2.3.2 Public Goods

• What are the two key characteristics of public goods?

  Non-rival and non-excludable
• It is difficult or impossible to prevent people from accessing a public good because it is non-excludable
• Public goods create a market failure because private firms cannot profitably provide them, leading to their underproduction
• The non-rival characteristic of public goods means that one person's consumption does not reduce its availability for others.


  True
• Match the characteristic with the correct type of good:

  Non-rival ↔️ Public Goods

  Rival ↔️ Private Goods
• The non-rival characteristic of public goods means that one person's consumption does not reduce its availability for others.

  True
• Match the characteristic with the correct type of good:

  Non-rival ↔️ Public Goods

  Rival ↔️ Private Goods
• What is an example of a pure public good?

  National defense
• Governments often address the free rider problem by providing public goods directly or imposing taxes.


  True
• Government provision of public goods generates positive spillover effects and improves overall social welfare
• Consumption of a public good by one person reduces its availability for others.

  False
• What is an example of a public good?

  National defense
• Public goods are non-rival and non-excludable.
• What does 'non-rival' mean in the context of public goods?

  Consumption by one does not reduce availability for others
• Private goods are rival and excludable.

  True
• The non-rival characteristic of public goods means consumption by one person does not reduce availability for others.
• Why do private firms underproduce public goods?

  They are not profitable
• What makes impure public goods different from pure public goods?

  Partial rivalry or excludability
• Impure public goods may become rival as usage increases.


  True
• To address the free rider problem, governments may impose taxes or directly provide public goods.
• What is a positive spillover effect from public goods like street lighting?

  Reduced crime
• Government provision of public goods may lack incentives for cost-cutting compared to private firms.


  True
• The government's ability to address the free rider problem justifies its intervention in providing public goods.
• Consumption of a public good by one person reduces its availability for others.

  False
• Match the characteristic with the correct type of good:

  Non-rival ↔️ Public Goods

  Rival ↔️ Private Goods
• Steps in defining public goods

  1️⃣ Define public goods

  2️⃣ Describe the characteristics of public goods

  3️⃣ Compare public goods with private goods

  4️⃣ Explain the resulting market failure
• It is difficult or impossible to prevent people from accessing a public good because it is non-excludable
• What are the two key characteristics of public goods?

  Non-rival and non-excludable
• It is difficult or impossible to prevent people from accessing a public good because it is non-excludable
• Arrange the types of public goods based on their characteristics:

  1️⃣ Pure Public Goods

  2️⃣ Impure Public Goods

  3️⃣ Global Public Goods
• The free rider problem arises because public goods are non-excludable
• Why does the government fund or provide public goods directly?

  To address the free rider problem
• What are the two key characteristics of public goods?

  Non-rival and non-excludable
• It is difficult or impossible to prevent people from accessing a public good because it is non-excludable
• The non-rival characteristic of public goods means that one person's consumption does not reduce its availability for others.


  True
• National defense is an example of a public good.


  True
• Public goods are non-excludable, meaning it is difficult to prevent access.
• What type of market failure do public goods lead to?

  Underproduction
• Smartphones are examples of private goods.

  True
• Categories of public goods from strongest to weakest public good characteristics:

  1️⃣ Pure Public Goods

  2️⃣ Impure Public Goods

  3️⃣ Global Public Goods