Public Goods and Common Resources

These flashcards cover key concepts regarding public goods and common resources as discussed in the lecture.

What are public goods?

Public goods are goods that are not excludable and not rival in consumption. (national defense)

What characterizes a common resource?

Common resources are not excludable but are rivals in consumption. (deer in the forest)

What is the free rider problem?

The free rider problem occurs when individuals benefit from a good without paying for it, leading to underproduction of that good.Person who receives the benefit of a good but avoids the cost

How can the government improve outcomes related to public goods?

The government can provide public goods and finance them through tax revenue if the overall benefits exceed the costs.

What are examples of private goods?

Examples of private goods include pizza and tacos.

What is the difference between excludability and rivalry in consumption?

Excludability refers to the ability to prevent someone from using a good, while rivalry in consumption indicates that one person's use reduces the ability of others to use that same good.

What is a club good?

A club good is excludable but not rival in consumption, such as cable TV.

What is an example of a public good?

An example of a public good is national defense.

What is the tragedy of the commons?

The tragedy of the commons refers to a situation where shared resources are overused and depleted because individual users act in their own self-interest rather than considering the overall good.

How can common resource overuse be mitigated?

Overuse of common resources can be mitigated by government regulations and corrective taxes.

What is cost-benefit analysis in the context of public goods?

Cost-benefit analysis is a study that compares the total costs and benefits to society of providing a public good, helping to determine whether it should be provided and in what quantity.

What are examples of common resources?

Examples of common resources include clean air, clean water, and congested roads.

What is excludability?

People can be prevented from using a good

Ex: fish in s private pond; tacos

NOT excludable: fish in the ocean: a park

Rivalry in consumption

One person’s use of a unit of a good reduces another person’s ability to use it

Rival: fish tacos ; oversold concert

NOT rival: uncongested road