Question 1

The degradation of the environment from litter is a
A) a negative externality.
B) free rider problem.
C) Tragedy of the Commons.
D) Both a and c are correct.

Accepted Answer

The degradation of the environment from litter is both a negative externality and a Tragedy of the Commons. It is a negative externality because the costs of littering (such as environmental damage, increased sanitation costs, and decreased property values) are not fully borne by the individual litterers, but are instead imposed on society as a whole. It is also a Tragedy of the Commons because littering represents a situation in which individuals overuse a shared resource (the environment) and impose costs on society as a whole, resulting in an outcome that is worse for everyone.

Question 2

The Tragedy of the Commons describes
A) government regulation that is necessary to combat externalities.
B) overuse of a common resource relative to its economically efficient use.
C) the nonrivalry feature of a common resource.
D) an effective cost-benefit analysis.

Accepted Answer

The Tragedy of the Commons refers to the overuse of a common resource beyond its economically efficient use. This happens when individuals or groups act in their own self-interest and use more than their fair share, resulting in depletion or degradation of the resource for everyone. This concept highlights the limitations of relying solely on market forces to manage shared resources and the need for collective action, such as government regulation or community-based approaches, to promote sustainability.

Question 3

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with
A) fire protection.
B) poverty.
C) pollution.
D) national defense.

Accepted Answer

The Tragedy of the Commons is often used to describe the negative effects of pollution or overuse of resources. If the medieval townspeople had foreseen the tragedy, they could have implemented regulations or restrictions on the use of the commons to prevent overuse and pollution. Similarly, modern society deals with pollution through regulations and restrictions on industry and individuals, as well as promoting sustainability and renewable energy sources.

Question 4

A New York legislator wanted to create a deposit on cigarettes butts. If implemented, people would have the incentive to (1) not toss cigarette butts onto public streets and sidewalks, and (2) pick butts up to redeem them for the cash. The degradation of the environment from littered cigarette butts is a
A) private goods problem.
B) Nash equilibrium.
C) Tragedy of the Commons.
D) cost-benefit equilibrium.

Accepted Answer

The situation described is a classic example of the Tragedy of the Commons, where individuals acting in their own self-interest harm the collective good by littering cigarette butts in public places. A deposit on cigarette butts would create an incentive to reduce litter and promote environmental protection.

Question 5

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?
A) The neighborhood divides the lot into equal size plots and each family can plant and harvest only on their plot.
B) The neighborhood continues to work the land and sow the seeds as a group, but sells all of the produce to willing buyers and reinvests the proceeds into the garden for the next year.
C) The neighborhood decides to stop gardening on this land because there is no equitable way to allocate the produce.
D) Both a and b are possible solutions to this example of the Tragedy of the Commons

Accepted Answer

Option A ensures that each family gets an equal share of the produce and is responsible for their own plot, which reduces the likelihood of some neighbors taking more than their fair share. Option B involves selling the produce, which can increase accountability and ensure that everyone benefits from the garden. Therefore, both options A and B could help solve the Tragedy of the Commons in this scenario.

Question 6

Four friends decide to meet at a Chinese restaurant for dinner. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. A Tragedy of the Commons problem is likely for each of the following reasons except
A) each person has an incentive to eat as fast as possible since their individual rate of consumption will not affect their individual cost.
B) there is an externality associated with eating the food on the table.
C) when one person eats, he may not take into account how his choice affects his friends.
D) each dish would be both excludable and rival in consumption.

Accepted Answer

The tragedy of the commons problem arises when a resource is non-excludable and rival in consumption. However, in this scenario, each dish is both excludable and rival because each person orders a specific item from the menu. Therefore, there is no common pool resource being shared, and the tragedy of the commons problem is not likely to occur. The other options - A, B, and C - are more relevant to the tragedy of the commons problem, but they are not applicable in this scenario.

Question 7

Which of the following is an example of government intervention to solve a Tragedy of the Commons problem?
A) subsidizing basic research
B) building lighthouses
C) toll charges on congested roads
D) cost-benefit analysis

Accepted Answer

Toll charges on congested roads is an example of government intervention to solve Tragedy of the Commons problem. When roads are congested, the usage of the road causes negative externalities on other drivers, causing a Tragedy of the Commons. Toll charges force drivers to consider the cost of the negative externality they are causing and discourages overuse of the road.

Question 8

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. We might expect that
A) over time, the aquifer is likely to be overused.
B) each farmer has a sufficient incentive to conserve the water.
C) state governments have an incentive to insure that their farmers do not overuse the water.
D) resources would be used more efficiently if the government paid for the pumps farmers use to get the water.

Accepted Answer

The unrestricted use of water from the aquifer without regulation can lead to overuse and depletion of the resource over time.

Question 9

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is
A) a private good.
B) a public good.
C) a club good.
D) a common resource.

Accepted Answer

The answer of The sign on a church in your...

Question 10

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could
A) allow individual shepherds to choose their own flock sizes.
B) internalize the externality by subsidizing the production of sheep's wool.
C) auction off a limited number of sheep-grazing permits.
D) wait until the market corrects the problem.

Accepted Answer

Auctioning off a limited number of sheep-grazing permits would create a market for the use of the town commons and give an incentive for shepherds to use the resource efficiently. It would also ensure that the number of sheep grazing on the commons is limited to a sustainable level. Allowing individual shepherds to choose their own flock sizes would not necessarily result in sustainable use of the commons, as some may prioritize their own profits over the long-term health of the resource. Internalizing the externality by subsidizing the production of sheep's wool would not directly address the issue of overgrazing on the commons. Waiting until the market corrects the problem could lead to irreversible damage to the resource.

