ESPM 1011 Study Guide - Final Guide: Garrett Hardin, Gary Snyder

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sapphireraccoon496

30 Oct 2014

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UMN

Department

Environment Sci, Policy, Mgmt

Course

ESPM 1011

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All

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Document Summary

Public goods dilemmas are when the benefits are non-rival. A non-rival benefit means that even if i enjoy the benefit, it is still available for another person to enjoy it as well; like the radio. Hardin"s tragedy of the commons is an essay about the need for regulations, education, and incentives to attain sustainable use of shared things. In his example, a community used a large pasture for the grazing of livestock, but without regulation. Hardin says it is in the human nature to be guilty, and without regulation, these people overgrazed the pasture until it was no longer of any use. A selfish herdsman is a free-rider always behaving in a narrow, self interested way and never cooperating in dilemma situations. A selfish herdsman grazes more than his fair share of sheep, even though he knows this may deplete the sources and leave nothing for others.

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home / study / business / economics / questions and answers / Question 1 Which Of The Following Is The Best Example ... Question: Question 1 Which of the following is the best exam... Bookmark Question 1 Which of the following is the best example of a positive externality? A car company lays off 10,000 employees in order to cut costs. An individual drives a large SUV, which increases the amount of greenhouse gases in the atmosphere. An individual smokes in a restaurant, which bothers other patrons. A child is vaccinated against a disease, which reduces the probability that other children will catch the disease. 4 points Question 2 As a result of a negative externality, the market equilibrium quantity is too ______ compared to the socially optimal quantity. As a result of a positive externality, the market equilibrium quantity is too ______ compared to the socially optimal quantity. high; high. low; low. high; low. low; high. 4 points Question 3 Based on the diagram below, the deadweight loss area associated with the market equilibrium equals: Week06_graph1.jpg $10 $50 $80 $1,000 4 points Question 4 A firm's accounting profit is given by total revenue: less implicit costs. less explicit costs. less economic profit. less implicit and explicit costs. 4 points Question 5 Suppose an activity has a private cost equal to $30 and a private benefit equal to $30. The associated social cost equals $35 and the social benefit equals $30. Which of the following statements is true about this activity? There is a negative externality associated with this activity but not a positive externality. There is a positive externality associated with this activity but not a negative externality. There is both a positive and a negative externality associated with this activity. There is neither a positive nor a negative externality associated with this activity. 4 points Question 6 The Coase Theorem implies that: the efficient level of an externality is generally zero. private individuals living in market economies should not be concerned with externalities. government intervention is not always needed to arrive at the efficient level of an externality. government laws are unnecessary. 4 points Question 7 An industry in which a small number of large firms sell products that are either close or perfect substitutes is: perfectly competitive. monopolistically competitive. an oligopoly. a monopoly. 4 points Question 8 When a negative externality is present in a market: a tax can increase the level of economic surplus. the social benefits are greater than the private benefits. there is generally too little of the good produced by private markets. the government should ensure that there are zero external costs associated in all markets. 4 points Question 9 In the presence of a positive externality, the government can arrive at the socially optimal output level by: paying producers a subsidy equal to the amount of social benefits associated with the activity. charging producers a tax equal to the amount of social costs associated with the activity. paying producers a subsidy equal to the amount of external benefits associated with the activity. charging producers a tax equal to the amount of external costs associated with the activity. 4 points Question 10 The tragedy of the commons is that: too few individuals have access to high quality healthcare. common people overconsume public goods. the quality of life for lower income people is generally lower than that of higher income people. a resource with no price tends to be exploited until its marginal benefit falls to zero. 4 points Question 11 One potential remedy to the tragedy of the commons is to: never allow a single individual to consume more than one percent of the common resource. criminalize the usage of common resources. allow individuals to use a common resource as long as they receive some benefit from doing so. place a common resource under private ownership. 4 points Question 12 As a result of a positional externality: contestants have a tendency to invest in a series of mutually offsetting investments in performance enhancement. there is generally an underinvestment in performance enhancement. the market price of performance enhancement materials is too high. the quality of performance in competitive situations is lower than the socially optimal level. 4 points Question 13 Which of the following statements is true regarding health insurance? Economics shows that all health related procedures should be free to individuals because the health of an individual is priceless. Total economic surplus would be larger if individuals faced an incentive to only use services when the benefit exceeds their costs. Health maintenance organizations provide an incentive for doctors to prescribe expensive nonessential services. First dollar insurance coverage has likely had very little to do with rising healthcare expenditures since World War II. 4 points Question 14 A strategy that yields a higher payoff no matter what the other players in the game choose is known as a: prisoner's strategy. dominated strategy. dominant strategy. Nash strategy.

In an article in the agriculture magazine Choices, Oregon State University economist JunJie Wu made the following observation about the conversion of farmland to urban development:

Land use provides many economic and social benefits but often comes at a substantial cost to the environment. Although most economic costs are figured into land-use decisions, most environmental externalities are not. These environmental 'externalities" cause a divergence between private and social costs for some land uses, leading to an inefficient land allocation. For example, developers may not bear all the environmental and infrastructural costs generated by their projects. Such market failures provide a justification for private conservation efforts and public land use planning and regulation.

Source: JunJie Wu, "Land Use Changes: Economic, Social, and Environmental Impacts," Choices, Vol. 23, No. 4, Fourth Quarter 2008, pp. 6-10.

By market failure, the author means:

(i) benefiting from a good without paying for it.

(ii) a situation that occurs when one person's consumption of a unit of a good means no one else can consume it.

(iii) a situation in which the market fails to produce an efficient level of output.

(iv) a situation in which a benefit is present that affects someone who is not directly involved in the consumption of a good or service.

(v) the tendency for a common resource to be underused.

cyanhound711

The microeconomic market structure I would like my business to be in is a monopoly in the utility industry. Using this business model to make the most amount of money, over a long period of time, without regard to service, quality, or competition could be interesting. Creating a company that could produce residual income with little effort is very appealing to the owner or its shareholders. Economies of scale will help the consumer save money when adjustments to internal costs are decreased. Once a monopoly was established you as a business owner could enjoy the benefits of no competition, depending on the product you may be able to compete internationally. The downside for consumers is with the limiting of competition there could be a limit on innovation and this could affect quality for the consumer. Depending on where an individual is in their life they may be in business to strictly make money with little regard for everyone else, if this is the case then a monopoly is the right type of business to have.

It is important to note that individuals enter business for different reason all are generally to make money but some individuals do it for other reasons as well. They may start a business in a rural area as a farmer and due to the fact that they sell fruit or vegetables would find themselves in a perfect competition market structure. This market is fairly easy to enter, there is lots of competition and the products are identical to each other between competitors. Others may start a restaurant business because they like food, they like providing and making people happy and they like the day to day interactions with people. This business is just fine and would fit into the monopolistic competition structure. This business is different from the monopoly structured business because it doesn't run itself, there is lots of competition, quality & price must always be considered, and if customers are not happy they can choose a different option.

I need a peer reply for this discussion of at least 200 words.

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ESPM 1011 Study Guide - Final Guide: Garrett Hardin, Gary Snyder

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