Read THOUROUGHLY and answer COMPLETELY. 1. Common resources versus private goods
ID: 1160458 • Letter: R
Question
Read THOUROUGHLY and answer COMPLETELY.
1. Common resources versus private goods go fishing for the weekend in Washington. Lorenzo could either go to the lake in town where anyone can fish without a permit, or he could drive up to a pond located on his family's property in the countryside to fish. Assume that, no matter where people fish, all of the fish that are caught would be PRIVATE PROPERTY The fish in the lake are considered and whereas the fish in the private pond are and .In other words, the fish in the lake are an example of ? , and Fishing in the lake will likely lead to All fishermen will choose to fish in the lake because of the limited access to the pond Nobody will enjoy fishing because of the lack of private contributions to the maintenance of the lake. Anyone can fish in the lake, and one person's fishing activity decreases the ability of someone else to fish with success. All fishermen will choose to fish in the pond believing that there are more fish there.Explanation / Answer
1) Common resource are those which are rival in consumption but possesses the characteristics of non excludable. Rival means consumption of good by one person decreases availability of good for the other. Non-exclusion means if common resource has been provided then it does not possible to exclude one person from consuming it.
Private good is a good which is rival and excludable in nature. Rival means consumption of good by one person decreases availability of good for the other. For example: Bread, Cloth. Exclusive means that it is possible to exclude one person from consuming it.
a) Non excludable
b) Rival
c) Excludable
d) Rival
e) Common good
f) Private good
g) provide drop down option - Overconsumption or Free rider
h) Anyone can fish in the lake, and one person's fishing activity decreases the ability of someone else to fish with success.
2. a) Common resource
b) Non- excludable
c) Rival
d) Manuel's Profit maximizing response is to hunt intensively because it does not negatively affect forest and increases payoff of Manuel.
e) Manuel's profit maximising response is to hunt intensively because forest will destroy in long run as other two are also hunting intensively so it is the time when Manuel can increase his earning.
f) Outlaw intensive hunting.
Convert the recreational wildlife game area to private property, and allow the owner to sell hunting rights.
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