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