Answered: Suppose Fischer Pond is a…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter21: Costs And The Supply Of Goods

Section: Chapter Questions

Problem 2CQ

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Question

Suppose Fischer Pond is a common-property resource—anyone can fish without having to pay for access. Locke Lake is privately owned—people who want to fish must purchase one of a limited number of permits from the lake's owner each season. According to the incentives that private ownership creates, which of the following would you expect to happen?

Check all that apply.

The owner of Locke Lake is likely to keep the lake clean and unpolluted.

The owner of Locke Lake is likely to limit the number of fishing permits in order to maintain a plentiful stock of fish.

Fischer Pond is less likely to experience a dwindling stock of fish each season.

Expert Solution

Step 1

Common property resource are the natural resources which are owned and managed by the community or society as a whole rather than an individual. It can be used collectively by all and no one can be excluded from its use since it is available for free and not privately owned.

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