1.3.3 public goods

Question 1

two criteria for a public good

Answer 1

non-excludable (cannot exclude anyone from consuming it)

non-rival (one person consuming the good does not stop another person from consuming it)

Question 2

definition of a pure public good

Answer 2

a good that is non-excludable AND non-rival

Question 3

definition of a quasi-public good

Answer 3

a good that is EITHER non-excludable OR non-rival (not both)

Question 4

definition of a private good

Answer 4

opposite to a public good e.g. a sweet

can exclude people as it has a price (not everyone will be able to afford it) and it is rival (if one person eats the sweet, no one else can)

Question 5

what is the problem with public goods?

Answer 5

they are non-excludable and non-rival meaning consumers can use these without paying for them (creates the free-rider problem)

firms cannot make a profit from providing public goods - typically provided by the state as they lack a firm’s profit motive