Ch. 17 Public Goods and Common Resources

Question 1

excludable

Answer 1

suppliers can prevent people who don’t buy a good from consuming it

Question 2

rival in consumption

Answer 2

some unity of a good can’t be consumed by more than 1 person at a time

Question 3

common resources

Answer 3

nonexclulable but rival (fish, clean water, biodiversity)
subject to overuse
MSC is higher than individual social cost
solutions: tax, licenses, assign property rights

Question 4

artificially scarce goods

Answer 4

excludable and nonrival (on-demand movies)
efficient price is 0 but sellers charge above
DWL
inefficiently low consumption

Question 5

public goods

Answer 5

nonexculable and nonrival (sewer system, disease prevention)
marginal social benefit = sum of individual marginal benefits (WTPs)
efficient quantity is where MSB = MC
low production, inefficient to charge

Question 6

nonexcludable

Answer 6

produce too little, free rider problem

Question 7

nonrival

Answer 7

consume too little, MC=0