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Micro Economics > Public Goods > Flashcards

Public Goods Flashcards

1
Q

What is a private good?

A
  • Excludable
  • Rival
  • Rejectable
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2
Q

What is meant by ‘excludable’?

A
  • Consumers of private goods can be excluded from consuming the product if they are not willing or able to pay for it and don’t benefit from the good or service
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3
Q

Give an example of a good or service that is excludable

A
  • ticket to the theatre
  • tickets to a sports event
  • meal in a restaurant
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4
Q

What is meant by ‘rival’?

A
  • one person’s consumption reduces the amount left for others to consume
  • scare resources are used up in producing and supplying the good or service
  • there is an opportunity cost
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5
Q

What is many by ‘rejectable’?

A

private goods can be rejected

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6
Q

Who supplies private goods and why?

A

The private sector because they can charge consumers and make a profit

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7
Q

Digital ‘pay per view’ are excludable private goods and is a growing market, list some

A
  • Movies
  • News
  • Repeat TV
  • Online libraries
  • Internet services
  • Sporting events
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8
Q

Digital ‘pay per view’ are excludable private goods and is a growing market, list some

A
  • Movies
  • News
  • Repeat TV
  • Online libraries
  • Internet services
  • Sporting events
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9
Q

What are ‘pure public goods ‘ main 3 characteristics?

A
  • Non-excludability
  • Non-rivalry in consumption
  • Non-rejectable
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10
Q

What is meant by ‘Non-excludability’?

A
  • The benefits of public goods cannot be confined to those who have paid for it
  • Non-payers can enjoy the benefits of consumption at no financial cost to them
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11
Q

What is meant by ‘Non-rivalry’?

A
  • Consumption of a public good by one person does not reduce the availability of a good to others
  • If a public good is provide, we cannot avoid it
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12
Q

What is meant by ‘Non-rejectable’?

A

If a public good is provided, we cannot avoid it

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13
Q

What are pure public goods also known as?

A

Collective consumption goods

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14
Q

Give some examples of pure public goods

A
  • National Defence systems
  • Sewage and Waste Disposal Systems
  • Lighthouse Protection
  • National Rail Safety Systems
  • Street Lighting
  • Firework Displays
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15
Q

What are ‘Semi-Public (Quasi) Public Goods’?

A
  • These are products that are public in nature, but do not exhibit fully the features of non-excludability and non-rivalry
  • They may become non-rival e.g. at peak times when congestion occurs
  • On grounds of equity the government may provide these goods directly and finance them through general taxation
  • There are is an element of excludability or rivalry in consumption
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16
Q

What are ‘Semi-Public (Quasi) Public Goods’?

A
  • These are products that are public in nature, but do not exhibit fully the features of non-excludability and non-rivalry
  • They may become non-rival e.g. at peak times when congestion occurs
  • On grounds of equity the government may provide these goods directly and finance them through general taxation
  • There are is an element of excludability or rivalry in consumption
17
Q

Give some examples of semi-public public goods

A
  • Motorways and major roads
  • Parks
  • Terrestrial television (public service broadcasting)
  • Police force protection
  • Galleries and museums
  • Airwaves
18
Q

Why does the state provide public goods ‘on grounds of efficiency’?

A
  • easier to provide them collectively

- economies of scale from providing all of them?

19
Q

Why does the state provide public goods ‘on grounds of equity’?

A
  • so that people on all levels of income can have access to them
  • provisions on grounds of need rather than ability to pay
20
Q

Why does the state provide public goods ‘on grounds of efficiency’?

A
  • easier to provide them collectively

- economies of scale from providing all of them?

21
Q

Given the nature of the free rider problem how are public goods often financed?

A

Through some form of enforcement, notably the compulsory nature of the TV License fee

22
Q

What are good examples of the free rider problem?

A
  • TV license dodgers

- People who choose to evade Council Tax but who still receive local authority services

23
Q

What are publics bads?

A
  • Environmental damage and global warming affects everyone - no one is excluded from the disbenefits of others polluting economic activity
  • Incidence of this are called public bads
24
Q

How are public goods financed?

A
  • Market cannot provide the incentives needed to supply essential services such as policing and defence causing allocative inefficiency
  • Hence public goods are provided collectively by government and financed through general taxation or other forms of charge
    e. g. the BBC licence fee
25
Q

What are publics bads?

A
  • Environmental damage and global warming affects everyone - no one is excluded from the disbenefits of others polluting economic activity
  • Incidence of this are called public bass

Micro Economics (7 decks)

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