economics

Question 1

define non-excludability

Answer 1

the benefits of a public good cannot only be confined to those who paid

Question 2

define non-rival consumption

Answer 2

public goods where the consumption of one consumer does not effect the consumption of another. it costs nothing to supply another person

Question 3

define non-rejectable

Answer 3

a public good that cannot be rejected from the public E.g nuclear defence system

Question 4

define semi non- rival

Answer 4

consumption does not effect others but eventually it would. E.g a beach ( it will fill up eventually)

Question 5

define quasi public good

Answer 5

has characteristics of a public good but isn’t one. E.g public transport , roads

Question 6

define semi- non excludable

Answer 6

possible but difficult to stop non paying consumers. e.g fencing a park or beach

Question 7

free rider problem

Answer 7

because public goods are not excludable it is difficult to charge people for benefiting from a good or service once it is provided

Question 8

define demerit good and how the government deals with it

Answer 8

a good that the government feels is overconsumed and causes negative externalities.

solutions :
banning
limit consumption
age limit
subsidising healthy alternatives
regulatory bodies( offstead)

Question 9

what is the principle agent and give an example

Answer 9

an arrangement in which one entity legally appoints another to act on its behalf.

E.g education

Question 10

define merit good

Answer 10

goods and services the government thinks are under consumed. they cause positive externalities

Question 11

how does the government deal with merit goods

Answer 11

they subsidies them
provide them free at the point of use

Question 12

why should the government provide public goods

Answer 12

.non rivalrous nature of consumption

:provided free at point of use
: state provision prevents under consumption

government provision may benefit economics of scale

helps affordability.

Question 13

economies of scale definition and example

Answer 13

the cost advantage of increasing output.

e.g costco buying huge quantities to get lower prices

Question 14

how does the government borrow money and why do they.

Answer 14

the government borrows money through bonds. they are promises that they’ll pay more back in the future. they do this when taxes don’t cover all expenditure