Question 1

What do American drivers on congested roads and Soviet shoppers waiting in line to purchase clothing have in common?

Accepted Answer

Both American drivers and Soviet shoppers are facing a situation where the price they pay for a product (in this case, the use of a congested road or the purchase of clothing) does not reflect the full cost of that product (such as the cost of building new roads to alleviate congestion or the cost of producing clothing in a more efficient manner). This creates a situation where there is excess demand for the product, leading to congestion or long lines.

Question 2

It is common knowledge that many U.S.national parks have become overused.One possible solution to this problem is to

Accepted Answer

Increasing entrance fees would discourage some visitors and also generate more revenue to support the maintenance and conservation efforts of the parks. Decreasing camping permit fees may also be a solution, but it could lead to overcrowding in campgrounds and further damage to the environment. Requiring visitors to register upon entering the park could help with monitoring and limiting the number of visitors, but it may not be feasible to enforce this policy effectively. Selling the land would defeat the purpose of national parks as protected areas for conservation and public enjoyment.

Question 3

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

Accepted Answer

In this case, a clean house is a common resource that they all benefit from but may not contribute equally to maintaining. Since they all share the cost of rent equally, there is no incentive for any one roommate to put in extra effort or resources to cleaning the house, leading to a collective action problem known as the tragedy of the commons. This is different from a public good, which is non-excludable and non-rivalrous and would require government intervention to provide, or a natural monopoly, which occurs when a single firm can produce an entire market supply at lower cost than any combination of two or more smaller firms.

Question 4

When Rick uses a common resource and diminishes other people's enjoyment of it,he creates

Accepted Answer

The situation described fits the definition of an externality, where Rick's use of the resource has a negative impact on others' ability to enjoy it. A free rider problem refers to a situation where individuals benefit from a resource or service without contributing to it, and nonrenewable resources refer to resources that are finite and will eventually be depleted, neither of which are applicable here. General knowledge is not related to this scenario.

Question 5

Elephants are endangered,but cows are not because

Accepted Answer

Elephants are a common resource, meaning they are shared and used by many people, while cows are private goods, meaning they are owned by individuals or companies. Because elephants are a common resource, they are more vulnerable to overuse and depletion. Additionally, elephants are often hunted for their ivory tusks, which makes them a valuable target for poachers. Cows, on the other hand, are not typically targeted for their parts and are not as vulnerable to overuse or depletion.

Question 6

Which of the following statements is true of the tax on gasoline?

Accepted Answer

The tax on gasoline discourages driving on noncongested roads, even though there is no congestion externality for these roads. This is because the tax is partly intended to internalize the negative externalities of pollution and environmental damage caused by driving, and not just to address congestion. Choice A is incorrect because the cost of collecting a gasoline tax is generally considered to be lower than the revenues raised by the tax. Choice B is incorrect because tolls are a separate issue from the tax on gasoline and serve a different purpose in managing congestion.

Question 7

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75.This toll bought the drivers who paid it a 27 minute time savings.Which of the following is correct?

Accepted Answer

The answer of A variable toll on a road in...

Question 8

Elephant populations in some African countries have started to rise because

Accepted Answer

The answer of Elephant populations in some African countries have...

Question 9

Why do elephants face the threat of extinction while cows do not?

Accepted Answer

The answer of Why do elephants face the threat of...

Question 10

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?

Accepted Answer

The answer of Many species of animals are common resources,and...

Question 11

Using a toll to reduce traffic when congestion is greatest is an example of a

Accepted Answer

This is a corrective tax solution because the toll creates a deterrent for drivers to use the road during peak hours, thus reducing congestion. The toll acts as a tax on the negative externality of congestion, encouraging drivers to seek alternative routes or modes of transportation.

Question 12

One of the least regulated common resources today is

Accepted Answer

The ocean is a vast and open space that is difficult to regulate and enforce. This makes it challenging for governments to ensure that people are not overfishing, polluting, or engaging in other harmful activities that can harm marine ecosystems. State parks, forest preserves, and the Great Lakes are all examples of common resources that are more regulated and managed than the ocean.

Question 13

The ocean remains one of the largest unregulated resources for each of the following reasons except

Accepted Answer

All of the given reasons contribute to the ocean remaining one of the largest unregulated resources. Many countries have access to the ocean and have different values, which makes it difficult to get international cooperation. Additionally, the oceans are so vast that enforcing any agreements would be a challenging task.

Question 14

Why is the commercial value of ivory a threat to the elephant,while the commercial value of beef is the cow's guardian?

Accepted Answer

The commercial value of ivory is a threat to the elephant because it leads to poaching and illegal killing of elephants for their tusks. Elephants are not a common resource and their population size is declining rapidly due to poaching. On the other hand, the commercial value of beef is not a threat to cows because they are a common resource and their population size is maintained through breeding and farming practices.

Question 15

The U.S.government protects fish,a common resource,by

Accepted Answer

The U.S. government protects fish, a common resource, by selling fishing licenses and regulating fish lengths. This helps to prevent overfishing and allows for sustainable use of the resource. Subsidizing the fishing industry or heavily taxing competing industries would not necessarily protect the fish population.

Question 16

Because elephants roam freely in many countries in Africa,each individual African elephant poacher has

Accepted Answer

Since elephants roam freely in many countries in Africa, it is difficult to regulate poaching. Poachers often have a strong incentive to kill as many elephants as they can find because they can sell ivory for a high price on the black market. Therefore, choice A is the best answer.

Question 17

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?

Accepted Answer

The statement "Each of the nine friends would have been better off staying at home" is not correct. Although the beach may become more congested with the addition of nine more people, the friends may still enjoy their time at the beach and the rental house. The negative externality is related to congestion, not the overall enjoyment of the beach experience.

Question 18

The goal of requiring licenses for hunting and fishing is

Accepted Answer

The answer of The goal of requiring licenses for hunting...

Question 19

One proposed solution to overused,deteriorating national parks would be to

Accepted Answer

Increasing entrance fees can help manage the number of visitors, generate more revenue for maintenance, and reduce overuse and deterioration of national parks.

Question 20

Excessive fishing occurs because

Accepted Answer

Each individual fisherman has little incentive to maintain the species for the next year as they prioritize catching as many fish as possible to earn more money. This leads to a tragedy of the commons situation where the fish population is depleted over time.

Quiz 11: Public Goods and Common Resources.