Public Goods
A common resource is rival and nonexcludable. A unit of a common resource can be used only once, but no one can be prevented from using what is available.
A public good is both nonrival and nonexcludable. A public good can be consumed simultaneously by everyone, and no one can be excluded from enjoying its benefits.
The free-rider problem is that the economy would provide an inefficiently small quantity of a public good.
A public good is nonexcludable and nonrival. Polio vaccinations in Myanmar are excludable and rival. They are not a public good.
The free-rider problem makes the private provision of a public good inefficient because _______.
no one will pay for the public good and the firm will make zero revenue
A natural monopoly good is _____ but _____.
nonrival; excludable
Healthcare and education are not public goods because they are _______.
rival & excludable
Three problems make healthcare a special good that is provided by government: NOT PUBLIC GOOD
-some consumers and potential consumers of healthcare can't afford the care they need -consumers and potential consumers of healthcare underestimate its benefit -consumers and potential consumers of healthcare underestimate their future needs
Road safety signs are a public good, so they have a potential free-rider problem. If the government uses the gas tax revenue to pay for these signs, the free-rider problem can be eliminated
Ambulance service: does not have a free-rider problem because it is a private good
Governments do not exist to eliminate inefficiencies in the markets for public goods and common resources.
Governments try to make the markets for public goods and common resources more efficient but they do not eliminate the inefficiencies.
is excludable and _____ is nonexcludable.
camera; concert
_____ is a private good, _____ is a public good, and _____ is a common resource.
car; freeway; oxygen
Staue liberty= is nonexcludablenonexcludable and nonrivalnonrival. A good is nonexcludablenonexcludable if it is impossible or extremely costly to prevent someone from benefiting from itit is impossible or extremely costly to prevent someone from benefiting from it.
A good is nonrivalnonrival if one person's use of it does not decreasedoes not decrease the quantity available for someone else.
A private good is both rival and excludable. Examples of private goods are a can of Pepsi and your iPod.
A natural monopoly good is nonrival and excludable. Potential users of a natural monopoly good can be excluded if they don't pay, but having paid for access use of the good is nonrival. Cable TV is an example of a natural monopoly good.
The market economy would produce too _______ healthcare because the marginal social benefit from healthcare _______ the marginal benefit perceived by its consumers. little;exceeds
quantity healthcare produced by market economy= quantity at which marginal benefit equals marginal social cost. - efficient quantity is the quantity at which marginal social benefit equals marginal social cost. Because the marginal social benefit from healthcare exceeds the marginal benefit perceived by its consumers, the market economy produces less than the efficient quantity.
The free-rider problem is that _______.
the market would provide an inefficiently small quantity of a public good ex:A person who refuses to be vaccinated is a "free rider" because he benefits from all his neighbors' vaccinations.