Econ Chapter 5

common pool resources

are resources that are not owned by anyone, do not have a price and are available for anyone to use without payment or any restriction. goods that are rivalrosu and non- excludable. eg: clean air, lakes, the ozone layer.

private good

goods that are rivalrous and excludable.

rivalrous

means that one person's consumption of a good reduces the amount available for others. For example, food and drinks are rivalrous goods.

non- excludable

means that resources can be used abundantly without restrictions. eg: such as public parks or street lighting. Therefore, may be overused, degraded and depleted.

tragedy of commons

an economic theory explaining how individuals acting in their own self-interest can deplete shared resources, leading to overuse and eventual resource depletion.

sustainable resource use

reasources are used at a rate that allows them to reproduce themselves, so that they do not become degraded or depleted.

market failiure

failiure of the market to allocate resources efficiently.

allocative inefficiency

too much or too little of goods or services are produced and consumed from the point of view of what is socially desirable.

externality

occurs when the actions of consumers and producers give rise to negatice or positive side-efffects on third party not involved in these actions, and ehose interests are not tkane into consideration

socially optimum output

refers to a level of output that is the best from the socially point of view, determined by the achievemnt of allocative efficiency.

negative prıodcution externalities

external costs created by producers - Qm > Qopt - MSC>MSB, overallocation of resources to the production