20- Market Failure- Public Goods

Question 1

What is a private good?

Answer 1

• A rivalrous good.
• Consumption by one person results in the good not being available for consumption by another.
• Excludable- once provided, it is possible to prevent others from using it.

Question 2

Characteristics of public goods

Answer 2

• Non-rivalry- consumption of the good by one person does not reduce the amount available for consumption by another person, sometimes also known as non-diminishing or non-excludability.
• Non excludability- Once provided, no person can be excluded from benefiting; equally, no person can opt out of receiving the good, which is known as non-rejectability
• The marginal cost of producing a unit of the good is zero.

Question 3

Examples of public goods

Answer 3

• Defence
• The judicary and prison service
• The Police Service
• Street Lighting
• Education and Health- include a public good element

Question 4

What is the free rider problem?

Answer 4

A free rider is someone who receives the benefit but allows others to pay for it. So there are public goods which is impossible to prevent people from receiving the benefits once the good is provided- so there is little incentive for people to consume it.

Question 5

What is a quasi-public good?

Answer 5

A good which takes characteristics of private and public goods.