Public Goods and Common Resources 2875
74.
Many species of animals are common resources, and many must be protected by law to keep
them from extinction.
Why is the cow not one of these endangered species even though there is such a high demand for
beef?
a.
Cows reproduce at a high rate and have adapted well to their environment.
b.
Public policies protect cows from predators and diseases.
c.
Cows are privately owned, whereas many endangered species are owned by no one.
d.
There is a natural ecological balance between the birth rate of cows and human consumption.
75.
Elephant populations in some African countries have started to rise because
a.
environmentalists have developed effective educational campaigns.
b.
the value of ivory has decreased.
c.
some elephants have been made a private good, and people are allowed to kill elephants on
their own
property.
d.
regulations are being enforced more forcefully.
76.
It is common knowledge that many U.S. national parks have become overused. One possible
solution to this problem
is to
a.
increase entrance fees.
b.
decrease camping permit fees.
c.
require all visitors to register upon entering the park.
d.
sell the land that the parks currently occupy.
77.
On holiday weekends thousands of people picnic in state parks. Some picnic areas become so
overcrowded the
benefit or value of picnicking diminishes to zero. Suppose that the Minnesota
State Park Service institutes a variable
fee structure. On weekdays when the picnic areas get little
use, the fee is zero. On normal weekends, the fee is $8
per person. On holiday weekends, the fee
is $14 per person. The fee system corrects a problem known as the
a.
Coase theorem.
b.
free rider problem.
c.
Tragedy of the Commons.
d.
public goods problem.
78.
Congressman Smith and Congresswoman Johnson both consider themselves advocates for the
national parks and
are introducing different bills designed to benefit the parks. Congressman
Smith’s bill calls for an increase in the
entrance fees. Congresswoman Johnson’s bill calls for a
decrease in the entrance fees. Which of the bills would be
more effective at ensuring the quality of
the national parks?
a.
Congressman Smith’s bill because it will reduce the overuse of the parks
b.
Congresswoman Johnson’s bill because more visitors means more citizens will value and care
for the parks
c.
Both bills would be equally effective.
d.
Neither bill would be effective.
79.
Nine friends who love the beach decide to pool their financial resources and equally share the
cost of a one-week
house rental on Nantucket. Suppose that the beach outside of the house
becomes more congested when the nine
additional people join the other beachgoers. Which of the
following statements is not correct?
a.
Use of the beach by the nine new beachgoers will yield a negative externality.
b.
The town can reduce the congestion externality by raising the fee to access the beach.
c.
An increase in the fee to access the beach could be viewed as a corrective tax on the
externality of
congestion.
d.
Each of the nine friends would have been better off staying at home.
80.
Ten friends who love to ski decide to pool their financial resources and equally share the cost of a
one-week time–
share condominium in Alta, Utah. Suppose that the lift lines at the ski resort
become more congested when the ten
additional people start to ski. Which of the following
statements is not correct?
a.
Use of the ski resort by the ten new skiers will yield a negative externality.
b.
The ski resort can reduce the congestion externality by raising lift ticket prices.
c.
An increase in lift ticket prices could be viewed as a corrective tax on the externality of
congestion.
d.
Each of the ten friends would have been better off staying at home.
81.
Residents of Hong Kong are able to find restaurants that advertise a dish that contains grizzly bear
paws. Since it is
unlikely that grizzly bear paws are purchased from a private producer of animal
paws, we can likely conclude that
a.
international laws making it illegal to sell grizzly bear paws are likely to be very effective at
eliminating these
offerings at Hong Kong restaurants.
b.
higher penalties for poaching grizzly bears will prevent poachers from killing.
c.
there are likely to be very few grizzly bear poachers.
d.
allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of
extinction to
grizzly bear populations.
82.
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
a.
people can be prevented from using it.
b.
access is limited due to driving distances.
c.
if too many people use it, one person’s use diminishes other peoples’ use.
d.
anyone can use it without affecting anyone else.
83.
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
on summer afternoons. Otherwise,
it is a great place. An efficient solution to the parking problem
would be to
a.
prohibit parking in the vicinity of the park.
b.
charge higher prices for parking at busy times.
c.
police the parking area and ticket cars that are parked illegally.
d.
do nothing.
84.
