Econ Goods And Services Ch#6

Question 1

What is Excludability?

Answer 1

Where it is possible for a producer to limit the consumption of a good or service of the consumer by pricing etc.

Question 2

Define Rivalry

Answer 2

Where consumption by one person of a good or service reduces the availability of the good or service for others.

Question 3

Define Non-Rivalry Goods.

Answer 3

Where consumption by one person does not reduce consumption by someone else.

Question 4

What are the two characteristics of Private Goods?

Answer 4

1.Excludability
2.Rivalry

Question 5

What are Free goods?

Answer 5

The Goods that have no price and in principle no FOP’s are required to produce them.

Question 6

What are the characteristics of free goods?

Answer 6

1. Zero Opportunity Cost
2. Consumption is not limited by scarcity
3. No price is charged
4. No FOP’s required to produce them

Question 7

What are Public Goods?

Answer 7

Public Goods are those goods that are non-excludable and non-rival.

Question 8

What are the characteristics of Public Goods?

Answer 8

1. Non-Excludable: Impossible to limit the consumption of anyone from using the good.
2. Non-Rival: The consumption of one person does not limit the consumption of anyone else

Question 9

What are Quasi-Public goods?

Answer 9

While pure public goods are defined by their non-excludability and non-rivalry, quasi-public goods might exhibit only one of these traits completely or may possess both but not in their absolute forms.

Question 10

What are some examples of Quasi-Public goods?

Answer 10

1. Toll Road
2. Highway/Roads
3. Flood Control
4. Firetrucks

Question 11

Define Merit Goods

Answer 11

Merit goods are goods or services that are considered to be beneficial to individuals and society as a whole, but are often under-consumed in a free market economy.

Question 12

Define Demerit Goods

Answer 12

A demerit good is a good or service whose consumption is considered harmful to the consumer themselves and they are often overproduced.

Question 13

What Is information failure?

Answer 13

A situation where consumers do not have full or complete information when making a decision.

Question 14

What Is information failure?

Answer 14

A situation where consumers do not have full or complete information when making a decision.

Question 15

What are the topics to include while discussing Merit Goods?

Answer 15

1.Information Failure
2. Low income and Underconsumption