Chapter 11: Public Goods and Common Resources Flashcards
Define ‘Excludability’.
The property of a good whereby a person can be prevented from using it.
Define ‘Rival in consumption’.
The property of a good whereby one person’s use diminishes another person’s use.
Define ‘Private goods’.
Goods that are both excludable and rival.
Define ‘Public goods’.
Goods that are neither excludable nor rival.
Define ‘Common resources’.
Goods that are rival but not excludable.
Define ‘Club goods’.
Goods that are excludable but not rival.
Define ‘Free rider’.
A person who received the benefit of a good but avoids paying for it.
Define ‘Cost-benefit analysis’.
A study that compares the costs and benefits to society of providing a public good.
Define ‘Tragedy of the Commons’.
A parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole.
Markets work best for ___ goods. They do not work as well for other types of goods.
Private.
What are some examples of public goods?
Fireworks display, national defense, and the creation of fundamental knowledge.
What are some examples of common goods?
Common grazing land, clean air, and congested roads.
What does the lack of cost for public and common goods mean?
Makes the private provision of a public good untenable. Governments try to provide, based on cost-benefit analysis.
Excessive use of common goods. Governments try to limit.
