Public Goods

Question 1

what are the 3 characteristics of a public good?

Answer 1

-Non Excludable
-Non-Rivalrous consumption
-Non Rejectable

Question 2

what is Non Excludable

Answer 2

the benefits derived from pure public goods cannot be solely confined to those who payed for it. Non payers can enjoy the benefits at no financial cost (free rider problem)

Question 3

what is Non rivalrous

Answer 3

consumption by one consumer doesn’t restrict consumption by others. If it is supplied to one person, it is available to all. marginal cost of supplying public goods to an extra person = 0

Question 4

what is Non Rejectable

Answer 4

the collective supply of a public good for all means that it cannot be rejected by people (e.g a nuclear defence/ flood system)

Question 5

what is marginal cost

Answer 5

additional cost

Question 6

what is different about private goods compared to public goods

Answer 6

private goods are excludable, rejectable, and rivalrous

Question 7

What is a Quasi public good?

Answer 7

A quasi public good has many characteristics of a public good, however it is only
-semi non rival
-semi non excludable

Question 8

the free rider problem

Answer 8

because public goods are non excludable, it is difficult to charge people from benefitting from a good/service once it is provided. — this can cause market failure.