Public goods and Common Resources
Public goods and Common Resources
1) What does it mean to say that a good is excludable?
2) Why is it difficult for private industry to provide a public good?
3) How is a streetlight (a public good) related to a positive externality?
4) Suppose the value of a human life is $10 million dollars. Suppose the use of air bags reduces the probability of dying in a car accident over one’s lifetime from 0.2 percent to 0.1 percent. Further suppose that a lifetime supply of airbags will cost the average consumer $12,000. If these numbers are accurate, would it be efficient for the government to require airbags in cars? Why?
5) What type of problem ate hunting and fishing licenses intended to relieve?
6) How are fish in the ocean (a common resource) related to a negative externality?
7) How can the establishment of individual property rights eliminate the problems associated with a common resource?
8) Food is more important than roads to the public, yet the government provides roads for the public and rarely provides food. Why?
9) Why did the buffalo become extinct while cows (a similar animal) are unlikely to ever become extinct?
10) Were the buffalo hunters that almost made the buffalo extinct behaving irrationally? Explain.
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