2.10 public goods Flashcards
1
Q
what are the characteristics of a public good?
A
non-excludability
non-rivalry
2
Q
why are public goods underprovided in a free market?
A
due to the free rider problem whereby people benefit from the consumption without paying for it or underpaying. as a result firms will not make a profit, therefore the marginal social benefit exceeds the marginal private benefit.
3
Q
what does non-excludable mean?
A
by consuming the good, someone else is not prevented from consuming the good, everybody can use it
4
Q
what does non-rival mean?
A
the benefit people get from consumption does not diminish if more people consume.
5
Q
what is a quasi public good?
A
goods that have characteristics of both public and private goods i.e partially excludable, resectable and rival.e.g roads, fence
