chapter 17 key terms
A private good is ? in consumption, and is ?
rival, excludable
A market for a private good with no externalities produces an ? quantity of goods.
efficient
national defense
nonexcludable, non-rivalrous
A club good is ? in consumption, and is ?
nonrival, excludable
A public good is ? in consumption and is ?
nonrival, non excludable
examples of a public good
public sanitation, national defense, scientific research
A common resource is ? in consumption and is ?
rival, non excludable
private good
a good that is both excludable and rival in consumption
example fo common resources
clean water, biodiversity
a hot pocket sandwich
excludable rivalrous
Pay-Per-View cable television
excludable, nonrivalrous
a unicycle
excludable, rivalrous
pajamas
excludable, rivalrous
private classroom education
excludable, rivalrous
Bob can pay to support his local public radio station, which depends on donations to be as effective as possible. Bob listens to the radio station several hours per day but never donates since he suspects that other people will donate enough to keep the station on the air.
free riding
Jim is working on a group project for a class in which he wants a high grade. However, since the grades are assigned to the group as a whole and he knows that the other group members will pick up most of the extra work, Jim calls in sick and plays video games on his Dream Station 64.
free riding
nonrivial in consumption
if more than one person can consume the same unit of the good at the same time, than a good is this
Excludable
if the supplier of that good can prevent people who do not pay from consuming it, then a good is this
common resources left to the market suffer from overuse
individuals ignore the fact that their use depletes the amount of the resource remaining for others
A market for a common resource produces an ? quantity.
inefficient
A market for a public good produces an ? quantity.
inefficient
A market for an artificially scare good, also known as a club good, produces an ? quantity.
inefficient
public good
is both non excludable and nontrivial in consumption
common resource
is nonexcludable and rival in consumption: you can't stop me from consuming the good, and more consumption by me means less of the good available for you
goods that are nonexcludable suffer from the free rider problem
many individuals are unwilling to pay for their own consumption and instead will take a "free ride" on anyone who does pay, goods that are nonexcludable suffer from this
Drew always buys the lunch special for $5 at the restaurant across the street from where he works. If he decided to eat at the restaurant after 3:00 p.m., however, he would be unable to get the lunch special, and would instead have to pay $10 for the same food.
not free riding
Karl never drives at night, and gets no benefit from street lamps at all. Street lamps are nonexcludable and nonrival in consumption. When the community group tries to collect money to build street lamps, Karl does not donate any money.
not free riding
example of artificial scare goods
on demand movies, computer software
cost-benefit analysis
the estimation and comparison of the social costs and social benefits of providing a public good
rival in competition
the same unit of the good cannot be consumed by more than one person at the same time, then a good is this
nonexcludable
the supplier cannot prevent consumption by people who do not pay for it, a good is this
artificially scare good
a good that is excludable but nonrival in consumption
Select the best definition of a public good.
a good that is nonexcludable and nonrival in consumption
example of private goods
wheat, bathroom fixtures