Question 11

The Tragedy of the Commons can be corrected by
A) conducting a cost-benefit analysis.
B) assigning property rights to individuals.
C) providing government subsidies for the resource.
D) making certain everyone in the economy has access to the resource.

Accepted Answer

Assigning property rights to individuals creates an incentive for them to manage the resource efficiently because they have a vested interest in its preservation. This results in sustainable use and prevents the tragedy of the commons. Conducting a cost-benefit analysis, providing government subsidies, and ensuring access to everyone may not be effective solutions in managing the resource sustainably.

Question 12

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except
A) assigning land property rights.
B) auctioning off sheep-grazing permits.
C) taxing sheep flocks.
D) subsidizing sheep flocks.

Accepted Answer

Subsidizing sheep flocks would not solve the problem of overgrazing on common land. In fact, it may encourage more people to raise sheep and exacerbate the problem. Assigning property rights, auctioning off permits, and taxing sheep flocks would all create incentives for individuals to use the land more sustainably and efficiently.

Question 13

Three business people meet for lunch at an Indian restaurant. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost of the final bill evenly among each of the people at the table. When the food is delivered to the table, each person faces incentives similar to the
A) consumption of a common resource good.
B) production of a public good.
C) consumption of a club good.
D) production of a private good.

Accepted Answer

Each person at the table is consuming a common resource good, as they are all sharing the same dishes. They face an incentive to consume as much as possible before the dishes run out, similar to the situation with a common resource such as a fishery or a grazing pasture.

Question 14

When Rick uses a common resource and diminishes other people's enjoyment of it, he creates
A) a free rider problem.
B) an externality.
C) a nonrenewable resource.
D) general knowledge.

Accepted Answer

Rick is creating an externality as his use of the common resource is affecting others' enjoyment of it. An externality is a cost or benefit that is not reflected in the price of a good or service and is imposed or enjoyed by a third party.

Question 15

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?
A) The aquifer is a public good which must be publicly owned to be used efficiently.
B) The aquifer is a private good which must be privately owned to be used efficiently.
C) The aquifer is a common resource which will be overused if no one owns it.
D) The aquifer is a club good which should be left as it is.

Accepted Answer

The Ogallala aquifer is a common resource, which means that it is rivalrous (one person's use of the aquifer diminishes the amount left available for others) and non-excludable (it is difficult to prevent people from using it). Without any ownership, there is no incentive for farmers to conserve the water, leading to overuse and depletion of the resource. Therefore, some form of governance or ownership is necessary to ensure sustainable use of the aquifer.

Question 16

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. An overcrowded picnic area is an example of
A) a private good.
B) a club good.
C) a Tragedy of the Commons.
D) public good.

Accepted Answer

An overcrowded picnic area is an example of Tragedy of the Commons where a commonly shared resource (in this case, the picnic area) is overused and depleted due to a lack of regulation or individual responsibility. Private goods are exclusive to paying customers, club goods are exclusive to members of a club or group, and public goods are non-excludable and non-rivalrous in consumption. An overcrowded picnic area does not fit any of those categories.

Question 17

The Tragedy of the Commons
A) occurs most often with public goods.
B) is only applicable to shared grazing rights among sheep herders.
C) is eliminated when property rights are assigned to individuals.
D) occurs when social incentives are in line with private incentives.

Accepted Answer

The answer of The Tragedy of the Commons
A) occurs most...

Question 18

Which of the following statements is not correct?
A) A free rider is a person who benefits from something for which he or she does not have to pay.
B) The creation of general knowledge is a public good.
C) The Tragedy of the Commons illustrates the underuse of a common resource.
D) A gasoline tax is an imperfect solution to the problem of traffic congestion on public roads.

Accepted Answer

The Tragedy of the Commons actually refers to the overuse or depletion of a common resource due to individuals acting in their own self-interest.

Question 19

The parable called the Tragedy of the Commons applies to goods such as
A) fire protection and cable TV.
B) tornado sirens and basic research.
C) clean air and clean water.
D) antipoverty programs and national defense.

Accepted Answer

The Tragedy of the Commons is a concept that illustrates the depletion of a shared resource when individuals act in their self-interest rather than for the common good. The depletion of clean air and clean water can be examples of the Tragedy of the Commons as individuals may pollute these resources for their benefit, ultimately leading to their depletion for everyone.

Question 20

Which of the following is an example of the Tragedy of the Commons?
A) The number of professional football teams increases to the point where the quality of the games decreases, as does television viewership.
B) The number of satellites increases to the point where they begin running into each other.
C) Disney World becomes so crowded that it institutes a lottery for admissions.
D) A tiger breeding program becomes so successful that local zoos have to build additional exhibits so that visitors can view the cats.

Accepted Answer

The Tragedy of the Commons is the tendency for a shared, limited resource to become depleted or ruined because people act in their own self-interest instead of considering the common good. In this example, satellites are a shared resource and their numbers have increased to the point where they are colliding with each other, causing potential damage and disrupting communication networks.

Quiz 11: Public Goods and Common Resources

The degradation of the environment from litter is a

The Tragedy of the Commons describes

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with

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 is an example of government intervention to solve a Tragedy of the Commons problem?

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. We might expect that

The sign on a church in your neighborhood reads "All are welcome at Sunday Service." Because the church has limited seating and is usually full, the Sunday Service is

The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the town could

The Tragedy of the Commons can be corrected by

The Tragedy of the Commons for sheep grazing on common land can be eliminated by the government doing each of the following except

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

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?

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. An overcrowded picnic area is an example of

The Tragedy of the Commons

Which of the following statements is not correct?

The parable called the Tragedy of the Commons applies to goods such as

Which of the following is an example of the Tragedy of the Commons?