The country of New Zealand decides to take 50% of its nation’s lottery money and use it to buy 1,000 acres of common grazing land in every county upon which any New Zealand shepherd may graze their sheepfor free, no strings attached. Based upon what you have learned in this class, economists would expect that:
A) the common grazing land would be under-utilized and the grass would become overgrown.
B) the common grazing land would be over-used and would become barren wasteland with little or no grass left.
C) the sheepwould catch the swine flu.
D) None of the above.
To answer this question, we need to use basic economic principles related to resource allocation and incentives.
In this scenario, New Zealand decides to allocate 50% of its lottery money to purchase grazing land for shepherds. This means that shepherds can now graze their sheep for free on this common land.
Based on economic principles, we can eliminate answer choice C ("the sheep would catch the swine flu") as it is unrelated to the consequences of the policy.
Now let's analyze the other options:
A) The common grazing land would be under-utilized and the grass would become overgrown.
This option suggests that shepherds would not fully utilize the common grazing land, resulting in overgrown grass. However, economists know that people respond to incentives, and in this case, the free access to grazing land would likely create high demand among shepherds. This means the land is more likely to be fully-utilized rather than under-utilized.
B) The common grazing land would be over-used and would become a barren wasteland with little or no grass left.
This option suggests that the free access to grazing land would lead to overuse, causing the land to become barren. Economists understand that when a resource is free and readily available, individuals tend to take more than what they actually need. This oversupply can potentially lead to the depletion of the resource, in this case, the grassland. Therefore, option B is a plausible outcome.
Based on the analysis, economists would expect that option B would be the more likely consequence of the policy. Therefore, the answer is B) the common grazing land would be over-used and would become a barren wasteland with little or no grass left.