<< Chapter < Page Chapter >> Page >

In the Caribbean, the queen conch is a large marine mollusk found in shallow waters of sea grass. These waters are so shallow, and so clear, that a single diver may harvest many conch in a single day. Not only is conch meat a local delicacy and an important part of the local diet, but the large ornate shells are used in art and can be crafted into musical instruments. Because almost anyone with a small boat, snorkel, and mask, can participate in the conch harvest, it is essentially nonexcludable. At the same time, fishing for conch is rivalrous; once a diver catches one conch it cannot be caught by another diver.

Goods that are nonexcludable and rivalrous are called common resources . Because the waters of the Caribbean are open to all conch fishermen, and because any conch that you catch is conch that I cannot catch, common resources like the conch tend to be overharvested.

The problem of overharvesting common resources is not a new one, but ecologist Garret Hardin put the tag “Tragedy of the Commons” to the problem in a 1968 article in the magazine Science . Economists view this as a problem of property rights. Since nobody owns the ocean, or the conch that crawl on the sand beneath it, no one individual has an incentive to protect that resource and responsibly harvest it. To address the issue of overharvesting conch and other marine fisheries, economists typically advocate simple devices like fishing licenses, harvest limits, and shorter fishing seasons. When the population of a species drops to critically low numbers, governments have even banned the harvest until biologists determine that the population has returned to sustainable levels. In fact, such is the case with the conch, the harvesting of which has been effectively banned in the United States since 1986.

Visit this website for more on the queen conch industry.

Positive externalities in public health programs

One of the most remarkable changes in the standard of living in the last several centuries is that people are living longer. Thousands of years ago, human life expectancy is believed to have been in the range of 20 to 30 years. By 1900, average life expectancy in the United States was 47 years. By 2015, life expectancy is 79 years. Most of the gains in life expectancy in the history of the human race happened in the twentieth century.

The rise in life expectancy seems to stem from three primary factors. First, systems for providing clean water and disposing of human waste helped to prevent the transmission of many diseases. Second, changes in public behavior have advanced health. Early in the twentieth century, for example, people learned the importance of boiling bottles before using them for food storage and baby’s milk, washing their hands, and protecting food from flies. More recent behavioral changes include reducing the number of people who smoke tobacco and precautions to limit sexually transmitted diseases. Third, medicine has played a large role. Immunizations for diphtheria, cholera, pertussis, tuberculosis, tetanus, and yellow fever were developed between 1890 and 1930. Penicillin, discovered in 1941, led to a series of other antibiotic drugs for bringing infectious diseases under control. In recent decades, drugs that reduce the risks of high blood pressure have had a dramatic effect in extending lives.

These advances in public health have all been closely linked to positive externalities and public goods. Public health officials taught hygienic practices to mothers in the early 1900s and encouraged less smoking in the late 1900s. Many public sanitation systems and storm sewers were funded by government because they have the key traits of public goods. In the twentieth century, many medical discoveries came out of government or university-funded research. Patents and intellectual property rights provided an additional incentive for private inventors. The reason for requiring immunizations, phrased in economic terms, is that it prevents spillovers of illness to others—as well as helping the person immunized.

The benefits of voyager i live on

While we applaud the technology spillovers of NASA’s space projects, we should also acknowledge that those benefits are not shared equally. Economists like Tyler Cowen , a professor at George Mason University, are seeing more and more evidence of a widening gap between those who have access to rapidly improving technology, and those who do not. According to Cowen author of the recent book, Average Is Over: Powering America Beyond the Age of the Great Stagnation , this inequality in access to technology and information is going to deepen the inequality in skills, and ultimately, in wages and global standards of living.

Key concepts and summary

A public good has two key characteristics: it is nonexcludable and nonrivalrous. Nonexcludable means that it is costly or impossible for one user to exclude others from using the good. Nonrivalrous means that when one person uses the good, it does not prevent others from using it. Markets often have a difficult time producing public goods because free riders will attempt to use the public good without paying for it. The free rider problem can be overcome through measures to assure that users of the public good pay for it. Such measures include government actions, social pressures, and specific situations where markets have discovered a way to collect payments.

Problems

Becky and Sarah are sisters who share a room. Their room can easily get messy, and their parents are always telling them to clean it up. Here are the costs and benefits to both Becky and Sarah, of taking the time to clean their room: If both Becky and Sarah clean, they each spends two hours and get a clean room. If Becky decides not to clean and Sarah does all the cleaning, then Sarah spends 10 hours cleaning (Becky spends 0) but Sarah is exhausted. The same would occur for Becky if Sarah decided not to clean—Becky spends 10 hours and becomes exhausted. If both girls decide not to clean, they both have a dirty room.

  1. What is the best outcome for Becky and Sarah? What is the worst outcome? (It would help you to construct a prisoner’s dilemma table.)
  2. Unfortunately, we know that the optimal outcome will most likely not happen, and that the worst one will probably be chosen instead. Explain what it is about Becky’s and Sarah’s reasoning that will lead them both to choose the worst outcome.
Got questions? Get instant answers now!

