Question 1

Which of the following can result in the tragedy of the commons?

Accepted Answer

The tragedy of the commons occurs when individuals use common pool resources above the socially optimal level, leading to depletion and negatively impacting the resource-sharing community as a whole. This can happen when individuals pursue their own self-interests and have no incentive to conserve the resource.

Question 2

Scenario: The following excerpt is from Michael A. McPherson and Michael L. Nieswiadomy, "African Elephants: The Effects of Property Rights and Political Stability," Contemporary Economic Policy 18, no. 1 (2007).
African elephant populations have declined by more than 50% over the past 20 years. International outrage over the slaughter led to a worldwide ban on ivory sales beginning in 1989, despite the objections of many economists and scientists, and of several southern African countries that have established systems of property rights over elephants. Far from declining, elephant populations in many of these countries have increased to levels at or above the carrying capacity of the ecosystem. This article estimates the determinants of changes in elephant populations in 35 African countries over several time periods. The authors find that, controlling for other factors, countries with property rights systems or community wildlife programs have more rapid elephant population growth rates than do those countries that do not. Political instability and the absence of representative governments significantly lower elephant growth rates.
-Refer to the scenario above.Which of the following is consistent with a solution to the elephant population decline described in the quote?

Accepted Answer

The article suggests that establishing property rights over elephants or implementing community wildlife programs can lead to more rapid growth rates of elephant populations. This is because it creates an incentive for owners to manage the resource effectively and not deplete it. Banning the trade of ivory, as done in the past, has not been effective in managing the elephant population decline. Government ownership alone may not be sufficient to protect the resource from depletion. The article suggests that political instability and the absence of representative governments can significantly lower elephant growth rates, indicating the importance of effective governance structures in managing common pool resources.

Question 3

Your roommate claims we can understand the near-extinction of the American bison during the latter half of the nineteenth century in America as an economic phenomenon.Since bison herds were ________ "owned," they were a ________,and buffalo hunters generated a ________ externality when hunting them,as the hunters failed to consider how overharvesting could reduce herd numbers in the future.

Accepted Answer

Bison herds were not privately owned, but were instead publicly owned resources. Since they were a common resource pool good, they were vulnerable to overharvesting, which created negative externalities. This ultimately led to the near-extinction of the American bison in the late 19th century.

Question 4

The total willingness to pay for public restrooms in a city is given in the table below.

If the marginal cost of building a public restroom is $208,000,how many restrooms will be built?

Accepted Answer

The answer of The total willingness to pay for public...

Question 5

The tragedy of the commons occurs because some goods are ________ in consumption.

Accepted Answer

The tragedy of the commons occurs when goods are non-excludable but rival, meaning that anyone can use the resource but using it decreases its availability for others. This creates a situation where individuals may overuse or exploit the resource, leading to its depletion or degradation over time. Examples of goods that can fall under this category include natural resources like forests, fisheries, and clean air/water.

Question 6

Scenario: The following excerpt is from Michael A. McPherson and Michael L. Nieswiadomy, "African Elephants: The Effects of Property Rights and Political Stability," Contemporary Economic Policy 18, no. 1 (2007).
African elephant populations have declined by more than 50% over the past 20 years. International outrage over the slaughter led to a worldwide ban on ivory sales beginning in 1989, despite the objections of many economists and scientists, and of several southern African countries that have established systems of property rights over elephants. Far from declining, elephant populations in many of these countries have increased to levels at or above the carrying capacity of the ecosystem. This article estimates the determinants of changes in elephant populations in 35 African countries over several time periods. The authors find that, controlling for other factors, countries with property rights systems or community wildlife programs have more rapid elephant population growth rates than do those countries that do not. Political instability and the absence of representative governments significantly lower elephant growth rates.
-Refer to the scenario above.Which of the following is consistent with a solution to the elephant population decline described in the quote?

Accepted Answer

The answer of Scenario: The following excerpt is from Michael...

Question 7

The government should provide an additional unit of a public good if ________.

Accepted Answer

The government should provide an additional unit of a public good if the marginal benefit exceeds the marginal cost of providing the additional unit of the good. This means that the additional unit will provide more benefits to society than it costs to produce. Choice A is incorrect because it does not consider the marginal benefit. Choice B is incorrect because it implies that providing the additional unit offers no benefits, which is not necessarily true. Choice D is incorrect because it is not a relevant factor in determining whether to provide an additional unit of a public good.

