Public goods

Question 1

Public good

Answer 1

A good that’s non-excludable and non rivalrous

Question 2

Non-Excludable

Answer 2

This is when it’s impossible to stop someone from consuming a good.

Question 3

Non-Rivalrous

Answer 3

One persons consumption of a good doesn’t influence another persons consumption of a good.

Question 4

Private good

Question 7

Quasi public good

Question 10

Tragedy of commons

Answer 10

A good can become a rival good if its overconsumed/ not consumed sustainably. For example over-fishing for cod became rivalrous as there’s less cod that could be distributed.

The tragedy of the commons is that, when natural public goods – called, the commons – are used sustainably, they are non-rivalrous goods, which can benefit everyone.

But, in a free market, firms are incentivised to profit as much as possible from the commons. And so, they consume above the sustainable threshold, making the commons a rival good.

As a result, natural resources get depleted.

For instance, due to massive fishing operations, the stock of cod on the East coast of Canada is just 1% of what it was in the 1970s.

Question 11

Why does the tragedy of commons occur?

Answer 11

In a free market, firms are incentivised to profit as much as possible from the commons. This means that they consume more than the sustainable threshold which makes the commons a rival good.

Question 12

Why is it very difficult for the government to bring the use of the commons down to sustainable levels?

Answer 12

the commons are also non-excludable