Answers to Week Revised 11

Answers to Week Revised 11 - TUTORIAL 11 WEEK 12 COMMON...

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TUTORIAL 11 WEEK 12 COMMON RESOURCES AND PROPERTY RIGHTS PUBLIC GOODS AND THEIR FINANCING Reading Text: Ch 12 (pp334 to end of chapter) Ch 13 Ch 12 Review Questions: 5 and 7 5 Because many different governments have an interest in fisheries in international waters, and because agreements about the level of fishing activity are very difficult to monitor and to enforce, extinction is a very real possibility. While still posing many challenges, fisheries that are entirely within waters that are part of Australia’s jurisdiction and are regulated by only a single government are less likely to be driven to extinction. 7 Spending on Christmas presents can become a positional arms race and result in wasteful spending patterns. Families sometimes devise rules and adopt norms which prevent such races occurring. Agreeing to limit spending is one such rule.
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Problems: 8 8 The following table shows the total village income from grazing llamas, together with the marginal village income from the activity. Number of llamas on the commons Price per 2- year-old llama ($) Income per llama ($/year) Total village income ($/year) Marginal income ($/year) 2 2 1 122 22 22 1 4 2 118 18 36 1 2 3 116 16 48 8 4 114 14 56 4 5 112 12 60 6 6 109 9 54 a Three llamas will be sent onto the commons. The resulting net village income will be $48 from the llamas plus $45 from government bonds, or $93. b The socially optimal number is only one llama. Villagers send three instead, because in deciding whether or not to send a llama, each villager ignores the
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This note was uploaded on 12/31/2011 for the course ECON 1101 taught by Professor Julia during the Three '08 term at University of New South Wales.

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Answers to Week Revised 11 - TUTORIAL 11 WEEK 12 COMMON...

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