- Using the concepts of rivalry and excludability, and providing examples, distinguish between public goods (non-rivalrous and non-excludable) and private goods (rivalrous and excludable).
- Explain, with reference to the free rider problem, how the lack of public goods indicates market failure.
- Discuss the implications of the direct provision of public goods by government.
Use p 139-141 to do the following:
- There are two characteristics of goods which define them as public or private goods. These characteristics are rivalry and excludability. Explain these characteristics.
- Use the example of a can of Coke to explain why private goods are defined as rivalrous and excludable.
- Use the example of a streetlight to explain why public goods are defined as non-rival and non-excludable.
- Give examples of public goods.
- All goods provided by the government are public goods - true or false? Explain your answer using examples.
- Is an internet website a public good?
- What is the free-rider problem?
- Why will the market (private firms) not produce these goods?
- “All public goods are merit goods but not all merit goods are public goods”. Explain.
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