, which one(s)?
Positive or negative?
Briefly explain.
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22. A rather large city has only one fire station, two fire trucks, and four firefighters. Is fire protection
in this city characterized by rivalry in consumption?
23. Why is cable TV reception regarded as a club good?
24. Is a tornado siren excludable? Is it rival in consumption? How do we classify a tornado siren in
terms of the four types of goods?
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25. Is basic research excludable? Is it rival in consumption? How do we classify basic research in
terms of the four types of goods?
26. Identify the externality that arises when basic research leads to new general knowledge. Is the
externality positive or negative?
27. Is a congested nontoll road excludable? Is it rival in consumption? How do we classify a
congested nontoll road in terms of the four types of goods?
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28. In what sense is it meaningful to say that fighting poverty is a public good?
29. Is national defense excludable? Is it rival in consumption? How do we classify national defense in
terms of the four types of goods?
30. Recall the four types of goods. Are national defense and a patented invention the same type of
good? Briefly explain.
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31. Recall the four types of goods. Are national defense and basic research the same type of good?
Briefly explain.
32. In what way do public goods give rise to positive externalities?
33. Someone who uses a good without paying for it is called a ?
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34. What is the main difficulty facing cost-benefit analysts when they attempt to evaluate the
worthiness of proposed public projects?
35. One way to place a value on human life is to examine the risks that people voluntarily take and
how much they must be paid for taking them. What is the approximate value of a human life
according to studies that use this approach?
36. The mayor of Newton is considering proposals to deal with an unsafe intersection. She could
install a traffic light at a cost of $50,000 or she could install stop signs at a cost of $5,000. The
traffic light is expected to reduce the risk of fatality by 0.45 percent and the stop signs are
expected to reduce the risk of fatality by 0.054 percent. If the value of human life is estimated to
be $10 million, what choice should the mayor make? Briefly explain.
37. Drivers have to pay a toll to drive on certain roads. In essence, a toll is a corrective tax on the
2924 Public Goods and Common Resources
externality of __________.
38. Are whales excludable? Are they rival in consumption? How do we classify whales in terms of
the four types of goods?
39. Why does the commercial value of ivory threaten the elephant, while the commercial value of
beef protects the cow?
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40. In almost all cases of common resources, the same problem arises as in the Tragedy of the .
41. In what way do common resources give rise to negative externalities?
42. What can the government do to solve the problem of excessive use of common resources?
2926 Public Goods and Common Resources
A
B
C
D
Figure 11-1
Rival in Consumption?
Yes No
Excludable? Yes
No
43. Refer to Figure 11-1. The box labeled A represents what type of good?
44. Refer to Figure 11-1. The box labeled B represents what type of good?
45. Refer to Figure 11-1. The box labeled C represents what type of good?
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46. Refer to Figure 11-1. The box labeled D represents what type of good?
47. Refer to Figure 11-1. A mathematical theorem is an example of general knowledge. In which
of the boxes — A, B, C, or D — does a mathematical theorem belong?
48. Refer to Figure 11-1. In which box — A, B, C, or D — does clean air belong?
49. Refer to Figure 11-1. In which box — A, B, C, or D — does cable TV belong?
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50. Refer to Figure 11-1. To which of the boxes — A, B, C, or D — does the phenomenon of free
riding most clearly apply?
51. Refer to Figure 11-1. With which of the boxes — A, B, C, or D — do we associate the
Tragedy of the Commons?
52. Refer to Figure 11-1. In which box — A, B, C, or D — does each of the following types of
roads belong? (Consider each type of road separately.)
• an uncongested toll road
• an uncongested nontoll road
• a congested toll road
• a congested nontoll road
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53. An absence of property rights often leads to market failure. When this is the case, how does
society usually solve the problem?
54. For all types of goods that are not private goods, the market fails to allocate resources efficiently
because _________________.