Public Goods

Question 1

pure public goods

Answer 1

goods that are perfectly non-rival in consumption and are non-excludable

Question 2

non-rival in consumption

Answer 2

one individual’s consumption of a good does not affect another’s opportunity to consume the good

Question 3

non-excludable

Answer 3

individuals cannot deny each other the opportunity to consume a good

Question 4

impure public goods

Answer 4

goods that satisfy the two public good conditions to some extent, but not fully

Question 5

to find social demand curve

Answer 5

add quantity at each price - sum horizontally

Question 6

samuelson rule

Answer 6

social efficiency is maximised when the marginal cost is set equal to the sum of the MRRs rather than being set equal to each individual MRS

Question 7

free rider problem

Answer 7

when an investment has a personal cost but a common benefit, selfish individuals will underinvest

Question 8

nash equilibrium

Answer 8

each agent maximises his objective taking as given the actions of the other agents

Question 9

reasons why people give charitably

Answer 9

warm glow
reciprocity
social pressure
altruism

Question 9

crowding out

Answer 9

reduction in private contributions to public good due to an increase in government provision of the public good

Question 10

how does government spending crowd out private donations

Answer 10

through two channels:
willingness to donate
fundraising