Public goods, private goods and quasi-public goods

Question 1

define public goods

Answer 1

public goods are non-excludable (t’s very difficult to stop other people from consuming the good) and non-rival (Lots of people can use these goods at the same time)

Question 2

in the market, are market goods not missing from the market, yes or no

Answer 2

no, Public goods are missing from the free market, but they offer benefits to society

Question 3

what may the non excludable nature of public goods lead to

Answer 3

the free rider problem

Question 4

what is the free rider problem

Answer 4

The free rider problem. This describes how consumers wait for other consumer to buy the public good and get a free ride (get to use it for free) and so consumers never actually demands the public good and producers will not want to supply public goods because everyone will just use it for free and they cannot make a profit

Question 5

why might public goods be under-provided

Answer 5

because it is difficult to measure the value consumers get from public goods, so it is hard to put a price on the good

Question 6

define private goods

Answer 6

are rival and excludable.

Question 7

define pure public goods

Answer 7

Pure public goods are always non excludable and non rival

Question 8

define Quasi public goods

Answer 8

are sometimes non excludable and non rival and sometimes not

Question 8

state how parks could be considered a Quasi public good

Answer 8

You cannot stop a person from sitting on a bench in the park (non excludable) and anyone can enter (non rival) but the park entrance can be locked then the park becomesexcludable- it is possible to stop people from using it.

Question 9

what is the free rider problem

Answer 9

The tragedy of the commons occurs when common pool resources (natural resources like forests and fish in the sea, clean air, which are not owned privately) are used by either the producer or consumer in a way that is not sustainable

Question 10

tragedy of commons: state an example of environmental failure (over fishing)

Answer 10

• east coast of Canada = plentiful supply of cod fish. English and French fishermen shared the waters
• cod was a non excludable good as it is impossible to stop someone from fishing in the open ocean.
• 1960s American and Canadian fishermen started rising for the cod faster than before
• wanted to profit as much as they could from the commons but caused the amount of cod in the coast to plummet
• farmers were consuming the fish common far quicker than they could replenish itself - the fish became a rivalrous food and there is now no Canadian cod for anyone.