Externality Definitions

Question 1

Private goods

Answer 1

Rivalrous and excludable meaning producers can charge a price on them

Question 2

Public good

Answer 2

Non-excludable and non-rivalrous meaning producers cannot charge prices on them (e.g healthcare in some countries, police, fishing pond)

Question 3

Tragedy of the commons/ Free rider problem

Answer 3

There is resource depletion because a price cannot be charged on the public good = used until nothings left

Question 4

capital good

Answer 4

previously produced good that is not directly consumed, but is used by businesses to produce other goods or services.

Question 5

common pool resource

Answer 5

rivalrous & non ecludable => fight for depletion but everyone can use it

Question 6

Why is it bad that gov. rgeulate CPR?

Answer 6

• might have less knowledge
• political decisions affect beauraucracy
• inflexible changes
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