A stairwell in a certain office building is always congested at 12:00 p.m. and 1:00 p.m. The
congestion is so bad that
people have been complaining to the building‘s owner. Which of the
following methods would be the most efficient
way of reducing congestion?
a.
Assign each person in the building a time when they are allowed to use the stairwell.
b.
Encourage people to voluntarily keep off the stairwell during peak times.
c.
Charge everyone who uses the stairwell when it is congested the same fee. People who value
the use of the
stairs the most will be the ones who use the stairwell at peak times.
d.
Hold a lottery to determine who wins the right to use the stairwell at peak times.
85.
On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these
times, electric
companies may ask people to voluntarily cut back on their use of electricity. An
economist would suggest that
a.
every electric customer has an incentive to prevent the system from overloading, so this
voluntary approach is
the most efficient.
b.
it would be more efficient if the electric company raised its rates for electricity at peak times.
c.
it would be more efficient to have a lottery to decide who had to cut back their use of
electricity at peak
times.
d.
it would be more efficient to force everyone to cut their usage of electricity by the same
amount.
86.
On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these
times, electric
companies may ask people to voluntarily cut back on their use of electricity. On
these days, electricity is
a.
excludable, but nonrival in consumption.
b.
not excludable, but rival in consumption.
c.
excludable and rival in consumption.
d.
not excludable and nonrival in consumption.
87.
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
a.
will tend to be overused because it is nonexcludable.
b.
is a common resource when it becomes crowded on sunny summer weekends.
c.
is rival in consumption when it becomes crowded on sunny summer weekends.
d.
All of the above are correct.
88.
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. Seymour wants an efficient way to
prevent overcrowding at the beach, so he should
require
a.
that all beach visitors pay the same entry fee regardless of the day of the week or time of the
year.
b.
that the beach limit the number of visitors to 500 per day, without an entry fee.
c.
an entry fee be charged on summer weekend days when many people tend to visit the beach.
d.
that only local residents be admitted to the beach.
89.
An economics professor, upset about the rising cost of textbooks, proposed that his department
purchase 50 copies
of a statistics book so the students in the statistics class would not have to
purchase their own books but rather could
borrow a book for the semester and then return it for
the next class to use. Which of the following strategies would
not prevent a common resource
problem with the textbooks?
a.
Students will be required to pay a deposit for the textbook, which is refundable at the end of the
semester
when the book is returned in good condition.
b.
The textbooks are placed in a common area of the department so students can borrow and
return them as
needed.
c.
Students must sign a form agreeing to return the book or pay a fine equal to the replacement
cost of the book.
d.
The textbooks are placed in the professor’s office and will only be given to students who are
registered members of the class. These students will not receive their final course grades until
the books are returned.
90.
Pollution is a
a.
problem that is entirely unrelated to the parable called the Tragedy of the Commons.
b.
problem that cannot be remedied with regulations or corrective taxes.
c.
negative externality that can be viewed as a public-goods problem.
d.
negative externality that can be viewed as a common-resource problem.
91.
Which of the following statements is correct?
a.
The efficient provision of private goods is intrinsically more difficult than the efficient provision
of public
goods.
b.
The efficient provision of public goods is intrinsically more difficult than the efficient provision
of private
goods.
c.
Private markets provide quantities of public goods that exceed the socially-efficient quantities
of those goods.
d.
Private decision makers utilize quantities of common resources that fall short of the socially–
efficient quantities
of those resources.
92.
The enclosure movement in England in the 17th century represented an attempt to transform
a.
a public good into a private good.
b.
a private good into a public good.
c.
a private good into a common resource.
d.
a common resource into a private good.
93.
The failure of markets to adequately protect the environment can viewed either as a problem of
a.
externalities or as a problem of common resources.
b.
externalities or as a problem of private goods.
c.
the overprovision of public goods or as a problem of the underprovision of private goods.
d.
club goods or as a problem that arises when the quantity of excludable goods exceeds the
socially-efficient
quantity.
94.
A regional lobster management board recently proposed a five-year moratorium on lobster fishing
in the Atlantic
waters south of Cape Cod based on a study of the lobster population. Which of the
following statements is not
correct?
a.
Lobsters are rival but not excludable.
b.
The lobster population is an example of the tragedy of the commons.
c.
