Question

Spring is here, and Frances and her brother would like to go fishing for the weekend in Washington. Frances could either go to the river in town where anyone can fish without a permit, or she could drive up to a stream located on her family's property in the countryside to fish. Assume that, no matter where people fish, all of the fish that are caught would be kept (that is, there is no "catch and release" policy).

The fish in the private stream are considered (rival in consumption / nonrival in consumption) and (excludable / nonexcludable) whereas the fish in the river are (rival in consumption / nonrival in consumption) and (excludable / nonexcludable). In other words, the fish in the private stream are an example of (Private good, public good, club good, common resource), and the fish in the river are an example of (private good, public good, club good, common resource)
Fishing in the river will likely lead to (adverse selection, natural monopoly, tragedy of the commons) because of which of the following reasons?
1. Nobody will enjoy fishing because of the lack of private contributions to the maintenance of the river.
2. All fishermen will choose to fish in the stream believing that there are more fish there.
3. All fishermen will choose to fish in the river because of the limited access to the stream.
4. Anyone can fish in the river, and one person's fishing activity decreases the ability of someone else to fish with success.

Answer 1

Answer: Please refer to Explanation

Step-by-step explanation:

A. The fish in the private stream are considered rival in consumption and excludable whereas the fish in the river are rival in consumption and nonexcludable.

When a good is said to be Rival in Consumption, it means that consumption of the good reduces the chances that others have of consuming the same good. Every Fish that Frances catches regardless of whether it is in the Private or the Non-Private stream, means one more fish that no one else will.be able to catch and consume.

Excludable goods are goods that one can refuse people access to if they have not paid or reached some sort of agreement with the owner of the good.

Non-Excludable Goods are goods that cannot be refused people access to. People can use them without having to pay a fee.

B. In other words, the fish in the private stream are an example of Private good, and the fish in the river are an example of a public good.

A Private Good is one that is Excludable and under the ownership of a person or entity who derives benefits from it and can choose whether or not to allow others the chance to get a benefit from the good as well. The Stream is private and so it is up to Frances's family as to who they want to use it.

Public goods are more often than not, Non-Excludable and open to use for the public. Anyone can use the river to fish without a permit thereby making the fish a Public good.

C. Fishing in the river will likely lead to tragedy of the commons because of which of the following reasons?

4. Anyone can fish in the river, and one person's fishing activity decreases the ability of someone else to fish with success.

The Tragedy of the Commons is refers to a situation described in Economics where because of a lack of restrictions on the use of a good, individual members of the public use the good in such a way that it is not sustainable which will lead to the depletion of the good.

Because anyone can fish in the river, one person fishing can reduce the ability of another person to get fish because the fish will keep going down if caught faster than they can reproduce.