Non provision of public goods

Question 1

Factors of Public goods

Answer 1

• Non rival
• Non - excludable
• Non rejectable

Question 2

Non-rival

Answer 2

Consumption by one economic agent does not reduce the amount of available for consumption by others

Question 3

Non-excludable

Answer 3

Once provided, its impossible to prevent economic agent from consuming the good

Question 4

Non-rejectable

Answer 4

Once provided, it is impossible for economic agent not to consume the good

Question 5

How public goods can cause market failure

Answer 5

Due to free riders

Question 6

Free riders

Answer 6

a person or organisation that receive the benefits that others paid for without making any contributions

Question 7

How does free riders cause market failure

Answer 7

• little incentive for people to pay for the consumption of the goods

Question 8

The problem of free riding can to some extent be solved for:

Answer 8

Club goods and common resources

Question 9

Difference between club goods and common resources

Answer 9

club goods:
Non rival - cannot get used up
Excludable - consumer agent can be prevent from consuming good

common resources:
Rival - Can get used up
Non excludable - Consumer agent cannot be prevented from consuming good