quiz 2 pt2

Question 1

government (3)

Answer 1

• decides wt public goods to provide
• in what quantities
• use the “cost-benefit” analysis

Question 2

“cost–benefit analysis”

Answer 2

a study that compares the costs and benefits to society of providing a public good.

(doesnt hv any price signs to observe & rough approximations)

Question 3

Tragedy of the Commons

Answer 3

a parable that illustrates why common resources are used more than is desirable, from the standpoint of society as a whole.

Question 4

characteristics of “tragedy of the commons” (3)

Answer 4

• social & private incentives differ
  -arises because of a negative externality
• diminishes other people’s enjoyment of it

Question 5

how can governments solve the problem?

Answer 5

regulation or tax
turn the common resource into a private good