Classification Of Reasources Flashcards
(22 cards)
What is the basic economic problem that leads to the production of private goods?
Scarce resources
Scarcity of resources necessitates the production of private goods.
Define ‘Excludability’.
It is possible to exclude some people from using a private good through the price charged.
Define ‘Rivalry’ in the context of goods.
The consumption by one person reduces the availability for others.
What are ‘Free Goods’?
Goods with zero opportunity cost and no price, consumption is not limited by scarcity.
Give examples of Free Goods.
- Air
- Sunlight
- Wild berries
What are ‘Public Goods’?
Goods that are non-excludable and non-rival.
What does ‘Non-excludable’ mean?
It is not possible to stop all from benefiting from the good.
What does ‘Non-rival’ mean?
The consumption of the product by one person does not diminish its availability for others.
Provide examples of Public Goods.
- Police
- Defense
- Streetlighting
- Lighthouses
What is a ‘Quasi-public good’?
Goods that are not strictly public or private, lying somewhere in between.
Give examples of Quasi-public Goods.
- Public beaches
- Toll roads
What is the ‘Free Rider’ problem?
Consumers benefit from public goods without paying, leading to underproduction.
What could happen if no mechanism is in place for public goods?
Public goods may never be provided as everyone waits for others to pay.
What leads to ‘overconsumption’ of goods?
Information failure about the good or bad effects of consumption.
What are ‘Merit Goods’?
Goods with positive side effects, often provided by the state.
Give examples of Merit Goods.
- Education
- Healthcare
- Vaccinations
What are ‘Demerit Goods’?
Goods that have adverse side effects when consumed.
Give examples of Demerit Goods.
- Alcohol
- Fast food
- Gambling
Why are Demerit Goods usually overproduced?
Due to their habit-forming properties.
What is the role of the state in relation to Merit Goods?
Merit goods tend to be provided by the state.
What is ‘paternalism’ in the context of goods?
Allowing society to dictate what is good or bad for individuals.
What do ‘value judgments’ refer to?
Societal decisions on what is considered good or bad for individuals.
