2.10-Public goods Flashcards
What is a public good?
A good that is non-excludable and non-rivalrous.
True or False: Public goods can be provided by private firms.
False.
Fill in the blank: Public goods are characterized by _____ and _____ characteristics.
non-excludability; non-rivalry
What is non-excludability?
A situation where individuals cannot be effectively excluded from using the good.
What is non-rivalry?
A situation where one person’s use of the good does not reduce its availability to others.
Give an example of a public good.
National defense.
What is the free rider problem?
When individuals benefit from a public good without contributing to its cost.
True or False: Public goods are typically underprovided in a free market.
True.
What is the role of government in providing public goods?
To ensure adequate provision due to market failure.
Multiple Choice: Which of the following is NOT a characteristic of public goods? A) Non-excludability B) Non-rivalry C) High marginal cost D) Positive externalities
C) High marginal cost.
What is a common resource?
A resource that is non-excludable but rivalrous.
Give an example of a common resource.
Fisheries.
What is the tragedy of the commons?
The depletion of a shared resource due to individuals acting in their self-interest.
True or False: Public goods can lead to positive externalities.
True.
What is an example of a positive externality from public goods?
Improved public health from vaccination programs.
What is the difference between public goods and private goods?
Public goods are non-excludable and non-rivalrous, while private goods are excludable and rivalrous.
Multiple Choice: Which of the following is a feature of public goods? A) Excludability B) Rivalry C) Free riding D) All of the above
C) Free riding.
What is a quasi-public good?
A good that has some characteristics of public goods but can be partially excludable.
Give an example of a quasi-public good.
Toll roads.
What is the significance of the Samuelson criterion?
It states that public goods should be provided until the sum of individual benefits equals the cost of provision.
True or False: The provision of public goods can lead to inefficiencies in resource allocation.
True.
What is the main challenge in funding public goods?
Determining the optimal level of provision and funding.
What is a public-private partnership (PPP)?
A cooperative arrangement between public and private sectors to provide goods or services.
Fill in the blank: Public goods often require _____ to address the free rider problem.
government intervention
