11. Test preperation

Give 4 examples of public goods

Flood defenses

Road signs

Army

Lighthouses

What are the 2 fundamentals of public goods

Non excludable

Non rivalous

What are the 2 characteristics of non-excludability?

1. The benefits of consuming the good cannot be confined to the individual that has paid

2. There is no cost efficient way to price

What does non-rival mean?

The quantity of the good doesn’t diminish upon consumption

What is the free rider problem?

Where individuals have the incentive to not contribute anything, because they will wait for others to pay, then they will free ride

What are quasi public goods?

Goods that can show the characteristics of both a public and private good

What are 2 examples of quasi public goods?

roads and beaches

what is the function of maximum prices?

to make goods more accessible

what are the functions of minimum prices? 2

1. to protect producers

2. to solve market failure

How to remember which way the welfare loss/gain points?

A numberline (negative left, positive right)

What are the two lines for consumption externalities?

MSB MPB

What are the two lines for production externalities?

MSC MPC

What equals each other for consumption externalities?

cost

What equals each other for production externalities?

Benefits

What is the x axis? (Externalities)

Quantity

What is the Y axis? (Externalitiesi)

Prices/ cost

For a positive consumption externality, which line is above the other?

Marginal Social Benefit

What is the acronym for costs of production?

STC

What does the acronym for costs of production stand for?

STC

Subsidies

Taxes

Costs

What is the acronym for PED?

RATES

What does the acronym for PED stand for?

RATES

Relative size of expenditure to income

Addicitiveness

Time period under consideration

Essentials

Substitutes available

What is the acronym for PES?

PSSST

What does the acronym for PES stand for?

PSSST

Production lag

Stocks

Spares

Substitutability of FOPs

Time