Reducing the quota on the number of lobsters any fisher can catch would have a protective
effect on the
lobster population.
d.
If left unregulated, the lobster population will likely increase.
95.
What do clean air in New York City and elephants in Africa have in common?
a.
They are both common resources.
b.
They are both public goods.
c.
They are both club goods.
d.
Both are excludable.
2886 Public Goods and Common Resources
Multiple Choice – Section 04: The Importance of Property Rights
1.
Markets do not ensure that the air we breathe is clean because
a.
clean air has no value.
b.
the government prevents markets from doing so.
c.
property rights are not well established for clean air.
d.
clean air is impossible to produce .
2.
Property rights are well established for
a.
private goods.
b.
public goods.
c.
common resources.
d.
both (b) and (c).
3.
Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted
air, and the near-
extinction of the wild rhinoceros. What do these problems have in common?
a.
Private markets could easily solve them if governments left the markets alone.
b.
They would all go away if the government sponsored an intensive public-information campaign.
c.
They are all the result of a failure to establish clear property rights over something of value.
d.
They are all the result of a failure of corrective taxes.
4.
Markets fail to allocate resources efficiently when
a.
demanders and suppliers cannot agree on a price.
b.
goods are rival in consumption and excludable.
c.
property rights are not well established.
d.
too many buyers and sellers exist in the same market.
5.
When the absence of property rights causes a market failure, the government can potentially solve
the problem
a.
by clearly defining property rights.
b.
through regulation.
c.
by supplying the good itself.
d.
All of the above are correct.
6.
A common theme among examples of market failure is
a.
the good being provided harms society in some systematic way.
b.
some item of value does not have an owner with the legal authority to control it.
c.
cost-benefit analysis will show that private markets should provide the goods and services.
d.
government intervention decreases the social benefits.
Public Goods and Common Resources 2889
7.
When property rights are not well established,
a.
private goods become public goods.
b.
markets fail to allocate resources efficiently.
c.
the distribution of private goods is unfair.
d.
government resources are used inefficiently.
8.
Which of the following represents a potential solution to the problem of environmental pollution?
a.
corrective taxes
b.
well established property rights
c.
government regulation
d.
All of the above are correct.
9.
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?
a.
to prevent overuse
b.
to decrease taxes
c.
to fight poverty
d.
to increase consumption
10.
In which of the following examples are property rights not well established?
a.
Carmen smokes a cigarette outside the door to her office building.
b.
Carlita stocks shelves in a grocery store.
c.
Cameron watches a movie in his home theater room.
d.
Cathy docks her boat at her lake house.
11.
Which of the following statements is correct?
a.
The establishment of property rights sometimes gives rise to market failure.
b.
The absence of property rights sometimes gives rise to market failure.
c.
In the context of public goods, the Coase theorem implies that total surplus in some markets
can be improved
by the elimination of property rights.
d.
Government regulation of private behavior, in response to market failure, can never improve
social well-being.
Public Goods and Common Resources 2891
True/False and Short Answer
1.
When goods are available free of charge, the market forces that normally allocate resources in our
economy are
absent.
a.
True
b.
False
2.
Free goods are usually efficiently allocated without government intervention.
a.
True
b.
False
3.
Most goods in our economy are allocated in markets, where buyers pay for what they receive and
sellers are paid
for what they provide.
a.
True
b.
False
4.
Government intervention cannot improve the allocation of resources for goods that do not have
prices attached to
them.
a.
True
b.
False
5.
A good that is excludable but not rival is known as a club good.
a.
True
b.
False
6.
National Public Radio would be considered a club good.
a.
True
b.
False
7.
Concerts in arenas are not excludable because it is virtually impossible to prevent someone from
seeing the show.
a.
True
b.
False
8.
A pair of jeans is rival but non-excludable.
a.
True
b.
False
9.
A good that is rival in consumption is one that someone can be prevented from using if she did not
pay for it.
a.
True
b.
False
10.
A good that is excludable is one that someone can be prevented from using if she did not pay for
it.
a.
True
b.
False
11.
Some goods can be classified as either public goods or private goods depending on the
circumstances.
a.
True
b.
False
12.
Roads can be considered either public goods or common resources, depending on how congested
they are.
a.
True
b.
False