Question

An example of a good (or goods) with high exclusion costs would be a. national defense b. radio broadcasting c. local roads. d. flood control e. all of the above 1 Which of the following best exemplifies the tragedy of the commons? a. Residents in the northern coast of California receive only one public broadcasting signal which may be eliminated altogether if government funding is cut b. The Pleasant Hill community is growing so fast that the city's only post office is not able to keep pace with the population growth in the community c. Canadian citizens receive free universal health care administered by provincial governments. d. The Malaysian Tapir, distinguished for its unusual colouration, is a target for poachers who hunt it for its tough and leathery hide 2 3. If the harvest rate is constant and lower than the growth rate associated with the maximum sustainable yield a. there will exist two stable equilibriums where each equilibrium will be characterized by nonzero populations. b. the animal species ill never be driven to zero. c. only the efficient equilibrium will be stable d. if the initial equilibrium was at the carrying capacity, the harvesting equilibrium would occur to the right of Xmsy. e. cand d When a person who has fire insurance is more careless with matches than he or she would be without such insurance, this person's behaviour illustrates the a. adverse selection problem b. the caveat-emptor problem c. how question. d. the moral hazard problem e. the nonrivalr problem 4. ai

Answer 1

Question No:1

Example of goods with high exclusion costs

The cost of excepting unauthorized users of a product can be termed as exclusion cost. If the product prevails for a single user, it is difficult to except the other inappropriate users. Then the exclusion cost will rise.

Option (a)

National defense and security deals with high exclusion costs. As the benefit of the same is being used by lots of unauthorized people, it is very difficult to remove them all.

Hence, option (a) is correct.

Option (b)

Several free riders with great potential will exist in the case of national broadcasting. In so many nations, TV will be provided by the government itself and the taxes of these broadcasting media will be paid by them. This will reduce the free-riders. But, in some other nations, the thing is opposite. So many people use national broadcasting without paying the tax. The cost of observing various stations and find out use of broadcasting by each individual. Exclusion cost will be high.

Hence, option (b) is correct.

Option (c)

Local roads meant for the local residents who pay tax for the same are being used by other free riders. Hence, exclusion cost will be high.

Hence, option (c) is correct.

Option (d)

Flood control is a public venture. The benefit of the same will be utilized by those who are not a part of the flood disaster. Hence, free riders will take advantage and that too in a large number. Hence, it is difficult to excepting them and thus high exclusion costs will be incurred.

Hence, option (c) is correct.

Option (e)

As all the options are correct, all of the statements are true.

Hence, option (e) is the right answer.

Question No:2

Tragedy of the commons means discussion by the people regarding environmental issues. People act with self-interest and a resource of any product will become obsolete.

Option (a)

Broadcasting is a public good and it cannot be depleted. Even if one broadcasting is available to those residents in North California, the service can be extended in future. Hence, the same cannot come under tragedy of the common.

Hence, option (a) is incorrect.

Option (b)

Post office is a public service institution. If the number of residents increase, the service will be enlarged by government. Hence, the same cannot come under tragedy of the common.

Hence, option (b) is incorrect.

Option (c)

Free healthcare provided by government to the residents is not in the nature of being depleted. That is a public issue, not environmental. Hence, the same cannot come under tragedy of the common.

Hence, option (c) is incorrect.

Option (d)

Hunting of Tapir for sake of its leather which have unusual coloration will extinct the particular species day-by-day. This is the case of environmental issue. Hence, this come under tragedy of the common.

Hence, option (d) is the correct answer.

Question No:3

Maximum sustainable yield is the maximum quantity that could be yielded and removed from an ecology for an indefinite period. It is normally use in the case of animals. It is not too high, and not too low. It is a balance between two extremes.

Option (a)

Two level of stable equilibrium with non-zero population will not happen in this situation. Because the initial population is over the non constant equilibrium size of the population.

Hence, the option is incorrect.

Option (b)

Organisms will never grow tremendously. It will deplete in over usage.

Hence, the option is incorrect.

Option (c) and option (d)

Efficient equilibrium will be the one which is unstable. Also, the harvest equilibrium will be happening to the right of MSY when starting equilibrium is at carrying capacity.

Hence, both of them are correct.

Option (e)

As both options (c) and (d) are same, option (e) is the correct answer.

Question No:4

Option (a)

Adverse selection problem is that when the insurer provide wrong information to the insurance company to obtain the premium at lower rate. Then, the company charge for the same.

This option is incorrect.

Option (b)

Undisclosure of all the problems regarding the insured good.

This option is incorrect

Option (d)

Insurer takes more risks than when the property is insured rather than not insured.

This option is correct.

Option( e)

Consumption of the insured good by a person will not reducing that of others.

This option is incorrect.