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Exam 15: Public Goods and Public Choice

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Question 31

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PAYING LANDOWNERS TO HOST WOLVES We can apply the concepts of public goods and free riding to the issue of preserving wildlife.There are some tradeoffs associated with preserving wolves and other wildlife in Yellowstone Park.To environmentalists,wolves are a part of the natural ecosystem.To ranchers,wolves are predators that eat livestock.In other words,there are costs as well as benefits associated with the preservation of wolves,just as there are costs and benefits associated with other public goods such as dams,fireworks,national defense,and space exploration. One response to the wolf-preservation problem comes from Defenders of Wildlife,an environmental group in Montana.The organization collects money from its members and uses the money to reward landowners who allow wolves to live on their properties.The host landowner receives a payment of $5,000 for each litter of wolf pups reared on the property.In addition,the organization compensates ranchers for livestock killed by wolves. As a result of these programs,ranchers in the Yellowstone area are more likely to support efforts to maintain the wolves as part of Yellowstone Park's ecosystem.The programs treat preservation as a public good,one that is supported by money contributed by people who benefit from preservation.The organization has collected contributions from thousands of people despite the free-rider problem.The success of Defenders of Wildlife illustrates one of the key principles of economics. SOURCE: Terry L.Anderson,"A Carrot to Save the Wolf," The Margin,Spring 1992,p.28. -Recall the application on "Paying Landowners to Host Wolves." Landowners let wolves live on their property because:

A) a private group pays them for each litter of wolf pups reared on it property.
B) the government orders them too.
C) wolves are good for livestock.
D) all of the above

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Question 32

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Recall the application about global weather observation and what happens when it comes to international borders.What kind of problem does global weather observation face?

A) Information gathered by one country is nonrival and therefore produces a free rider problem.
B) No single organization gathers all the information to reveal the big weather picture.
C) Some parts of the world received little to no monitoring.
D) all of the above.

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Question 33

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Give an example where individuals "vote with their feet" in choosing among bundles of public goods and tax rates.

Give an example of an external benefit and explain why the outcome is inefficient.

The median-voter rule suggests that:

For public goods,an external benefit occurs because:

Private goods are:

PAYING LANDOWNERS TO HOST WOLVES We can apply the concepts of public goods and free riding to the issue of preserving wildlife.There are some tradeoffs associated with preserving wolves and other wildlife in Yellowstone Park.To environmentalists,wolves are a part of the natural ecosystem.To ranchers,wolves are predators that eat livestock.In other words,there are costs as well as benefits associated with the preservation of wolves,just as there are costs and benefits associated with other public goods such as dams,fireworks,national defense,and space exploration. One response to the wolf-preservation problem comes from Defenders of Wildlife,an environmental group in Montana.The organization collects money from its members and uses the money to reward landowners who allow wolves to live on their properties.The host landowner receives a payment of $5,000 for each litter of wolf pups reared on the property.In addition,the organization compensates ranchers for livestock killed by wolves. As a result of these programs,ranchers in the Yellowstone area are more likely to support efforts to maintain the wolves as part of Yellowstone Park's ecosystem.The programs treat preservation as a public good,one that is supported by money contributed by people who benefit from preservation.The organization has collected contributions from thousands of people despite the free-rider problem.The success of Defenders of Wildlife illustrates one of the key principles of economics. SOURCE: Terry L.Anderson,"A Carrot to Save the Wolf," The Margin,Spring 1992,p.28. -Recall the application on "Paying Landowners to Host Wolves." Wolves in the west:

Which of the following is TRUE about education?

Food stamps handed out to the needy by the government are an example of a public good.

Explain the free-rider problem.

In a two-party democratic system,individuals running for office typically:

The protection of the earth's ozone layer is an example of a public good.

Recall the application about how a private good,LoJack,generates external benefits as well as private benefits.Who are the recipients of the external benefits generated by LoJack?

An individual would choose the number of news articles to read based on his/her:

In the absence of government,an underallocation of resources generally exists for:

Sirens located around a town to warn citizens of the approach of a tornado are an example of:

Which of the following is NOT an example of a public good?

When Chris buys pizza for his football party and he gets to decide who will have a slice of his pizza.This means his pizza is:

The problem with using voluntary contributions to support a public good is known as the ________ problem.