Question

Can you please state true false or uncertain and explain the reasoning in 4 or more sentences

1)When the park in front of the Kingston courthouse is uncongested, charging an entry fee would be inefficient, but when it is congested, then charging an appropriate entry fee is an efficient policy.

2)Free entry is necessary for efficient production in a fishery (ie. the use of a particular stock of fish).

3)The fact that worker effort is unobservable in some cases may explain why some workers are paid on commission (they receive a percentage of the sales they make) even though the efficient (observable effort) employment contract might involve high worker effort and a more stable income (like a salary).

Answer 1

A park in front of the Kingston courthouse is rival and excludable in nature. It means that it is a private good. For private goods, the demand and supply are seen. If the park is uncongested, it means there is not enough demand for it and in that case, it is better to allow free entry to increase the demand. If it becomes congested, it is better to impose an entry fee to reach the efficient level. Therefore, the given statement is true. 2) The given statement is not correct since for the efficient production in a fishery, it is not efficient to allow free entry as it will lead to over-fishing and the depletion of stock of fishes. Instead of allowing free entry, an entry fee imposed will lead to reaching the efficient fishing level. Therefore, the given statement is false 3) The given statement is true since the workers' efforts are unobservable and therefore, employers are skeptic in giving them a fixed salary. Instead of a fixed salary, in such situations, employees prefer to give some commission to their employees on the basis of work done by them and the targets achieved. Therefore, the given statement is true.