The tragedy of the commons is the idea that:        society has a tendency to overuse and thus abuse common resources.        total external costs in society far outweigh total external benefits.        matter can be transformed to other matter or into energy but can never vanish.        crime rates typically are higher in public places than where property is privately owned.

Consider the market for electricity. Suppose that a power plant dumps byproducts into a nearby river, creating a negative externality for those living downstream from the plant. Producing additional electricity imposes a constant per-unit external cost of $240. The following graph shows the demand (private value) curve and the supply (private cost) curve for electricity. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $240 per unit. PRICE (Dollars per unit of electricity) 800 720 640 560 480 400+ 320 240 Supply (Private Cost) Demand (Private Value) 160 [- 80 0 0 1 2 3 4 5 6 7 QUANTITY (Units of electricity) Social Cost ? The market equilibrium quantity is units of electricity, but the socially optimal quantity of electricity production is units. To create an incentive for the firm to produce the socially optimal quantity of electricity, the government could impose a unit of electricity. of per

The free rider problem arises when a good is both rival and non-excludable; rival non-excludable; both rival and non-excludable both rival and non-excludable; excludable rival; both rival and non-excludable and the tragedy of the commons arises when a good is

Explain why the private provision of public goods leads to an inefficient level of public goods.

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The free-rider problem is that: free public transportation is overcrowded. people will not voluntarily pay for something that they can obtain without paying. government supplies goods at no charge to people who can afford to pay for them. public goods often create large external costs.

61) The Coase Theorem points out that externality problems can be eliminated if the number of parties involved is small and if property rights A) are granted solely to consumers. B) are granted solely to producers. C) are eliminated. D) are granted to either consumers or producers and transactions costs are low. 62) The Coase Theorem says that which of the following is necessary to lead to an efficient use of resources? A) presence of transaction costs B) existence of property rights C) government intervention D) All of the above answers are correct. 63) According to the Coase theorem, which of the following are necessary for the efficient levels of pollution to be achieved? I.Property rights are defined. II.Transactions costs are low. A) I only B) II only C) both I and II D) neither I nor II 64) Which condition(s) must exist for the Coase Theorem to hold? I.Property rights must exist. II.Transactions costs must be measurable. III.A small…

Consider the positive externality graph If firms are able to ignore the benefit to society, which of the following statements is correct? Price ($) P* P₁ Private 0 Qp Private MSC MSB Dprivate Quantity (in units)

Is there is a free rider problem in a New Year’s Eve celebration in Times Square, New York? Yes because of the tragedy of the commons. It is a common event. No because the NYE celebration is a rival good. Yes because the NYE celebration is open to anyone. It is non excludable. No because you can watch the event from home.

The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: First bottle Second bottle Third bottle Fourth bottle Fifth bottle Further bottles $14 $4 The cost of producing Zlurp is $1.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) Producing Zlurp creates pollution. Each bottle has an external cost of $1. Taking this additional cost into account, what is total surplus per person? $8 $5 $4.5 3 2