Question 1

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States.Any farmer with land above the aquifer can at present pump water out of it.Which of the following statements about the aquifer is correct?

Accepted Answer

The Ogallala aquifer is a common property resource, meaning it is accessible to many individuals, and without regulation or ownership, it is likely to be overused, leading to depletion.

Question 2

Elephants are endangered,but cows are not because

Accepted Answer

Endangerment of a species depends on its status as a common resource or a private good. Common resources, like elephants, are usually not owned by anyone and are accessible to anyone who wants to hunt or use them. Over hunting and excessive use of these resources cause endangerment. On the other hand, cows are usually owned by individuals and are considered as private goods. The owners of cows usually protect them, which reduces the chances of endangerment.

Question 3

Bill owns 3 acres of beautiful wooded land.When Bill decides to move to be closer to his grandchildren,he donates the land to the state with the understanding that the land will be used as a state park that anyone may use without paying any fees.This state park

Accepted Answer

A) The park will tend to be overused because it is nonexcludable, meaning that it is difficult to exclude anyone from using the park without paying fees.
B) The park can become a common resource since it is available for anyone to use, and if it becomes crowded, there may be issues with overcrowding and resource depletion.
C) The park becomes rival in consumption as more people use it, meaning that there is competition for the available resources within the park, such as picnic tables or parking spaces. 
Therefore, all of the above are correct.

Question 4

Ten friends who love the beach decide to pool their financial resources and equally share the cost of a one-week time-share condominium in San Diego,California.Suppose that the beach outside of the condominium becomes more congested when the ten additional people join the other beachgoers.Which of the following statements is not correct?

Accepted Answer

The statement "Each of the ten friends would have been better off staying at home" is not correct. Even though their presence on the beach may contribute to congestion, they are still benefiting from the shared cost of the time-share condominium. It is not necessarily true that they would have been better off staying at home.

Question 5

The commercial value of ivory is a threat to the elephant,but the commercial value of beef is a guardian of the cow.This is because

Accepted Answer

Cows are considered private goods because they are owned by individuals or corporations and can be bought and sold in the market. In contrast, elephants tend to roam freely without owners, making them a public good. The commercial value of beef incentivizes farmers to protect and care for their cows, ensuring a steady supply of meat. In contrast, the commercial value of ivory incentivizes poachers to kill elephants illegally, leading to a decline in their population.

Question 6

A stairwell in a certain office building is always congested at 12:00 p.m.and 2:00 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?

Accepted Answer

Charging a fee during peak times creates a financial incentive for people to avoid using the stairwell when it is congested, effectively reducing congestion by allowing only those who value it most to use it.

Question 7

Which of the following statements is correct?

Accepted Answer

The answer of Which of the following statements is correct?
...

Question 8

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

Accepted Answer

Implementing a pricing system where the cost of parking is higher during busy times would incentivize people to either arrive earlier or later when parking is cheaper or to find alternative means of transportation to the park. This would help optimize the use of the park's resources without restricting access to it.

Question 9

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

Accepted Answer

The park is a common resource because its use is non-excludable, meaning people cannot be prevented from using it, and its use is rivalrous, meaning if too many people use it, one person's use diminishes the use of others. This is evident from the fact that on summer afternoons when the park is crowded, it becomes difficult to find parking and the trash cans overflow with food wrappers, which shows that one person's use (like parking or throwing trash) affects others. Therefore, option C is the best choice. Option A is incorrect because people cannot be prevented from using the park. Option B is incorrect because the question does not mention any issue related to driving distances. Option D is incorrect because the use of the park by one person affects the use of others, making it a rivalrous resource.

Question 10

Elephant populations in some African countries have started to rise because

Accepted Answer

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

Question 11

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 12

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 Wisconsin 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 $5 per person.On holiday weekends,the fee is $15 per person.The fee system corrects a problem known as the

Accepted Answer

The problem being corrected by the variable fee structure is the Tragedy of the Commons, which occurs when a shared or public resource (in this case, the picnic areas in state parks) is overused and depleted by individuals who act in their own self-interest without regard for the collective good. The fee structure aims to reduce overcrowding on high-use days by incentivizing individuals to picnic on weekdays or pay higher fees on weekends, thereby reducing the overall depletion of the public resource. The Coase theorem pertains to the ability of private parties to negotiate solutions to externalities without the need for government intervention, the free rider problem concerns individuals who benefit from a resource without contributing to it, and the public goods problem relates to the difficulty of providing and funding goods or services that are non-excludable and non-rivalrous in consumption. None of these problems are directly addressed by the variable fee structure described in the prompt.

Question 13

Why has the value of ivory threatened the extinction of the elephant,whereas the value of beef has enhanced the survival of the cow?

Accepted Answer

The value of ivory has threatened the extinction of elephants because they are common resources and are often illegally hunted for their ivory which can fetch a high price on the black market. On the other hand, the value of beef has enhanced the survival of cows because they are privately owned and raised for commercial purposes, leading to more investment in their breeding and protection.

Question 14

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

Accepted Answer

The answer of On hot summer days,electricity-generating capacity is sometimes...

Question 15

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 16

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

Accepted Answer

The answer of Residents of Hong Kong are able to...

Question 17

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

Accepted Answer

By raising the rates for electricity at peak times, electric companies can encourage customers to reduce their usage during those times. This creates an incentive for customers to be more mindful of their energy consumption and adjust their behavior accordingly. Additionally, this approach produces additional revenue for the electric company, which can be used to invest in improving infrastructure and increasing capacity.

Question 18

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

Accepted Answer

The answer of One proposed solution to overused,deteriorating national parks...

Question 19

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?

Accepted Answer

The statement "Each of the ten friends would have been better off staying at home" is not correct. While the additional skiers may create a negative externality by increasing congestion, the ten friends themselves still benefit from the time-share condominium and the opportunity to ski. Therefore, it is not accurate to say they would have been better off staying at home.

Question 20

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 will not only generate revenue to address the park's maintenance and overuse problems, but it will also discourage casual visitors and attract only serious and passionate nature lovers. Decreasing camping permit fees and requiring registration at the entrance may be helpful, but they may not generate enough revenue to address the park's overuse problem. Selling the land is not an appropriate solution as it will destroy the parks' natural beauty and ecological balance, and it does not ensure that the new owners will preserve the land for public use.

Quiz 11: Public Goods and Common Resources