Chapter 11

Question 1

Excludability

Answer 1

Property of a good whereby a person can be prevented from using it.

Question 2

Rivalry in Consumption

Answer 2

Property of a good whereby one person’s use diminishes other use.

Question 3

Types of Goods

Answer 3

-Private Goods
-Public Goods
-Common Resources
-Club Goods

Question 4

Free Rider Problem

Answer 4

A person who receives the benefit of a good but avoids paying for it. There is little incentive for a firm to produce public goods. Is a Public Good Problem.

Question 5

Governments decide on Public Goods by

Answer 5

-Quantifying benefits is difficult using the results of a questionnaire
-Respondents have little incentive to tell the truth

Question 6

Common resources

Answer 6

The outcome is similar to a negative externality because consumers do not take into account the negative impact of others into their consumption.

Question 7

Tragedy of the Commons

Answer 7

Issue of Common Resources Good.

Private incentive says to get as much as possible, but from a social perspective this is over doing it. Governments try to regulate by imposing fees.

Question 8

Property rights and government action

Answer 8

Markets fail to allocate efficiently because property rights are not clearly established. In a private market no one owns it, so no one can charge so people overuse.