1.3.3 Public Goods

Question 1

What is a private good?

Answer 1

A good that once consumed, is cannot be consumed by someone else. Such good has excludability and is rivalrous

Question 2

What are public goods evident of market failure?

Answer 2

Because they allow the free-rider problem. This is where individual consumers can benefit from the production of the good without paying for it.

Question 3

What does non-excludable mean?

Answer 3

A situation in which it is not possible to provide a product to one person without allowing others to consume it as well

Question 4

What does non-rivalrous mean?

Answer 4

A situation in which one persons consumption of the good doesn’t prevent other people from consuming it

Question 5

What is a public good?

Answer 5

A good that is non-excludable and non-rivalrous. Consumers cannot be stopped from consuming the good and consumption by one person doesn’t affect the amount available to others