Public Goods & Common Resources

Question 1

Explain the classification of goods.

Answer 1

Rivalry
1. Rival goods - individual consumer.
2. Non-rival goods - multiple consumers.

Excludability
1. Excludable goods - requires payments.
2. Non-excludable goods - free to consume.

Question 2

Identify a rival excludable good.

Answer 2

Private good

Examples: houses, cars.

Question 3

Identify a non-excludable rival good.

Answer 3

Common Resources

Examples: fish, pasture.

Tragedy of the Commons (1968) - a situation where anyone has access to a non-excludable (free to consume) good, but only one individual may consume it - disaster.

Question 4

Identify an excludable non-rival good.

Answer 4

Club goods

Examples: Netflix, Spotify

Question 5

Identify a non-excludable non-rival good.

Answer 5

Public goods

Examples: air, national defence.