Question 3 7ys Recently California has been suffering from a severe draught Oack

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Question 3 7ys Recently California has been suffering from a severe draught Oack of rain weter, Last ye he California draught received renewed attention becaune the gpvemer of Calloia announced he was considering implementing water restrictions This question deals with a specific source of water under-ground aquifers (arge "pools' of fresh water that have collected under the ground). For the most part Califomia does not have restrictions o who can drill down to the aquifer to access that water. Answer the following parts from the perspective of people with wells that can access the aquifers a) Using the information above (under the current situation in which there are not restrictions on who can drill into aquifers), is water from an aquifer an excludable o no excludable good? Briefly explain. rival or non-rival good? Briefly explairn or (b) Is the water from an aquifer a c) Using your answers above, what'"type of good' is water from an quifeec (d)Given your answer in part (c, is this good susceptible to a free-fider problem tgey of the commons, or neither? Briefly explain. n the box below make sure you answer ALL parts,(a)-d), and clearly abel each part of your answer (part (la), (tb), etc.)

Explanation / Answer

a.)

Since any one can drill into aquifer, hence drilling by one person does not rule out chances of drilling any another person. Therefore, it is non-excludable good.

b)

Consumption of water by one person does not rule out chances of consumption by another. Hence, this is non-rival good.

c)

This is public good.

d)

Since this is public good and no one is ready to disclose true demand for water. Every one tends to overexploit water resources. Hence, chances of free rider problem are abundant enough.

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