Question 8

Electricity generated from coal-burning plants is relatively cheap,but the plants contribute to global warming due to their high level CO₂ emissions.The negotiations between developed and developing countries to cut back on coal electricity has failed in the past.This is an example of the ________.

Accepted Answer

The tragedy of the commons explains a situation where individual users, acting independently according to their own self-interest, deplete or spoil shared resources even though it is not in anyone's long-term interest. The failure of negotiations to cut back on coal electricity, despite its contribution to global warming, exemplifies this as countries prioritize their immediate, individual benefits over the collective good of reducing CO₂ emissions.

Question 9

Which of the following is not a solution to the tragedy of the commons?

Accepted Answer

Granting a subsidy will encourage more use and therefore exacerbate the tragedy of the commons. The other three options (levying a tax, privatizing, and rationing) can all help to reduce overuse of the common resource and prevent tragedy of the commons situations.

Question 10

The poaching of African elephants for their tusks is a serious problem facing many African nations.One solution is to establish large fenced-in "parks," where elephants are ranched similar to beef cattle on ranches in the western United States.Maintaining elephant herds in large enclosed park-like areas solves the problem of ________.

Accepted Answer

The answer of The poaching of African elephants for their...

Question 11

Tom is willing to contribute $400 toward building a public park,Jack is willing to contribute $500,and Joe is willing to contribute $750.What is the total value of the park if Tom,Jack,and Joe are the only residents in the neighborhood where the park is being built?

Accepted Answer

The total value of the park is the sum of the contributions from Tom, Jack, and Joe: $400 + $500 + $750 = $1,650.

Question 12

Suppose you live in a housing co-op with eleven other college students.The kitchen is constantly a mess; virtually nobody in the house cleans up,and the sink is overflowing with dirty dishes.This is an example of ________.

Accepted Answer

This scenario is an example of the tragedy of the commons, which occurs when a shared resource is overused or exploited because no individual feels responsible for conserving it. In this case, because no individual takes responsibility for cleaning the kitchen, the resource (the kitchen and its cleanliness) is being exploited and overused. The tragedy of the commons can only be resolved through collective action, in which individuals work together to find a mutually beneficial solution.

Question 13

Overfishing leading to a rapid depletion of the stock of fish is an example of the ________.

Accepted Answer

The tragedy of the commons is a situation where individuals, acting in their own self-interest, use a shared resource (in this case, fish) in such a way that it becomes depleted and no longer available for future generations. Overfishing is a classic example of the tragedy of the commons.

Question 14

A green pasture has turned barren due to overgrazing.This has happened because the pasture was ________.

Accepted Answer

The pasture was non-excludable because anyone could access it, and it was rival because one person's use (or in this case, overuse) diminished the ability of others to use it, leading to overgrazing and the pasture turning barren.

Question 15

Which of the following is true?

Accepted Answer

The market demand curve for a public good is obtained by the vertical summation of individual demand curves because public goods are non-excludable and non-rivalrous, meaning each individual's valuation is added vertically to determine the total willingness to pay for each quantity level.

Question 16

Which of the following is not an example of the tragedy of the commons?

Accepted Answer

Fishing on a private lake is not an example of the tragedy of the commons, as it is not a shared resource. The other options involve the depletion of a commonly shared resource, such as water, land, or communal food.

Question 17

A retired athlete built a gym near her house that could be used for free by all the residents in the neighborhood.However,the overuse of the facilities soon led to irreparable damages.This is an example of the ________.

Accepted Answer

The situation described in the scenario is an example of the tragedy of the commons. This term refers to the overuse of a shared resource, which can lead to depletion and degradation of the resource over time. In this case, the gym was a shared resource, and the overuse by multiple residents led to irreversible damage.

Question 18

Free access and unrestricted mining of iron ore led to the depletion of the iron ore deposits in Rockland.As a result,several economic activities were adversely affected.What caused the overexploitation of these resources when their conservation could have benefited the consumers in the economy?

Accepted Answer

The answer of Free access and unrestricted mining of iron...

Question 19

Four friends decide to have a party every Saturday.They decide to pool the money to spend on the parties.The table below shows the maximum amount each friend is willing to contribute to each party.

If the cost of each party is $225,how many parties should they have to maximize total surplus?

Accepted Answer

The answer of Four friends decide to have a party...

Question 20

What causes the overexploitation and depletion of common pool resource goods?

Accepted Answer

The answer of What causes the overexploitation and depletion of...

Quiz 9: Externalities and Public Goods