Question

Which of the following goods would be considered a common resource?

A. a rural road because it is nonrivalrous and nonexcludable

B. bottled natural mineral water because it is excludable and rivalrous

C. a congested public park because it is rivalrous and nonexcludable

D. All of the above

E. A and B, only

Market failure occurs with common resources because

A. consumption can be privately profitable even when it is socially undesirable.

B. when one person uses it other people are usually not as well off so a negative externality occurs

C. government imposes a negative externality on everyone's consumption of the resource.

D. All of the above.

E. A and B, only

Oil is found in large pools under the earth’s surface and ownership rights to the underground pool are often unclear. As such, oil could be considered a common resource because

(x)   when one landowner extracts oil, less is available for the other land owners above the oil pool.

(y) it is a good that is nonrivalrous in consumption and excludable.

(z) it is a good that is rivalrous in consumption and nonexcludable.

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (z) only

Answer 1

C) a congested public park because it is rivalrous and nonexcludable.

E) A and B only.

E) z only.