Week 10 - Types of Goods

Question 1

what is an excludable good?

Answer 1

A good is excludable if a person can be prevented from using it. E.g. ice-cream :)

Question 2

What is a rival in consumption good?

Answer 2

Good with the property that one person’s use diminishes others’ use. E.g. ice-cream as if one person eats it, no one else can.

Question 3

What type of good has rivalry and is excludable?

Answer 3

private goods

Question 4

What type of good has rivalry and is non-excludable

Answer 4

Common resources

Question 5

What type of good has no rivalry and is excludable

Answer 5

Club goods

Question 6

What type of good has no rivalry and is non-excludable

Answer 6

Public goods

Question 7

What are private goods?

Answer 7

Excludable and rival

Most goods are private and only the person who purchases/consumes it benefits. Supp;y and demand assumes this

Question 8

What are common resources?

Answer 8

rival and not excludable

E.g. fish in the ocean - one person catching it reduces the fish for others but it is hard to stop fishing.

Question 9

What are public goods?

Answer 9

Neither excludable nor rival. E.g national defence, once the country is defended it is impossible to prevent any single person from benefiting and one person enjoying the benefits does not reduce others’ utility

Question 10

What are club goods?

Answer 10

Excludable and not rival. e.g. fire protection is easily excludable but non-rivalous.

Question 11

What is the free rider problem?

Answer 11

Refers to parties who recieve the benefit of a good but avoid paying, leading to the under provision of public goods.

Question 12

Can fireworks be provided by the free market?

Answer 12

The free market fails to provide an efficient outcome as people can enjoy fireworks from a distance/without a ticket leading to an incentive to free ride. The government may be able to provide it though.

Question 13

Name 3 examples of public goods?

Answer 13

1) defence
2) basic research
3) fighting poverty