Exam 11: Public Goods and Common Resources

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

If we can conclude that human life has a finite value, cost-benefit analysis can lead to solutions in which human life is worth less than the cost of a potential project.

Why do wild salmon populations face the threat of extinction while goldfish populations are in no such danger?

The old lyric "the best things in life are free"

Studies that compare the wages of more risky and less risky occupations estimate the value of a human life to be about

Figure 11-1 -Refer to Figure 11-1. Once good x is provided, policymakers need to be concerned about how much of it is used. Good x is an example of the type of good represented by Box

Common resources and public goods have in common that they are not excludable and they are not rival in consumption.

Private markets usually provide lighthouses because ship captains have the incentive to navigate using the lighthouse and therefore will pay for the service.

Table 11-5 A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. -Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which business owner(s) would be opposed to having any ferry trips?

Which of the following is not a reason why government agencies subsidize basic research?

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 $32 per hour and that the residents have agreed to split the cost of cleaning the lake equally. It would maximize Lydia's surplus if 6 hours of cleaning is done.​

If good x is available free of charge, then

People cannot be prevented from using a good if the good is

Which of the following types of goods are rival in consumption?

Consider a good for which the number of people who benefit from the good is large and the exclusion of any one those people is impossible. In this case, the market for this good will likely

The overuse of a common resource relative to its economically efficient use is called

Each of the following explains why cost-benefit analysis is difficult except

What particular characteristic do public goods and common resources have in common?

A neighborhood voted to develop a vacant lot into a vegetable garden. All of the neighbors worked the land and sowed the seeds. A few neighbors picked and ate the produce before the other neighbors had a chance. Which of the following could solve this example of the Tragedy of the Commons?

Which of the following statements is correct?