Chapter 19 Econ

What are the two types of goods subject to market failure?

Common Resources and Public Goods.

What type of goods end up over-consumed and depleted?

Common Resources.

What type of goods end up undersupplied?

Public Goods.

What is an excludable good?

A good that allows owners to prevent its use by people who have not paid for it.

What is a private good?

A good that is both excludable and rival.

What are public goods?

A good that is neither excludable nor rival.

What is a common resource?

A good that is not excludable but is rival.

What is the free rider problem?

A problem that occurs when the non excludability of a public good leads to undersupply.

What can quotas do?

Control quantity but they don't necessarily allocate supplies in the most efficient way.

What is an example of a non excludable good?

Street lights.

What is rival in consumption?

The charactersitic of a good for which one person's consumption prevents or decreases others ability to consume it.

What is tragedy of the commons?

The depletion of a common resource due to individually rational but collectively inefficient overconsumption.

Where are bans and quotes applied?

To common resource problems to reduce the inefficiency created by overuse.

What does the combination of inefficiently high demand and dwindling quantity lead to?

Tragedy of the commons.