8.3 Private Goods Public Goods And Quasi-public Goods Flashcards
what is a private good?
a good that is exludable and rival
e.g an orange
what is an excludable good?
people who unprepared to pay can be excluded from benefiting from the good
what is a rival good?
when one person consumes a good, the quantity avaliable to others diminishes
what is a non-excludable good?
good where someone can’t be prevented from having it(no competition)
what is a non-rival good?
a good where one person using the good does not diminish the supply(no competition)
what is rivalry often reffered to as and why?
diminishability-when one person consumes the good the quantity avaliable to other people diminishes
what is a public good?
good that is non-excludable and non-rival
and non-diminishable
e.g a radio programme
what characteristics of a public good lead the market to failure?
it being non-excludable and non-rival(no profits are made)-problem of missing markets
what are some examples of public goods?
air,sea,police, london fire brigade
what is the free rider problem?
non payers who enjoy the benfits on consumption of the good
why are the free riders able to enjoy public goods?
because they are non excludable
if a public good charged money for its use, what is the issue that would make it impossible to collect enough revenue to cover costs?
because the good is non-excludable
why is healthcare not a public good?
it has characteritics of a private good, e.g its rival and excludable in consumption
is national defence a public good?
yes
what would happen if everyone freerided on the Nuclear defence service?
it would make a loss and its incentive to provide a service in the market disappears-resulting in a missing market(market failure)
goods vs bads
what is a good?
something that provides benfit to the person cosnuming it.
-bread causing utility or pleasure
(increases economic welfare)
goods vs bads
what is a bad?
something that yeilds disatisfaction or displeasure
(reduces economic welfare)
e.g consumption of rotten meat
what a ‘public bad’
(opposite of public good)
e.g rubbish or garbage
-leads to the freerider problem-people can avoid paying for their rubbish to be removed by dumping it in a public place(although most people wouldn’t do this)
what is a quasi-public good?
a partially public and partially private good(non fully non-rival and where it is possible to exclude people from consuming a products)
are most public goods pure public goods or quasi-public goods?
quasi-public goods(e.g light houses and tv)
why would markets turn pure public goods to quasi-public goods?
to get rid of the free-riders
when does the optimum level of consumption occur for public goods?
when they are free
can quasi-piblic goods be provided by the markets and essentially make money?
yes
use roads as an example, how does technilogical change a public good to a quasi-public good?
technolgical change makes it feasable for the gov to charge all motorists for use and this can be varied throughout the day to create incentives for drivers to shift their patterns
why would you let public goods be free
they are non-diminishing so it would allow as much consumption as possible
