Question 1

Which of the following factors are most important to the success of resource allocation policy? (i) the policy must be well planned and well run
(ii) policymakers must have access to good information about the value of resources and how they affect economic wellbeing
(iii) policymakers must have altruistic motives for helping society

Accepted Answer

Factors (i) and (ii) are the most important for the success of resource allocation policy. A well-planned and well-run policy ensures efficiency and effectiveness, while access to good information about the value of resources and their impact on economic well-being helps policymakers make informed decisions. Altruistic motives (iii) may be desirable, but they are not essential for the success of resource allocation policy.

Question 2

Explain the differences between public goods and private goods.

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Question 3

Jack criticises the idea of road tolls to fix congestion problems because he says they would allow the rich to drive more than the poor. You counter-argue by saying that road tolls could potentially address these equity issues and offer even an egalitarian solution. You propose to Jack that each automobile owner be given a specified debit card balance every year and that those who are willing to drive less can sell their unused balance to those who want to drive more. Jack likes your proposal, especially because of the manner in which your plan redistributes income. What groups of people might benefit from this implicit redistribution of income?

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Question 4

Careers that lend substance to the approach of valuing human life by evaluating the risk that people are voluntarily willing to take and the compensation they require for those risks include:

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Question 5

Explain the difference between a common resource and a public good.

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Question 6

What combination of policies has the Singapore Government used to reduce road congestion and pollution? Why wouldn't this reduction in road congestion occur without government intervention?

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Question 7

Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week timeshare unit in the Blue Mountains of New South Wales. If lift lines at the ski resort become more congested when these 10 additional people start to ski, then:

Accepted Answer

All the statements are true. A) The increased congestion due to the ten new skiers represents a negative externality because it affects other skiers' enjoyment and access negatively. B) Raising lift ticket prices can help manage the congestion by potentially reducing the number of skiers, thus addressing the externality. C) An increase in lift ticket prices acts as a Pigovian tax, which is a tax imposed to correct the negative externalities of a market activity.

Question 8

Explain the fundamental reason that common resources have a tendency to be exploited in private markets.

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Question 9

Sheep-grazing on a common land and wireless internet share a common problem. Explain what this is and what are its causes.

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Question 10

The creation of knowledge is a public good. This means that markets will not devote enough resources to the creation of knowledge. What, however, are the difficulties governments face in increasing the level of basic research?

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Question 11

In Australia, crocodiles are farmed for their leather and meat. Australian crocodile numbers have been increasing. In India, native crocodile species are protected and can't be harvested but populations have been falling. Explain why harvest in Australia has led to more crocodiles and contrast with India.

Accepted Answer

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Question 12

A common theme among examples of market failure is that:

Accepted Answer

Market failure often occurs when there is a lack of clearly defined property rights or ownership, leading to a situation where goods and services are not allocated efficiently. This can include situations where there are externalities (costs or benefits that affect third parties not involved in a transaction) or public goods (goods that are non-excludable and non-rivalrous, meaning that it is difficult to exclude people from using them and one person's use does not diminish the availability for others). In these situations, private markets may fail to provide the optimal amount of goods and services, leading to undersupply or oversupply.

Question 13

The most effective ways to solve highway congestion is to:

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Question 14

One of the most pressing concerns associated with the implementation of road congestion pricing policies can be resolved by:

Accepted Answer

Employing barcode and debit card technologies to charge users would allow for efficient and accurate implementation of road congestion pricing policies for all users, regardless of income or vehicle type. This would also eliminate the need to only charge tolls to certain users or exempt certain groups, ensuring fairness and effectiveness. Charging tolls only to visitors could potentially create logistical issues and would not necessarily address the concerns associated with road congestion.

Question 15

When human lives are at stake, should the government approve all projects that would increase safety to human beings?

Accepted Answer

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Question 16

Some villages in Papua New Guinea farm rare butterfly species for collectors. What outcome would you expect from this policy?

Accepted Answer

Farming rare butterfly species for collectors in Papua New Guinea creates an incentive for villagers to maintain and increase butterfly populations. When individuals or communities have property rights to a resource, they have a vested interest in its sustainability and growth. This is because the resource directly contributes to their livelihood or income, encouraging them to manage it responsibly to ensure its continued availability.

Question 17

Do cost-benefit analysts need to attach a dollar value to human life when increased safety is a benefit of a proposed project?

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Question 18

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:

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Question 19

Some advocates of anti-poverty programs claim that fighting poverty is a public good. Explain what these advocates mean by classifying charity as a public good. What does this have to do with the need for government intervention?

Accepted Answer

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Question 20

Which of the following statements best describes the cause of 'overrun and over-trampled' national parks?

Accepted Answer

The statement "national parks are treated as free goods by their visitors" suggests that visitors do not value the parks enough to be willing to pay higher fees, leading to overcrowding and damage to the parks. The other options do not directly address this issue.

Quiz 11: Public Goods and Common Resources