Question : 32) Which of the following NOT a potential solution to : 1241081

32) Which of the following is NOT a potential solution to the tragedy of the commons?

A) setting a production quota

B) granting individual transferable quotas

C) subsidizing use of the resource

D) establishing property rights to the resource

E) None of the above is correct because they are all potential solutions to the tragedy of the commons.

33) If the government assigns private property rights to a common resource, then the

A) resource is under-utilized.

B) marginal private cost becomes equal to the marginal social cost.

C) government needs to set a quota to achieve efficiency.

D) resource becomes subject to the free riding problem.

E) resource cannot be utilized.

34) The market price of an individual transferable quota is equal to the

A) marginal private benefit.

B) marginal social benefit.

C) marginal private benefit minus the marginal cost.

D) marginal social benefit minus the marginal cost.

E) marginal private benefit plus the marginal cost.

11.4   Chapter Figures

The figure above shows the marginal benefit curve (MB) and marginal cost curve (MC) of surveillance satellites that provide national defense services.

1) In the figure above, the efficient quantity of satellites to produce is

A) 200, because this is where marginal benefit equals marginal cost.

B) 200, because this is where the market is in equilibrium.

C) anywhere below 200, i.e., where marginal benefit exceeds marginal cost.

D) anywhere above 200, i.e., where marginal benefit is below marginal cost.

E) zero, because no one is willing to pay for satellites.

2) In the figure above, a private market will most likely produce

A) no satellites because of the free-rider problem.

B) 200 satellites because at this point marginal benefit equals marginal cost.

C) less than 200 satellites because over this output range marginal benefit exceeds marginal cost.

D) more than 200 satellites because over this output range marginal benefit is below marginal cost.

E) 200 satellites because at this point the market will be in equilibrium.

3) Using the figure above, suppose there are two political parties, the Hawks and the Doves, which agree on all issues except for the quantity of defense satellites. The Hawks want 300 satellites and the Doves want 100 satellites. The voters are well informed and know what is best for them. The parties run a voter survey and discover the marginal benefit curve (MB). They also know the marginal cost curve (MC). What quantity of satellites will most likely result from this political process?

A) 200, because unless each party proposes 200 satellites, the other party can beat it in an election

B) 300, because the Hawks are more likely to win

C) 100, because the Doves are more likely to win

D) 200, because the parties will strike a deal: each will agree to give up 100 satellites

E) Zero, because given the marginal benefit and the marginal cost of satellites, none should be provided.

4) Suppose that satellites are publicly provided. The voters are rationally ignorant, while the Defense Ministry is well informed. Using the figure above, which of the following quantities of satellites is most likely to be provided?

A) 300

B) 200

C) 150

D) 100

E) zero