Chapter 18 Flashcards
exclaudable
If the supplier of that good can prevent people who do not pay from consuming it
rival in consumption
If the same unit of the good cannot be consumed by more than one person at the same time
nonexcaudable
the supplier cannot prevent consumption by people who do not pay for it
nonrival in consumption
If more than one person can consume the same unit of the good at the same time
private goods
exclaudable and rival in consumption
ex. wheat
public goods
nonexcaudable and nonrival in consumption
ex. public sewer systems
Common resources
nonexcaudable but rival in consumption
clean water in a river
Artifically scarce goods
exclaudable but nonrival in consumption
ex. pay per view movies or cable tv
free-rider problem
Individuals have no incentive to pay for their own consumption and instead will take a “free ride” on anyone who does pay
Occurs in goods that are nonexclaudable
Public good
Both nonexclaudable and non rival in consumption
ex. Disease prevention
ex. national defense
ex. Scientific research
Marginal social benefit of a public good
Some of all the individual marginal benefits of the good consumed
Cost-benefit analysis
When governments estimate the social costs and social benefits of producing a public good
Common resource
Nonexclaudable and rival in consumption
Artificially scarce good
Exclaudable but nonrival in consumption
