 1 st Group Quiz - Monday Sept. 9 th  Homework #2 Due Sept. 16  Exam #1 Sept. 16 Chapters 3, 4, 6  Writing Assignment Due Oct. 23rd

 What is the difference between a common good, a public good, and an open-access resource? Give examples of each.

Excludable Non-Excludable Non-Rivalrous Rivalrous Club Goods Public Goods Common Goods Private Goods Fish, hunting game, grazing land National defense, lighthouses, clean air, information goods Food, clothing, toys, cars Satellite television, Golf courses, Cinemas

 Exclusivity – All benefits and costs accrued as a result of owning and using the resources should accrue to the owner, and only the owner, either directly or indirectly by sale to others  Transferability – All property rights should be transferable from one owner to another in a voluntary exchange  Enforceability – Property rights should be secure from involuntary seizure or encroachment by others (ie. eminent domain)

 What is willingness to pay (WTP)?  What is your WTP for a dozen eggs from Meijer?  What is your WTP for a dozen farm fresh eggs from organically raised free-range chickens?  Explain why they are different (or the same).

 Assume a change in the quality of a good results in an increase in consumers’ willingness to pay. Assume also that the supply of the good is unchanged. Illustrate this situation graphically and identify the change in net benefits attributable to the change in quality.

Pric e Qd Qs  Consider the following supply and demand schedule for steel.  Pollution from steel production is estimated to create an external cost of $60 per ton.  Show the external cost, market equilibrium, and social optimum on a graph

 What kinds of policies might help to achieve the social optimum? How would this policy affect consumers? How would this policy affect producers? What effect would the policy have on market equilibrium price and quantity?

 Rivalrous and non-excludable  Tragedy of the Commons When a resource is non-excludable, individuals act independently and rationally consume with their own self-interest in mind. Ultimately, this will deplete the resource, even when it’s not in anyone’s best interest.

Number of Boats (in hundreds ) Total Product (in hundreds of tons of fish) Constant Returns Diminishing Returns Absolutely Diminishing Returns

Number of Boats (in hundreds) Dollars (in millions) Total Revenue Total Costs Fishery Profits Figure 4.2: Total Revenue, Total Costs, and Profits for the Entire Fishery

Number of boats (in hundreds) Total fish catch (hundred tons) Total revenue (in million $) Total costs (in million $) Total profits (in million $) Table 4.1: Total Fish Catch, Revenue, Costs, and Profit

Number of Boats (in hundreds) Dollars (in thousands) Average Revenue Marginal Revenue Marginal Cost Open-access Equilibrium Efficient Outcome License Fee Figure 4.3: Marginal Revenue and Cost Analysis of Fishery

Number of boats (in hundreds) Revenue per boat (in thousand $) Cost per boat (in thousand $) Profit per boat (in thousand $) Table 4.2: Average Revenue, Costs, and Profits

Number of boats (in hundreds) Total revenue (in $ million) Marginal revenue (in $ 000) –2–4–6–8 Marginal cost (in $ 000) Table 4.3: Marginal Revenue and Cost Analysis of Fishery

 1 st Group Quiz - Monday Sept. 9 th  Homework #2 Due Sept. 16  Exam #1 Sept. 16 Chapters 3, 4, 6  Writing Assignment Due Oct. 23rd