Question

PART I: • You live on the outskirts of a small town, and are considering investing in one of three different apple orchards, as a way to supplement your income and help pay for your college tuition. You are presented with the following four scenarios, and must discern the type of good involved in each, as well as the incentives associated with the use of each orchard. • Orchard A: You would be the sole owner of Orchard A. There is a fence around the orchard which restricts access, and you could pick the apples to keep for yourself or to sell to others. The apples would be of very high quality, since you would would wait to pick the apples at their ideal ripeness, and may be willing to invest in fertilizing and trimming the apple trees to promote healthier growth. 1. What type of Orchard is Orchard A? (a) Public Good (b) Private Good (c) Club Good (d) Common-resource Good 1 • Orchard B: Orchard B is managed by a restricted group of owners in a Cooperative. Access to the Cooperative is limited to only 20 members who join and pay dues. Members are free to pick as many apples as they would like at any time, as there are many more apples than the limited number of members would ever want to pick to sell or consume. Non-members are not allowed access to the orchard. 2. What type of Orchard is Orchard B? (a) Public Good (b) Private Good (c) Club Good (d) Common-resource Good • Orchard C: Orchard C is available for anyone in town to access. There are no fences or barriers, and fruit may be picked by anyone at any time. You are free to sell or consume any apples you pick. Due to the unlimited access and large number of patrons, each apple you pick means fewer apples for other citizens to enjoy. The orchard is funded by tax revenue from the city. 3. What type of Orchard is Orchard C? (a) Public Good (b) Private Good (c) Club Good (d) Common-resource Good • Now consider all 3 orchards to answer the following questions: 4. Which Orchard is least likely to have apples left on the trees in the last week of the apple-picking season? (a) Orchard A (b) Orchard B (c) Orchard C (d) All are equally likely 5. If the costs of maintaining an orchard are prohibitively expensive for a single-owner, which orchard may provide a way for you to enjoy the fruits of Orchard ownership while maintaining a sustainable orchard that can produce high-quality fruit for years to come? (a) Orchard A (b) Orchard B (c) Orchard C (d) All are equally likely

Answer 1

1.Orchard A is a Private Good.​​It is excludable and rival in nature. Orchard A is owned by one person who can pick apples and sell it to anybody he likes. Anybody else is excluded from picking apples from orchard A.

2.Orchard B is a Club good as it is excludable because it prevents non-members from having access to the orchard. Only members, who have paid a certain fee are free to pick apples. They are non-rival because there are many more apples than members.

3.Orchard C is a Common resource because it is non-excludable but rival in nature. The orchard is accessible to everybody in town, hence non-excludable. It is rival in nature because each apple picked means fewer apples for other people.

4.Orchard C is least likely to have apples left is the last week of the apple picking season mainly because of it's rival nature as people are well aware that there might be no apples left for rhem sue to the large number of patrons.

5. Orchard B can allow one to enjoy the fruits of orchard ownership if the costs of orchard ownership are expensive. Orchard B is a club good and 20 members have paid to have access. It is in the interests of everybody to grow a sustainable orchard and to pick high quality apples.