Microeconomics 2.10 Public Goods

Question 1

Public Goods

Answer 1

Goods that have the characteristics of being non-excludable, non-rejectable, non-rilavrous, zero marginal cost.

Question 2

Non- rejectable

Answer 2

When a consumption cannot be prevented by a consumer

Question 3

Non-rivalrous

Answer 3

When consumption of a good does not prevent consumption by another person. Also known as non-diminishability.

Question 4

Zero marginal cost

Answer 4

When production of an additional unit does not add extra costs to the business.

Question 5

Non-excludable

Answer 5

When potential consumers cannot be prevented from consuming a good without paying for it.

Question 6

Free rider problem

Answer 6

Occurs when a person benefits from consuming a shared resource or good without paying for that good.

Question 7

Private goods

Answer 7

Goods which are rivalrous, excludable, rejectable and have a marginal cost.

Question 8

Common goods

Answer 8

Goods which are available to all but when consumed by one consumer it affects the quality of the good for others.

Question 9

Club goods

Answer 9

Good which are excludable but on consumption do not affect others ability to consume

Question 10

Netflix

Answer 10

Club good

Question 11

River fish

Answer 11

Common good

Question 12

Street lighting

Answer 12

Public good

Question 13

Quasi-public good

Answer 13

Goods which have some of the characteristics of a public good and some of a private good.

Question 14

Why do private firms not provide public goods?

Answer 14

Because they cannot exclude users who have not paid- the free rider problem.

Question 15

National defence

Answer 15

Public good

Question 16

What influences a government’s decision to supply a public good?

Answer 16

Opportunity cost of providing the good, the cost of the provision, risk of underprovision, public perception, political stance.