True/ False: All public goods are provided by a state, local, or federal governm

Question

True/ False:

All public goods are provided by a state, local, or federal government.

All goods provided by the federal government are public goods.

2)

A fishery is an example of a common resource. In the absence of government regulation, the number of fish caught will be:

Select one:

a. Higher than the efficient number of fish

b. Lower than the efficient number of fish

c. Exactly equal to the efficient number of fish

Suppose 2 landowners share water from a common underground aquifer. They can choose to take 0, 1, or 2 units of water each year for the next two years. In both years, the value of the 1st unit of water is $7 and the value of the second unit of water is $5.   There are 4 units of water altogether.   The cost of extracting water is $1 per unit. Finally, if there is an odd number of units left in the second year, assume the odd unit gets split between the 2 landowners, each getting half the value and paying half the cost.

How much water will each landowner take in the 1st year if he chooses the amount of water to maximize his consumer surplus?

Select one:

a. 2 units

b. 1 unit

c. 0 units

How much water should each landowner take in the 1st year to maximize total surplus over the two years?

Select one:

a. 2 units

b. 0 units

c. 1 unit

Explanation / Answer

1. FALSE: Public goods are all those goods which are "non-rivoulrous" and "non-excludable" . Generally they are provided by government or governmental agencies. However, community services like common area maintence, or Union representation are alos public goods in which the members benefit. so the statement is false.

2. False: All gooods provided by the Federal government are not public goods. The Postal services are paid for by its users as per the tariff determined. they are thus called public utility service but noa a public good in the true sense.

3. Fishery is a common resource. Hoever, exploitation of common resources , without regulation may lead to the formation of dominant pl;ayers in the market and the emergence of monopolies. Government regulation is cetainly a mehod to avaiod these poblems.

But whether government regualtion alone an bring out the optimum exploitative level of fish in the common source is doubtful. but it is certain that lack of regulation is an incentive to extreme skewness in market behaviour and causes several externalities, absence of regulation cannot lead to the catching of the optimum level of fish.

Therefore government regulation has better chance in the long-run of haveing optimum exploitation level of teh fish resource, than without it.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.