Think about two public goods? public schools and food assistance for needy families. Consider the implications of the Tiebout model. Which of the goods is more efficiently provided locally? Which is more efficiently provided centrally? Explain.

Suppose Fischer Pond is a common-property resource—anyone can fish without having to pay for access. Locke Lake is privately owned—people who want to fish must purchase one of a limited number of permits from the lake's owner each season. According to the incentives that private ownership creates, which of the following would you expect to happen?     Check all that apply. The owner of Locke Lake is likely to keep the lake clean and unpolluted.   The owner of Locke Lake is likely to limit the number of fishing permits in order to maintain a plentiful stock of fish.   Fischer Pond is less likely to experience a dwindling stock of fish each season.

In planned economic systems, government agencies control both supply and price of the products.   True   or  False?

Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a ___________ externality.   The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good.

Which of the following is most likely to be a free good?         schools         sunlight         jeans that are sold at clearance prices         a new restaurant giving away free tacos on "Taco Tuesday" as a way to kick-start its business

Which of the following is an example of the free-rider problem? Select one: a. Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. b. Alfred receives a free lunch from the local "Meals on Wwheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch. Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking. C. O d. Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale. Next page

Within a laissez faire system, the government should only perform those activities that the private sector of the economy is incapable of? What kinds of activities do you think the government ought to                           legitimately perform in a laissez faire system?

a. Which of the following correctly shows the Pareto efficient provision of effort. i. G=(1/4)(W_M+W_P) ii. G=(1/3) (W_M+W_P) iii. G=(1/2) (W_M+W_P) iv. G=(2/3) (W_M+W_P)   b. What is the decentralized provision of effort: i. G=(1/4)(W_M+W_P) ii. G=(1/3) (W_M+W_P) iii. G=(1/2) (W_M+W_P) iv. G=(2/3) (W_M+W_P)

A well educated society can be considered which of the following, as it pertains to economics? Negative Externality Positive Externality Economic Relief Social Welfare