1) a. Private good, excludable and rival
b. Common resource, rival but not excludable
c. Public good, not excludable nor rival
d. Natural monopolies, excludable but not rival
e. Public good, not excludable nor rival
f. Natural monopolies, excludable but not rival
2) Ignoring the increase in population (and demand per capita) and the improvement in
fishing technology another reason why overfishing was not a big problem in the Roman
empire is because unlike nowadays which fishing right in the Mediterranean is shared
between several different countries, the Roman empire owned all of the fishes in the
Mediterranean, and thus the Roman government would take consideration of how fishing in
one region would affect the fishers in another region of the Roman empire and adjust fishing
practices accordingly.
3) a. A survey may not be a reliable method because firstly, respondents may not have
enough information to accurately value the benefits and costs of the tram and secondly, since
it’s a hypothetical situation and respondents don’t see themselves as the ones paying for the
tram, they may overstate or understate their valuations.
b. Perhaps use contingent valuation such as asking respondents how much more tax they are
willing to pay for the tram or analyse existing public transportation usage (how often people
use and how much people are willing to pay for public transportation similar to the tram in
cities comparable to Edinburgh).
4) a. The efficient outcome is to build the fence because the cost of building a fence is less
than the cost of filtering the water.
b. Carla could pay for the fence since the cost of cleaning is more than the cost of filtering.
c. This would likely result in the inefficient outcome for Carla where she would pay 100
pounds filtering water.
5) a. When one person buys a fire extinguisher, when fire breaks out, it is less likely that fire
will spread to neighbouring properties and neighbours can borrow the fire extinguisher in
case of emergency.
6) Negative externalities include antibiotic resistance. US may prescribe antibiotics more
frequently due to looser regulations and private healthcare’s focus on patients’ customer
satisfaction.