yr 11 eco topic 6 - govt. and the economy

2 main characteristics of public goods

non excludable - not possible to exclude people from benefitting from them

non-rival - one person’s enjoyment of a public good for not restrict other’s enjoyment of the good

free riders

people who benefit from public goods without contributing towards their costs

e.g defense

natural monopolies

market structures where goods can only be efficiently provided by one supplier because of the enormous investment in infrastructure required

e.g public transport

how do inequalities in income and wealth develop?

• wealth compounds over time - people who are already wealthy become wealthier

• once people own assets, they earn rent and interest from their factors of production, and from growth in value of their investments

• those who hold wealth are more likely to have greater opportunities for developing skills and finding employment

• poverty can generate intergenerational effects