References

Cowen, Tyler. Average Is Over: Powering America Beyond the Age of the Great Stagnation . Dutton Adult, 2013.

Hardin, Garret. “The Tragedy of the Commons.” Science 162 (3859): 1243–48 (1968).

Questions & Answers

Max U(x,y)=xy+x+2y subjected to Px=2, Py=5 and M=51
Tsion Reply
Max U(x,y)=xy subjected to Px=2, Py=8 and M=160
Tsion
since price controls enacted by the government always has an unintended effects, the best way to control the market is to allow economic activities to run their cause
Japheth Reply
Microeconomics is the Study of allocating limited resources to solve the problems of optimizations.Explain this statement with suitable example.
Aruna Reply
Microeconomics is called price theory.Why?
Aruna
because it is a individual theory producer can set price acc to his benefit
mithlesh
who was the father of macroeconomics?
Eyob Reply
Alfred Marshall
Aruna
John Maynard Keynes
hosneara
What is economic
rafi Reply
Economy is everything...
Htoo
An economy is an area of the production, distribution and trade, as well as consumption of goods and services by different agents. In general, it is defined 'as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of
Muhammad
Thanks
Abdullahi
will I be able to get Macroeconomic book?
Dhieumarial Reply
difference between monopolistic competition and monopolist markets
Nancy Reply
Cardinal utility theory assumes that consumers can
Siphelele Reply
why are price ceiling and price floor said to be efficient?
Mariateretia Reply
they are called inefficient, price floor or a price ceiling will prevent a market from adjusting to its equilibrium price and quantity, thus creating an inefficient outcome.
Stuti
please how did we get fixed cost, marginal and average cost. thanks
Onovo Reply
can any one help me solve pie chart, bar chart and histogram. thanks
Onovo
any answers please, thank you
Onovo
solution on average cost and marginal cost
Onovo
p= -10+0.05p
Dil
Create the supply curve
Dil
plz help..
Dil
are u sure that it is p? it should have two variables. Qd should be there too
Stuti
if you have two variable, put different values of p to get q and you will have coordinates that u can use to make the supply curve.
Stuti
Fixed cost remain constant,when we r going to gain marginal cost so we should increase in additional unit/variables to get marginal cost with the increase in mc then we easily get average cost
Bilal
Answer the below question to best of your ability by employing the tax concept and supply and demand Suppose the supply of tobacco is elastic and the demand for tobacco is inelastic. If an excise tax is levied on the suppliers of tobacco, will the incidence fall mostly on consumers or mostly on pro
Carolyn Reply
first you suppose the demand for tobacco is elastic that means if price change more change would occur in demand and second you suppose tax has been lived on suppliers that means the price of tobacco will rise up and it's demand will decline that means consumer will start consuming less
Wani
what is perfect competition
Masciline Reply
perfect competition is the form of market where sellers are selling homogeneous product to buyers homogeneous product means a product which is same colour ,same brand and same cost has been used .
Wani
WHAT IS OPPORTUNITY COST AND GIVE EXAMPLES
Werku Reply
What Is opportunity cost and give examples fot it?
Werku
Opportunity cost means profit of what you have give up in order to choose something else
Wani
example of opportunity cost . we take example of land.As land have alternative uses it can be use for production , for building factories on it or for construction of house . suppose you are the owner of land and you build house on it that means you give up the benefit which you may get in produ
Wani
the benefit which you didn't get in production or in building factories is called opportunity cost
Wani
opportunity cost is the cost of what you give up to get something. example: if u wanna buy an apple and a mango and end up buying only a mango. your opportunity cost is the cost of the Apple the you've given up
ebrima
define marginal rate of substitution
Roshan Reply
marginal rate of substitution
Lengha
The rate at which one product can be substituted for another is called MRS.
Ramachandra
how much additional units of a product under consideration is required to deliver the same level of satisfaction that one derives from an additional unit of a given product.
Simply untill the satisfaction one icreased another decreased also depends upon the satisfaction power of a commodity
Bilal
Why indifference curve does not intersect x axis and y axis
Bilal
If the two products are perfect substitutes it will touch both axis. In your question, it is assumed that these are not perfect substitutes. If it touches any axis, it shows that with the given quantity of one product alone gives the same level of satisfaction.
Ramachandra
the intersection at the axis would mean that the product is perfectly substitutable and hence the indifference analysis is non-existent.
what industry monopolies belongs
Gwayi Reply

Get Jobilize Job Search Mobile App in your pocket Now!

Get it on Google Play Download on the App Store Now




Source:  OpenStax, Microeconomics. OpenStax CNX. Aug 03, 2014 Download for free at http://legacy.cnx.org/content/col11627/1.10
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Microeconomics' conversation and receive update notifications?

Ask