Chapter 19: Public Goods and Common Resources
Open-source software, traffic lights, and national defense are examples of:
Public Goods
the defining characteristics of a ___ good are non excludability and non rivalry.
public
the free-rider problem occurs with all ___ goods.
public
*** Public goods are:
- non excludable - nonrival
*** Common recourse are:
- non-excludable - rival
Solutions to free-rider problems:
1. change social norms relating to the good or service. 2. make someone responsible for the provision of a certain quantity of the good or service 3. make the good or service more excludable by assigning property rights.
*** Artificially scarce goods are:
- excludable - nontrivial
*** Private goods are:
- excludable - rival
Regressive tax:
A tax whereby people with lower incomes pay a higher proportion of their income than people with higher incomes.
Progressive tax:
A tax whereby people with lower incomes pay a smaller percentage of their income than people with higher incomes.
MP3d, pay-per-view movies, subscription-only websites are examples of:
Artificially scarce goods
Forests, fisheries, and wildfires are examples of:
Common resources
_____ matters because it allows owners to set ban enforceable price on a good.
Excludability
Plane tickets, pizza, and minivans are examples of:
Private goods
Free-rider problem:
a problem that occurs when the non excludability of a public good leads to under supply.
Collective tax:
a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality
Common resources:
are NOT excludable but are rival
Public goods:
are the opposite of private goods,. - they are NEITHER excludable nor rival.
Private goods are both:
excludable rival
Street lights are an a _____ good
nonexcludable
Rival in consumption:
one person's consumption prevents or decreases others' ability to consume it.
** the problem with common resources is that they are:
over consumed
Private goods:
which are both excludable and rival in consumption.
*** most goods are ___ goods.
rival
EX of ____ good: after you eat your lunch, nobody else can eat that exact same plate of food.
rival
the tragedy of the commons arises from the combination of ___ and ____.
rivalry non excludability
Excludable:
sellers can prevent its use by those who have not paid for it.
Tragedy of the Commons:
the depletion of a common resource due to individually rational but collectively inefficient overconsumption.
Metro bus service is an example of:
the free rider problems
the free-rider problem is a problem of ___ ___: people are able to enjoy the benefits of something without playing the corresponding costs.
trade-offs
*** the overconsumption problem is called:
tragedy of the commons
** the problem with public goods is that they are:
undersupplied