Public goods

Question 1

Charcterize public goods

Answer 1

non-rivalry/indivisibility
consumption by one agent does not reduce quantity available for consumption by another

• non-excludability
  if supplied, no consumer can be excluded
• impossibility of rejection
  if supplied, it must be consumed

Question 2

What is called a good that is rival and excludable? example

Answer 2

private, ice cream

Question 3

What is called a good that is non rival and excludable?

Answer 3

club good, cable tv

Question 4

What is called a good that is rival and non escludable?

Answer 4

common property resource, sidewalk

Question 5

What is called a good that is non rival and non excludable?

Answer 5

public

Question 6

What is social capital?

Answer 6

The value of altruistic and communal
behavior in society.

Question 7

What is warm glow model?

Answer 7

A model of the public goods
provision in which individuals care about both the total
amount of the public good and their particular
contributions as well

Different from altruism because people don’t care about
just the amount of the public good.

Question 8

What are the vchallenges in measuring preferences for public goods?

Answer 8

1.Preference revelation: People may not want to reveal their true valuation because the government might charge them more for the good if they say that they value it highly.
2.Preference knowledge: People may not know what
their valuation is.
3.Preference aggregation: How can the government
combine the preferences of millions of citizens?